Council puts development programme sites on hold amid ‘challenging’ conditions

“During this review it was established that several sites had significant viability gaps which, notwithstanding taking necessary steps to mitigate, would remain a high funding gap and may not be value for money in current form,” according to the report.

Sites being placed on hold include Hensford, Markwell, Evelyn and Dacres. The number of potential homes involved in the schemes was not published. 

The report also highlighted risks associated with the redevelopment of the Achilles Street estate. 

According to the report: “Many risks impact project and programme delivery of new build homes.

“Since programme approval in January 2020, we have seen significant economic factors which have disrupted development across the sector.”

The council said that, alongside a rise in construction costs and inflation, “we have seen several building regulation changes which have required a higher standard of specification and design”.

This includes the requirement for two staircases in buildings over 18 metres in height.

“The steep rise in construction costs has been significant across the sector.

“Building Cost Information Service are reporting an average rise of 25% since 2020.

“This increase has impacted the majority of our new build projects.”

The Achilles Street regeneration is forecast to deliver around 300 new homes.

However, according to the report: “The scale of the affordable housing delivery proposed in the Achilles scheme means that it is facing significant viability challenges.

“The mix of new homes and development proposals remain in line with our landlord offer and the speed of delivery will be dependent on decant and land assembly programme.

“We are working to bridge the viability gaps by increased grant funding, design efficiencies and running various option appraisals prior to any planning submission.”

The council is planning to merge its land holdings with private developers on some sites to deliver homes.

A spokesperson for Lewisham Council said: “Like many local authorities and housing associations, we are facing an increasingly challenging development environment, with rising construction and labour costs, higher borrowing rates and changes in building regulations affecting our ability to deliver new homes.

“With limited funding available to us, we have reviewed the scope of our Building for Lewisham programme to ensure it remains financially viable.

“This has required us to pause a small number of schemes currently in pre-construction and plans for these sites will be brought forward at a later date.

“Despite these challenges, we are continuing to build hundreds of new council homes through our Building for Lewisham programme.

“262 council homes have already been completed and a further 97 are currently under construction.

“In the coming years, we expect to begin construction on an additional 843 affordable homes, including more than 400 new council homes and the delivery of the Achilles Street redevelopment.”

This week, Lewisham announced that it had referred itself to the Regulator of Social Housing over a potential breach of the consumer standards.