THE Isle of Man Government has signed a guarantor agreement with a developer, obliging it to buy any homes on a site at Douglas that are left unsold.
But Social Care Minister Chris Roberthshaw MHK defended the ‘section 13’ agreement with Haven Homes Ltd, the developer behind a scheme, currently under construction, to build 36 first-time-buyers’ homes at Pulrose Farm.
Under a clause in the agreement, the government would agree to purchase any house that the Department of Social Care failed to provide a nominee for within six months of it being completed.
Graham Cregreen (Malew and Santon, who raised the issue in the House of Keys, claimed the agreement would expose the taxpayer to a potential liability of £5.4 million if the homes went unsold.
Mr Robertshaw replied that was a hypothetical situation because ‘we have absolute confidence that the sales will take place’. He insisted his department and the Treasury were satisfied that entering into the agreement was in the public interest and posed ‘no material risk to public funds’.
He added: ‘The development risks rest solely with the developer.’
The Minister explained the purpose of the clause was to ensure all housing developed on the site under the current planning approval will be made available for affordable housing. ‘Given the changes to the economy in the last few years, and the downturn in the private housing market, this assurance has also provided the developer with a guaranteed market for the houses, enabling him to progress the scheme with certainty,’ he said.
He said there was ‘no substantive risk’ of the homes remaining unsold as there continued to be a very strong demand for suitable properties for first-time buyers, with 715 people currently on the first-time buyers’ register who have expressed a first preference for properties in the Douglas area.
The Minister said the first eight completed properties, out of the total of the full 36 at Pulrose Farm, should be ready this summer, and he said his department had received ‘very considerable interest from potential purchasers whose names are included on the first-time buyers’ register’.
He said this sort of ‘special arrangement’ was ‘unusual, although not without precedent’, section 13 agreements having been signed in connection with a 17-home development at Foxdale and a 16-home scheme called Cronk Grianagh in Braddan.
One-time opposition leader and now Education Minister Peter Karran MHK said the government had to look at imaginative ways of using other people’s money. ‘Was the MEA imaginative?’ asked Mr Cregeen.