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South Kesteven District Council makes loss on Wherry's Lane housing development in Bourne

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South Kesteven District Council is forecasting a £132,000 loss on its housing company’s first project in Bourne.

According to a now-hidden document, the authority hoped to budget for a £243,000 profit from Gravitas Housing’s Wherry’s Lane build.

But the figure is £375,000 short of the desired outcome, meaning a £132,000 loss is forecast due to legal and council costs.

The Wherry's Lane development in Bourne
The Wherry's Lane development in Bourne

Gravitas was formed in 2017 and gained permission for 20 apartments and five townhouses built in July 2018. Work started in November 2020.

The public report before councillors said 10 of the apartments have now been sold, with seven reserved. But none of the townhouses has been sold or reserved and officers have since agreed to reduce the price by between £17,000 to £25,000.

In a bid to reduce the losses the scheme is due to make, the company has also made repaid £900,000 of a £1.9m loan – taking the interest charge from £178,000 to £154,000.

The Gravitas budget sheet for Wherry's Lane
The Gravitas budget sheet for Wherry's Lane

According to the Project Forecast Outturn Profit and Loss Account – which was published with the agenda but later removed – the authority is projecting to have made £116,000 more on sales than budgeted.

But it has also spent £397,000 more on building and selling the properties than it wanted.

This includes an extra £377,000 on construction, £21,000 on consultants and £94,000 on finance costs and South Kesteven District Council recharges.

The document attempts to explain the variance through changes to feasibility designs, market prices leading to increases in construction costs, delays in receipt of income and an increased need for “bridging loans”.

Covid-19 also features.

The Wherry's Lane development in Bourne when it was under construction
The Wherry's Lane development in Bourne when it was under construction

South Kesteven district councillor Ashley Baxter (Ind - Market and West Deeping) said the figures raised important questions around why South Kesteven was investing in “unaffordable” private housing over council houses, why the figures were not being discussed in public, and what it meant for the council's other companies InvestSK, EnvironmentSK and LeisureSK.

“The council has a target of building more than 100 council houses on average per year, but in the past three years it has completed only 18 in total, and those were small modular units,” he said.

“It is lamentable that the council has wasted so much time and effort playing at being a private sector housing developer while failing dismally to fulfil its obligations to provide affordable homes for people who really need them.”

Coun Ashley Baxter
Coun Ashley Baxter

He suggested Gravitas may not be “disrupting the housing market” as it was pitched, and that the report next week contrasted with reassurances the council had been given that “estate agents have been trying their best to stimulate interest and repeated reductions in price”.

Coun Baxter has long been a critic of the council creating private companies, with two further initiatives - DeliverSK and HomesSK - so far not moving ahead.

South Kesteven District Council leader Kelham Cooke has been contacted for further comment.

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