Around 20 people attended a workshop to go through the financial model for the Somerleyton Road project. This model identifies all the costs needed to make the project happen and all the possible sources of funding.
The council’s financial advisors (Grant Thornton) took the group through the model and explained the assumptions that had been used (e.g. the construction cost for a new home would be £1200 per square metre and an additional £150 per square metre if it is built above the Victoria line tunnel. These assumptions will change as the project develops and we start firming up our requirements.
We hope that sharing the model in this helps you to get involved. We want people to understand what decisions will be based on and what impact certain requirements might have on the overall project and what we can achieve on Somerleyton Road.
For example, at the workshop people told us we should aim for high sustainability standards and we discussed the option of building passivhaus homes. These are a specific type of eco home which result in very low heating bills. These homes tend to be more expensive to build but have longer term benefits to normal housing.
Grant Thornton modelled the development using 60% of the homes at private rent levels and 40% of the homes at Council target rent levels (e.g. £94 per week for a one-bed flat. They then showed that if 100% of the new homes are Council target rent, the rent levels are not high enough to pay back the borrowing and the scheme has a financial hole of £21m.
The group agreed that a summary version of the model along with the full version should be made available so we’ll upload these to the Future Brixton website next week.
We’ll also start planning site visits to schemes elsewhere in London so we can better understand how to achieve ambitious sustainability targets without adding significant costs to the project.
A series of workshops will now be organised by focusing on key aspects of the project including design, housing mix, long term management as well as returning to the financial model.
The design team and development manager will be in place in May when the serious work of preparing the planning application will take place.
Here is a sketch produced on the night which tries to capture some of the main discussion points. Summary sheets of the financial model based on three different scenarios are available on the library page.