Updated: 26/09/22 @16:43
Back in July when the sun was warm, skies were clear and talk of a drought was sweeping its way across the nation’s media, we released details around Phase One of the Otterpool Park Development.
Now in an exclusive we can name the developers who will build out the first phase as pictured below and the approxiamate amount of money they’ll pay the Master Planner – Otterpool Park LLP on an average 3 bed house which makes up 31% of the whole development.
As we understand, each developer has signed a deal with Otterpool Park LLP. This of course is dependent on planning permission being granted; which is not a foregone conclusion.
Barretts = up to 500 homes
Pentland Homes = up to 350 homes
Places for People = up to 2,000 homes
Quinn Estates = up to 350 homes
Redrow = up to 500 homes
This gives an approxiamate total of up to 3,700 homes of mixed tenure, ie 1 bed, 2 bed, flats, detached, semi detached etc, for Phase One only.
Two Cllrs have tabled questions at Full Council on the 28 Sept @ 7pm, Agenda Item 7, regarding the development.
We further understand, the designs of the homes will need to vary so as not to create a single mono culture designed development.
The number and type of houses to be built across the Otterpool Park development are set out in the Housing Strategy Report
The annual delivery rate – which is indicative – as issues such as interest rates, construction material prices, fuel prices – will have a knock effect to the rate of build out on the site.
The Gerald Eve Financial Viability Assessment (FVA) found that the plot revenue of the site would be £340 per square foot for a market sale unit, and £187 per square foot on an affordable or social rented unit, with the FVA suggesting 75 units per plot.
The most commonly built house is a 3 bed house. This has a square footage of between 1,200 – 1,300. So we’ll use the midpoint of 1,250 sq ft for our calculations. We can if we use a 3 bed house and the RIBA Cost modelling, work out the Council will need to collect approx £140,000 from each developer for a three bed house. And the indicative suggestion in the Housing Strategy Report is that 31% of all houses at Otterpool will be 3 bed houses, which means 2,635, or thereabouts.
If we take the the £140,000 for what the Council will collect per house we can see that the indicative figures suggest they’ll collect approx £373m for all 3 bed houses; which we stress is NOT pure profit as Otterpool Park LLP will use the receipts from selling off parcels so that money is recycled and it brings forward the rest of the infrastructure.
Of course, on top of this are the costs for the named developers above; who will make a profit on each 3 bed of approx 15 – 20% of an overall sale price of £425,000, meaning profit on a 3 bed house at Otterpool will be between £63,000 and £85,000. Taking the midpoint profit of £74,000 and the amount the council will collect for each 3 bed house £140,000, the cost of building out a single 3 bed house will be in the region of £210,000 – £215,000 per 3 bed house.
Cost to build each all 3 bed house = £212,500 × 2635 = £559,937,500
Cost paid by developer per 3 bed house =£140,000 x 2635 = £368,900,000
Profit for developers on build of 3 bed = £74,000 x 2635 =£194,990,000
This means that the total amount of money for just 3 beds alone; which makes up 31% of the whole site, is £1.1bn. Given the other types of homes to be built, 1 bed, 2 bed, flats, house and affordable, the indicative cost for the whole scheme at current prices is approx £3bn.
The latest Otterppol Park LLP business plan indicates that the council would see between £240m – £270m of revenue on its investment, once the project is complete; which means of the overal sum invested to build out the project the council will see approx 8.5% of the £3bn.
The Council has already granted itself permission for a £100m loan for Otterpool Park LLP. We known they have borrowed £35m via inter authority lending and used £25m of this to purchase the racecourse from the Reuben Brothers. The remaining £75m is to get the site ready for development.
The LLPs job is to complete the land assembly, which has been done; secure planning and other permissions – yet to be done; and then invest the remaining £75m in the infrastructure to the point at which they can then sell off serviced parcels of land to house builders – yet to be done; which is how they’ll recoup their investment.
Of course, not all the money is going to come out at the end of the scheme in a single lump sum. The council will undoubtedly draw down some of the profit as the development progresses.
As we said most of the £3bn anticipated cost for the development lot will be recycled into the project. The monies which can be drawn down as it comes available, will be invested in other community activities across the district outside of the project itself. What these “other community activities” has not been identified as yet, but perhaps that’s a question for our Cllrs to ask.
We will reach out to each developer for a comment. If they respond we will of course publish their response in total.
All figures used are based on averages and what is already in the public domain.
Finally, Otterpool Park Officers really should be more careful about what they discuss on trains.
The Shepway Vox Team
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