Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Government's £60k boast 'hides true cost' of homes

NEWS - Legal experts say affordable homes price excludes remediation and planning

THE GOVERNMENT'S competition to build £60,000 houses is masking the true cost of development, according to legal experts.

Tim Johnson, associate partner in planning and environmental issues at Davies Arnold Cooper, said that there was a still a raft of 'unanswered questions' behind the initiative.

The practice's clients include William Verry and Geoffrey Osborne, two of the nine companies shortlisted by English Partnerships to go through to the final stage of the competition. The winners have until early October to submit bids.

Mr Johnson said: 'We should not be reading too much into this initiative so far as the real costs of development are concerned. The devil will be in the contractual detail of negotiations between developers and English Partnerships.

'You've got £60,000 for design and construction costs ? for 30 per cent of the units across the 10 sites ? but what is not included is remediation costs, infrastructure and section 106 agreements.' He added: 'We are still required to get planning permission and the Government is hinting that the prices will not be linked to inflation.'

David Weir, DAC's head of construction, said: 'The sale costs will be the real price, over and above design and preliminaries and profit.

The real cost is down to the unknown items.' Remediation costs for the 10 sites ? nine owned by EP and one by the South East England Development Agency ? are not yet known.

An EP spokeswoman said: 'The costs that may arise are from the need to carry out work specific to individual sites, such as land remediation. Finance, sales and marketing costs are also excluded from the figure to maintain a pure target construction cost.

'Where additional significant expenditure may be incurred to deal with issues such as land remediation, bidders have been asked to identify potential costs in their stage three submissions. It is expected that these costs, depending on their significance, will be taken into account and ref lected in the financial offer for the land by bidders.' An ODPM spokeswoman said: 'We have made it clear all along that the competition was to design and build a house with a £60,000 construction cost. Remediation costs of the land have not been worked out yet and are being dealt with by EP.'