Regeneration plan for former Vauxhall Motors site in Luton on hold after developer's plea amid rising costs

Plans for a regeneration project for a former Vauxhall Motors site in Luton have been put on hold after the developer’s plea to be excused paying planning contributions.

Rising costs prompted SSRE Investment 2 Limited to ask to vary a legal condition on its December 2021 planning permission for a mixed-use redevelopment on the 56-acre Kimpton Road site.

The Napier Gateway project includes apartments, retail and leisure, a hotel, and a medical wellbeing centre, according to a report to the borough council’s development management committee.

Planning team leader Clive Inwards said: “A financial viability assessment concluded phase two of this scheme is unviable with the currently agreed levels of contributions for affordable housing, education and waste management.

“This puts the council in a difficult position. Possible outcomes could be the applicant walking away from the site. Alternatively LBC might have to defend its position when an independent expert says it’s unviable.

“While this is disappointing, our view is it should be accepted. Phase two would have some benefits, providing an extra 592 new homes.

“The Napier Gateway site is an important regeneration project in this part of the town. It would be detrimental to the Local Plan objectives if this stalled.

“Any uplift in the viability position can be captured by a review mechanism. Officers have discussed with the applicant giving Luton residents the first chance to buy properties.

“There would be wider benefits associated with transforming this area, such as job opportunities and extra consumer spending locally.”

Head of development consultancy at Newsteer real estate advisers and registered valuer Richard Garside for the applicant warned: “Changes are needed now to deliver phase two.

“Build costs have continued to increase by nearly 38 per cent at an extra cost of £32m, without a rise in value and slowing sales rates.

“My client is happy to enter into talks about giving locals first opportunity to buy good quality, affordable new housing. We haven’t got the details yet over exactly how that might work.

“Changes to the Section 106 agreement would prevent this site sitting empty for many years, which would benefit nobody and make future delivery increasingly difficult.”

Liberal Democrat Barnfield councillor David Franks said: “Once again we’re asked to feel sorry for these poor property developers who can’t afford to provide things which are only necessary because of their development.

“There’s the additional convenience of obligations having been put off from phase one. It provides time to think why you can’t afford to pay them at all.

“And there’s this marketing to Luton residents without anyone having an idea what that means.”

Labour Farley councillor Mahmood Hussain explained: “I’m seriously concerned if we follow this pattern we’ll get a number of other developments where everyone will say ‘we can’t afford the Section 106 contributions’.

“We’ve a statutory duty to provide school places and a serious need for affordable housing. There are almost 2,000 families in temporary accommodation. I can’t support this to make an exception.”

Councillors voted to defer the plans for further talks with the applicant over an initial marketing option to Luton residents only.