Final sign-off nears for £1.1bn Manchester scheme
Manchester City Council is close to handing down a formal decision notice for Renaker’s plans for five towers comprising 2,400 homes at New Jackson, with draft legal agreements confirming that “viability issues” mean the developer will not contribute anything towards affordable housing.
Last August, the city council approved in principle Renaker’s plans for five towers – including the developer’s tallest yet at 71 storeys – at New Jackson.
Manchester City Council has now published the draft S106 agreements it has agreed with Renaker in relation to the project, meaning a formal decision notice is not far away.
In them, the authority has calculated that Renaker would have to pay £114m in Section 106 contributions towards discounted homes to comply with the city’s core strategy.
The drafts, recently uploaded to Manchester City Council’s planning portal, state that contributions of £81m for the four-tower The Green and £33m for the 71-storey Lighthouse skyscraper would be required “in order to comply with the Core Strategy”.
However, Renaker has cited “viability issues”, which it claims prevent it being able to pay the affordable housing contribution or provide any on-site discounted homes. Doing so would render the projects unviable, according to the developer, a position the council agrees with.
The draft S106 agreements can be found by searching for reference numbers 137226/FO/2023 and 137227/FO/2023 on Manchester City Council’s planning portal.
As a result, Manchester City Council has confirmed that, in the first instance, it will not require Renaker to pay anything in S106 contributions due to the constrained viability of the schemes.
A viability appraisal carried out by Savills on behalf of the city council states that the towers have a combined gross development value of £1.1bn and would cost £894.5m to develop, generating a gross margin of £205m.
A clawback mechanism will be implemented into the S106 agreement that will allow MCC to reassess the viability at various junctures to see if it has improved and affordable housing payments can be made.
This type of mechanism is often seen in S106 agreements attached to projects that are deemed too marginal in terms of viability to make contributions to affordable housing, either on site or financial.
A spokesperson for the city council said: “When a viability study was carried out at the onset of this project it was determined that provision for affordable housing could not be included in this development, however, this was to be reviewed at a later date.
“A reconciliation mechanism exists where further down the line after a proportion of the development has been completed it will be reassessed to determine if a contribution towards affordable housing could be provided. If this retesting supports a contribution this would be retrieved from the developer. The reference to £114m is the maximum sum, should viability improve, that could be provided.”
Renaker was contacted for comment.
While it is acknowledged that building skyscrapers on brownfield sites presents a level of risk to developers, it is not always impossible to deliver affordable homes or a contribution towards them.
Salboy, as part of Viadux phase two, is building a standalone 100% affordable block comprising 133 homes in the city centre.
Weis Group, the company behind Park Place – two 51 storey towers close to Renaker’s schemes – signed a S106 agreement last year stipulating a £1m payment towards discounted homes, while a similar figure was paid in relation to Select Property’s One Port Street scheme.
Nothing at all? Maybe, we, as citizens, should ask for a financial contribution from Renaker to keep our pavements litter and weed free?
By Gerry Mander
Thanks for your unimaginative skyscrapers and lack of contribution towards the city Renaker. Think Salboy should take it from here.
By Anonymous
This is a pretty poor do and leaves the council open to more litigation from developers who have made S106 payments .
By Wislon
Good lord. Nothing at all? How much money does Renaker make?
By Bob Todd
A reappraisal is a sensible approach. We were always warned in valuation class that trying to speculate as to future value, yield and cost was not an exact science. I do wonder what having another £1.1bn on the balance sheet might do to the share price, it’s not all bad news for Renaker and MCC get another 2,400 units onto their housing target. Cue recycled comments about lack of public infrastructure.
By Dave C
sorry, we can’t give you £114m so we’re giving you absolutely nothing?? surely there has to be a better way
By Anonymous
This stretches credulity. One can see why so many people take issue with the ‘Manchester model’.
By Anonymous
Nothing at all on 2400 homes and a development of over £1bn GDV as its unviable ; viability arguments have become all smoke and mirrors. Yes, create regeneration and economic growth although there needs to balance. Clawbacks are great but more affordable housing is needed now, how many have Renaker provided to date in Manchester ?
By L Tyke
Manchester City Council’s longer-term approach to planning will benefit the city for decades to come, if only other council’s could adopt a more strategic approach taking a long term perspective.
By Anonymous
See Nick Small, that’s how it’s done. Manchester pressing ahead yet again. 1.1bn investment into the City. When will you and your LCC cohorts awaken from your economic coma.
By Stephen Hart
PNW – can you provide a linking the article to the draft 106 agreement so it can be reviewed. Thanks
By Anonymous
Hi Anonymous! We’ve updated the story to include the application reference numbers. For convenience: “The draft S106 agreements can be found by searching for reference numbers 137226/FO/2023 and 137227/FO/2023 on Manchester City Council’s planning portal.”
By Julia Hatmaker
Absolutely outrageous that MCC continues to entertain this nonsense from Renaker especially on a scheme of this scale when there is endless homeless people and tents across the streets of Manchester! MCC needs to toughen up on their stance when it comes to enforcing their affordable housing requirements on their favourite pet developer. What is really the public benefit of these developments? Some left over space for public realm and landscaping? Super expensive rentals, gated gardens and amenities. Where is the overall planning balance and public benefit here? Renaker is a developer contractor – making margins at both stages…
By Only in Manchester!
@ Gary Mander, and wind free!
By Anonymous
I might be being extreme – but does this mean that all developers could say this. As there is a developer trying to build on a school near me – 3 luxury houses. They are stating that the viability is impacted and not doing any affordable homes – but they have swimming pools in each. Won’t everyone be at it saying I cannot afford?
By Imtiaz
I am not clever enough to know what this is really about but I know that Renaker actually gets things done.
By Elephant
Of course MCC aren’t going to hold them to it. They’ll be doing it themselves soon, they’ll have another 2400 top-band council tax payers on top of the 30,000 theyve gained in recent decades, but still claim they cant afford anything.
By Anonymous
Never heard so much rubbish. Having been in development for over 40 years . How can they get away without fulfilling the planing obligations.
The council should look again.
By RMC
By referencing the Salboy Viadux Phase Two scheme the article strays into “apples and oranges” territory.
The Viability Assessment work undertaken by Savills references the sales values of a branded residency scheme – the W Residences at St Michaels – which are considerably ahead of where the “mainstream” sales market is at.
Viadux Phase two is another branded residency scheme – part of the explanation as to why it is able to fund the 133 affordable homes lies in the very considerable sales values that such branded residencies can achieve. A very different market to which the Renaker scheme is selling into.
By Anonymous
Let’s not totally forget the council taxes that the council will collect, the jobs these developments create, the taxes those employed pay and the corporation taxes the company itself pays. Reading the comments here you’d be forgiven for thinking the only ones that benefit are Renaker!
By Cristoforo
Yet another scam to maximise profits for Developers at the expense of the poorest in society.
There should be a fixed rate of tax on all developments which should be paid upfront.
Councils are far too lenient in these matters and also quite happy to collude with Developers by agreeing to changes to projects after initial Planning Permission is agreed, mainly to the benefit of the Developers and the detriment of the community.
By Anonymous
Fair play to Renaker, they seem to have the Council and GMCA wrapped around their little finger
By Anonymous
The market in Manchester and everywhere else in the country is in a dire state. The cranes will soon disappear and we will see very few schemes under construction. The profit isn’t there, construction inflation and direct and indirect government Levys and taxes have created an unviable environment.
By Anonymous
Please increase the tallest building to 80 storeys.
By Peter Chapman
Ah the joys of socialism
By Phil Lleb
Well all of the information is before us…….if you can prove that this greedy developer is pulling the wool over the Council’s eyes please provide the evidence. Perhaps RMC with his 40 years of experience can get the ball rolling?
By Anonymous
Could one of the doubters please answer a simple but obvious question? Why would the council and GMCA for that matter not require affordable housing if a scheme could support it??
By Anonymous
Leave the poor developer alone, there’s obviously no profit in the scheme yet they are delivering it purely for the good of the city and it’s inhabitants [eye-roll]
By Anonymous
The lack of any Section 106 contribution does seem disappointing. But looking at the bigger picture, you can understand how the developers got away with it. Section 106 is intended to offset the negative impacts of development but in this case, the site was a disused brownfield with no public value. In that context, the development has only added positives: high-density housing, job creation, increased council tax revenue, and regeneration of an underused area.
From the council’s perspective, the choice was likely between leaving it as wasteland or approving a scheme that delivers clear benefits. That said, it’s a shame a compromise couldn’t have been reached to secure at least some guaranteed contribution through 106 even a modest one could have contributed towards local infrastructure or amenities.
By Thinking
Great to see the focus on maintaining the momentum of delivering high quality housing in the heart of the city. There is acres and acres of land to the periphery of the core in Beswick, Ardwick, openshawe, Burnage etc much more suited to affordable family housing
By YIMBY
Most contributors appear to be ignoring the option to re-evaluate. See Swan Street: https://www.placenorthwest.co.uk/manchester-claws-back-700000-from-swan-street-house-developer/
Viability is based on assumptions relating to construction costs and sales values, these can change.
By Local Interest
Ok, so the big developer can’t afford £114m, why settle at zero and not even ask for 10% of that? I get that the foreign investors want to part with their hard earned cash and Saudi students obviously need somewhere to live, but don’t sell MCR short.
By ROLL OVER
If the project can’t deliver affordable homes, a labour manifesto, then the project is not viable and doesn’t get built
By Anonymous
Should’ve made them redesign the project and make the public space actually public for public use!
By Anonymous
Anon 4.00pm it is also a labour manifesto pledge
By Anonymous
Anon 4.00 it is also a labour manifesto pledge
To build 250000 homes in the next 5 years!!!
On and on with the nonsense……..answer the simple question…….why would the council not secure affordable housing if it could be provided
By Anonymous
On and on with the nonsense……..answer the simple question…….why would the council not secure affordable housing if it could be provided. PNW should not allow people to make barely veiled accusations on this site about the word that no one is brave enough to use
By Anonymous
Brilliant to see Manchester’s pragmatic approach to housing delivery. The end result is more investment, more housing and increased affordability of housing.
By Ababa
To all the naive people moaning about homeless people in tents in Manchester etc. Grow up! Its not the responsibility of private companies to cater for the homeless. Companies need to make profits, thats how things work.
Its up to homeless people to seek help for themselves. Get off the ‘stuff’, find a job and act like a responsible adult….Just like the rest of us.
By Yogert
So another 2400 sucking the water supply up into holding tanks. Whilst UU are not providing 1 bar pressure in the local mains for existing residents.
By Water margin