Aylesham Village Expansion


Client: Dover District Council

SQW Land & Property (as BBP Regeneration) was originally commissioned to provide appraisal and development management advice to the masterplan for an urban extension to Aylesham village. We were subsequently appointed by the landowner, Dover District Council, to manage the procurement of a development partner for the scheme. A joint venture development agreement was entered into between Ward Homes (now part of the Barratt Group) and Hillreed Homes (now part of Persimmon) in 2007. In accordance with the agreement, the developers secured outline permission for the scheme and a detailed permission for an initial phase of housing.

We had originally advised Dover District Council on the structure for the joint venture. In essence, this involved securing over £20 million of on and off-site infrastructure funded through the value of the council's land for the initial phases of residential development. This then left the Council with fully serviced development land for later phases from which it would be able to realise value. However, the financial crash in 2008/2009 led to a situation where a number of the assumptions underpinning the financial model, particularly those relating to sales values and rates of sales, were no longer valid. In addition, there was less grant available to support the affordable homes. The overall effect was to significantly reduce residual land value and consequently the affordability of the infrastructure. In short, the project became unviable and stalled.

We were instructed to lead negotiations with the Council's development partners to identify how the development arrangements could be re-structured to achieve viability to enable the project to proceed.

Three key areas were investigated:

  • First, we held a number of workshops to examine the scope of the infrastructure requirements and the phasing. We identified scope for deferring certain items of landscaping improvements and off-site highways which were desirable rather than essential for the first phase.
  • Secondly, working with the developers, we undertook a value engineering exercise on the costs of infrastructure. There was a firm desire not to reduce quality but through re-design of key elements, and with the help of a fall in prices, we were able to identify savings.
  • Thirdly, we re-visited the area of land the Council needed to make available to fund the revised scope of infrastructure costs. This was difficult for the Council, but it concluded that delivering additional new homes was a strategic priority, and the option of mothballing the asset was not an attractive one. The Council agreed to make additional land available to compensate for the fall in land values. We also explored publicly managed programmes to support stalled sites, but for a variety of reasons the project was deemed not to meet the criteria.

The changes were agreed with the developers and a Deed of Variation to the Development Agreement was entered into. This required the developers to submit variations to the planning permission to reflect the agreed changes. We undertook all of the financial modelling and prepared market and viability reports for the Council. We also prepared RICS Red Book valuations to support the council entering into the revised arrangements by satisfying the 'best consideration' requirements of the Local Government Acts. The site is now being developed out.

Aylesham