Weston Homes forced to cancel plans to redevelop Anglia Square in Norwich as multiple issues impact on viability and make funding extremely difficult

Weston Homes has been forced to cancel plans to redevelop the 4.65 hectare (11.5 acre) Anglia Square site in Norwich after eight years, which was set to deliver up to 1,100 new homes, due to a multitude of issues which have impacted on the viability of the scheme and made funding extremely difficult.

The landmark Anglia Square regeneration was set to bring major inward investment and new jobs to Norwich and was planned to provide up to 1,100 new homes of mixed tenure, up to 8,000 sq m (86,111 sqft) of non-residential (retail, office and leisure) floorspace in addition to a community hub, community hall and new employment floorspace for a range of businesses.

The suspension of the planned scheme follows eight years of investment, hard work and consultation between Weston Homes, Norwich City Council, the people of Norwich and an extensive range of stakeholders which resulted in the creation of a local scheme and a successful Resolution to Grant Planning gained in April 2023.

Weston Homes say the reason for their withdrawl from the scheme is due to seven key issues which have led to delays in the scheme, additional costs and negatively impacted on the financial viability of the project.

The first of these is the planning delays and related costs Weston Homes has been hit with due to national government intervention in the proposed scheme. Weston Homes initial proposals for Anglia Square were granted local consent by Norwich City Council planning committee back in 2018 however the then Housing Minister, Robert Jenrick decided to call in and overturn the local planning consent and the inspector’s recommendation to approve.

Robert Jenrick’s intervention resulted in Weston Homes having to return to the drawing board and design a revised scheme to address the issues raised by the Secretary of State. There was then a further 12 months of local community and key stakeholder consultation before the current project received a Resolution to Grant in April 2023.

Secondly, during the planning delays there was the economic fallout from the COVID-19 pandemic (2020-2021), which has had a major impact on the viability of the proposed office and retail space within the scheme, with the rise in homeworking and digital retailing reducing market demand for commercial space and retail units.

Thirdly in March 2022 further delays to the scheme arose when a Nutrient Neutrality directive from Natural England blocked the building of new homes across Norfolk as it was believed housebuilding could dangerously increase nutrient levels in local wetland and waterways and harm species. Councils were told they could not give new housing schemes the go-ahead until mitigation measures were in place.

This blockage was not reviewed until August 2023 when, following criticism from council leaders, MPs and developers, the then Housing Minister Michael Gove announced that his department intended to rewrite the rules on nutrient neutrality, making Natural England’s rules guidance rather than directives. However, Gove has since backtracked on his announcement so Natural England’s directives still stand.

A key impact of the Nutrient Neutrality directive is that Weston Homes now has to pay a £4 million levy to Norwich City Council towards council housing provision, this is an offset contribution fee to the increased nutrient levels that are calculated to be generated by the redevelopment of Anglia Square and the new housing being built.

Fourthly Weston Homes highlights that from the start the financial viability of the redevelopment of the Anglia Square was always challenging which is why the site was allocated £15 million of Marginal Viability Funding from Homes England’s Housing Infrastructure Fund.

However due to the planning delays the funding rules mean that Weston Homes will now only be able to draw down £7 million of funding, resulting in Anglia Square not receiving £8 million of financial assistance which is critical for its viability. Homes England have now offered a nine-month extension which whilst very welcome will only go part way to help the funding being spent in time.

Fifth has been the huge build cost inflation of over 30% which has impacted on the calculated construction costs of the site and has made the scheme’s viability even more marginal over the last 18 months.

Sixth, whilst Weston Homes welcome the Labour-led Norwich City Council cabinet approving a community infrastructure levy (CIL) exemption of £2.3 million covering the first two phases of the development, there is still the remaining tax levy on the final two phases, which means that there will still be an additional £5.4 million tax bill for scheme, which is simply not viable given the current financial equations needed to make the project work.

Finally, the design guidelines in the Government’s Building Safety Act (2022) will result in the loss of another 100 homes within the proposed scheme, due to the required redesign of the various buildings. This reduction in units will lead to a further loss of millions of pounds from the projected revenue required for the scheme’s viability.

All these issues have had a huge negative impact on the scheme and as a business Weston Homes has now had to write-off a £7.5 million loss in its report and accounts due to the costs spent on the design, redesign and community consultation over the seven years of delays during the planning process.

These seven issues and the £7.5 million write-off have forced Weston Homes to undertake a full strategic review of the financial viability of their Anglia Square proposals and whether they can progress with the scheme. As a result of this review, it is with deep regret that Weston Homes has been forced to cancel plans for the redevelopment.

Bob Weston, Chairman & Managing Director of Weston Homes says: “It is with deep regret that after eight years of hard work, substantial staff time and resources and some £7.5 million of capital expenditure Weston Homes has been forced to cancel our plans for the redevelopment of Anglia Square. I am personally gutted to have to write-off millions of pounds of company investment and not have a new scheme to show at the end of the venture. Weston Homes has bent-over-backwards to make this work and we have worked closely with Norwich City Council and the people of Norwich to try and realise a scheme that meets both local aspirations and is financially viable. I would like to add that throughout the eight-year process, Norwich City Council cabinet and officers have worked tirelessly to facilitate the redevelopment of Anglia Square.”

Bob Weston adds: “There are sadly no winners with this outcome. The city and people of Norwich, Weston Homes and Anglia Square are all victims of this deeply unfortunate situation. This was a development calculated to create circa 2,211 direct construction jobs, another circa 288 jobs in the completed retail and commercial premises, with the residents of the new housing calculated to spend up to £36.4 million per annum in the local Norwich economy. None of this will now happen. The core contributor to a lot of the issues in this saga is the Conservative government, which seems to have no understanding of the importance of supporting the housebuilding industry, regional cities and local communities in the UK. The Ending Stagnation Report: A New Economic Strategy for Britain, recently published by the Resolution Foundation & Centre for Economic Performance, LSE provided a damning criticism of the Conservative Government and Anglia Square is a textbook case study that could be added to the report.”

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