In a new twist in the never-ending Shrubhill redevelopment saga, it turns out that two city housing associations are working on a plan to build 341 mid-market rent homes on the eyesore brownfield site.
The trading arms of Port of Leith and Dunedin Canmore Housing Association are seeking financial support from the council, in the form of a low interest loan of £37.8m, a report to the city finance committee reveals.
The loan will help them take over the former tram depot site, which is currently owned, on paper at least, by a firm called Frasers Hamilton (Shrubhill) Ltd, that is currently in administration.
In a bid to sell the Shrubhill site, the Frasers Hamilton administrators have also been working on a new lower density planning application, which would see the number of homes built on the site reduced to 160. That plan was not entirely uncontroversial, during the public consultation phase.
However, it’s not clear that even if planning permission were to be granted for the Frasers Hamilton lower density proposal, that development would begin any time soon.
This is because the the current owners would need to sell the site on to another firm with the cash to build it.
Council officers are clearly aware of these risks with the Frasers Hamilton plan, and have backed a higher density use of the site, delivered through the Housing Associations, using planning permissions that that are said to be in place already.
In the report, where they recommend granting the loan to the housing associations, they advise councillors: “This site has been undeveloped for a number of years and there are risks that a lower density planning permission could result in a reduced number of affordable homes or that the site may remain undeveloped until the market improves.”
They go on to list other benefits of the proposal, including the fact that it would support 500 construction jobs. Sadly, this latest proposal to surface does not affect the even bigger eyesore, next door Shrubhill house, which is owned by UNITE.
But unpicking the business model, proposed by the housing associations gives some food for thought.
Of the 341 “affordable” homes that would be built as part of the new plan, it turns out that 256 of them will be bought by a private developer – from the housing associations, over the ten year period following their construction.
The plan leaves just 85 in the ownership of the two housing associations after ten years, and they would need to refinance their borrowing at this point. The report admits that if they can’t do this at the time, then they’d have to sell off even more of the houses. None of the flats that will be built are apparently ring-fenced for letting at lower “social rent” levels either.
So, it seems entirely possible that all the homes could be sold off to private owners eventually.
Although sitting tenants in the new development would be given first option to buy their homes, one reason for seeking out a mid-market rent house in the first place is because of the lack of affordability in the private sector.
In many senses then this plan might be regarded more like a complex way to subsidise the private sector construction industry and the jobs that it supports – rather than a long-term means of securing affordable homes in the heart of the city.
But of course, none of this precludes another advantage of the proposal from a political perspective – whoever is Housing Convenor in 2019 will still be able to stand in front of these proposed flats and claim that they’ve built hundreds of “affordable new homes,” when it’s time to cut the ribbon.
However, even if councillors agree the loan there are a number of other hurdles that the two housing associations and the council will need to overcome even if spades are ever to go into the ground.
They will still need to secure the purchase of the site from the current owners, and they’ll need to get approvals from their own boards and the Scottish Government as well as ensuring the deal meets the EU state-aid tests.
And even if they manage all that, then the development may not be complete until as late as 2019.
You can read the full council report on the council website.
Do you support the return of a higher density proposal for the Shrubhill site? Should the council be providing financial subsidy for proposals that give no long term guarantee to provide social housing? Or do you prefer to see it developed at a lower density? Let us know your thoughts.
Photo credit: Chris Scott