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.
