£12 Million profit not enough for zero-affordable housing developer

City 18th January, 2017

Adam Cantwell-Corn

The Bristol Post swallows developer’s line on Blackberry Hill development

A confidential document released by the council following pressure from the Cable shows that £12 million in profit is not enough for Galliford Try, the billion pound company behind the Blackberry Hill development. The viability report shows that even when Galliford Try complied with council policy of delivering 30% “affordable” units they would still make this profit. However, due to planning law, the company is able to claim that the project is not financially viable, as they want to make at least 20% in profit. On this basis, despite initially being awarded a contract to deliver affordable housing at the site, Galliford Try argues that they should be allowed to develop the site with zero affordable homes, netting themselves over £17 million in profit overall. In 2016, Galliford Try announced record profits on its £2.7 billion turnover.

Today’s hasty Bristol Post article failed to grasp that in the strange world of planning 20% profit is counted as a cost, rather than the money leftover after all costs have been covered. (They also failed to credit the Cable for forcing the disclosure of the information, again). In failing to understand how viability reports work, the Post have published that the developer will make a £1.6 million loss. In fact it’s actually just £1.6 million less in profit.

See here for a brief explainer on viability reports and the housing crisis.