Manhattan Loft Corporation and St George are understood to have cited this as the reason for their withdrawal from the shortlist for Founders Place. It is one of the first indications that tighter stipulations about affordable housing are deterring housebuilders.
The 600-unit housing development has an affordable housing tariff of 50% and Lambeth council has refused to help out through its social housing grant. The effect of this is that the developer is required to pay for the construction of the homes.
Some councils, believed to include Bristol as well as Tower Hamlets and Southwark in London, have warned developers that they are unwilling to provide money to subsidise developments through social housing grants. The councils say this is because the amount of money they receive from the Housing Corporation to cover such grants has failed to keep pace with the increased demands made for affordable housing.
Experts claim that developers are now facing a double whammy: on the one hand councils are refusing to hand over social housing grant cash and, on the other, the same councils are making increasing demands over planning-gain deals.
Several consultants, including Drivers Jonas, believe this could lead to a decline in the number of houses built.
Richard Petty, head of residential valuation at Drivers Jonas, said: "This is affecting the work that our developer clients do. From the developer's point of view it clearly affects the viability of their schemes." Another expert said developers could find themselves paying three times the amount they now pay for social housing.
The House Builders Federation echoed this warning. John Stewart, economic adviser to the HBF, said: "If a housebuilder owns the land and a local authority subsequently ups the affordable housing demand then that will have to come out of the developer's profit. Housing levels are going to fall even further."
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