Council waives developer's fees over profit fears

Two new six-storey apartment blocks in Rugby may not produce any social housing or infrastructure money because the developer is not expected to make enough profit.

Rugby-based developer Stepnell received planning permission from Rugby Borough Council in August 2023 to demolish the Myson House office block and replace it with homes.

The firm expects to make less than the industry-standard minimum of 20% profit from the project, according to figures independently verified by the council.

Councillors have agreed to waive the developer's obligations as a result.

Under the original planning permission, the developer would have had to provide a percentage of affordable homes and payments to various public organisations for things like education, libraries and healthcare.

Under the new agreement with the council, there is a caveat that if the development makes more money than expected, parts or all of the original obligations could kick back in.

The original permission declared that at least 20% of the units would be affordable homes, with more than £796,000 due towards education provision and more than £42,000 wanted by the NHS to help provide primary care.

Councillors unanimously said yes to changing the outline permission to remove those obligations following the firm's viability assessment.

A further decision will take place on the proposed layout, scale, appearance and landscaping of the development, including the exact number of apartments.

A submission for Stepnell had said there was little demand for the dated office block as it was, and it was unsuitable for conversion.

It said it was willing to take a higher risk to change it to residential use, rather than having the block near Rugby railway station stand largely vacant and underused.

The council said it will look again at the agreement when the majority of the units were completed, so it had a real indication of the building costs and market values.

This news was gathered by the Local Democracy Reporting Service which covers councils and other public service organisations.

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