A developer behind a 119-home scheme at Home Farm in Deeping St Nicholas has been allowed to withdraw £685,000 in promised contributions towards local health and education facilities, after a viability review found the project would not be financially viable under its original planning agreement.
South Holland District Council approved Emerald Homes’ application to amend the Section 106 agreement attached to the development. The revised deal removes the financial contributions and the requirement to provide affordable housing, although the developer has pledged to build a village hall it says will cost £1.2 million.
An independent viability assessor has recommended that the council consider adding a “clawback” clause. Such a clause could allow the authority to recover money later if the development becomes more financially viable during construction or delivery.
What has changed at the Deeping St Nicholas development?
The original Section 106 agreement, signed in 2021, required the village hall to be built once 50 per cent of the site had been completed. Under the newly agreed arrangement, construction of the hall is expected after 25 per cent of the development has been completed.
However, Emerald Homes will no longer have to make the £685,000 in health and education payments required under the earlier agreement. It will also not have to include an affordable housing element in the scheme.
The development is expected to increase the population using local services. The Lincolnshire Integrated Care Board said it was disappointed that the health contribution would be lost. Of the total amount, £609,390 had been intended for local healthcare provision.
In an objection to the application, the ICB said the absence of funding could affect the additional capacity needed at Munro Medical Centre and Beechfield Medical Centre. It said the requested contribution was linked directly to the expected population increase from the new homes.
Developer says original agreement made scheme unviable
Emerald Homes submitted a viability study claiming that the original Section 106 agreement would have left the project with a “negative viability” of £5.28 million.
The developer said the revised proposal would still result in a negative viability figure of £2.28 million, based on an assumed developer profit of 17.5 per cent.
CPV, the independent viability assessor brought in to examine the figures, agreed that the scheme would not be viable without an amendment to the Section 106 agreement. Its assessment modelled the scheme with no affordable housing and no Section 106 contributions, while still including the community centre.
That model produced a residual land value of £933,744, compared with a benchmark land value of £1,560,600. The assessor said the result did not meet the viability threshold and attributed it to poor market conditions, describing those conditions as a national issue.
“With nil affordable housing and nil S106 contributions (but the community centre still factored into the model) the scheme generates a residual land value of £933,744.”
CPV recommended that any clawback provision should be retained so the scheme’s viability could be reassessed at a later stage while the project is being delivered.
“We would strongly recommend that this is retained to allow viability considered at a later date, during the delivery of the project,”
Council position on possible clawback remains unclear
Despite the assessor’s recommendation, South Holland District Council had not confirmed whether the revised agreement would include a clawback clause or explained how such a provision would operate.
The council had not responded to requests for clarification from The Spalding and South Holland Voice at the time of its report. That leaves the future prospects of recovering any health or education funding dependent on the final wording of the amended agreement and the development’s financial performance.
The decision affects planned services in and around Deeping St Nicholas, including local medical capacity, while bringing forward the point at which the village hall is due to be built. The development’s revised obligations now include the hall pledge but no affordable housing or direct Section 106 payments for health and education.