Sam Davies

Profit and Loss

This week, let’s explore the debate about the ‘benefits of growth’ through the experience of one local development, 291 Hills Road.

This project has generated considerable public interest ever since the plans for the demolition and replacement of ‘Raylands’, the existing Victorian house, were first submitted back in 2017. Although there’s still another six months to go before it’s completed, we’re now in a position to at least start assessing what’s been gained and at what cost.

What has been lost?

The most visible loss is the building itself, a characterful Victorian property in its own right and characteristic of the neighbourhood as described in the City Council’s 2012 Hills Road ‘Suburbs and Approaches’ study. Raylands wasn’t a Listed Building, or even recognised as a Building of Local Interest but it was a significant historical building on a visible corner plot, integrated into the streetscape of the area. This was afforded no weight in the planning process.

Looking beyond aesthetics and local character, Raylands’ size also accounted for considerable embodied carbon, now lost through demolition. This factsheet from UCL’s Engineering Department explains why, in carbon accounting terms, retrofit/refurbishment options offer many advantages over demolition and rebuilding. This principle was summed up by distinguished architect Carl Elefante: “The greenest building is the one already standing”. In the case of 291, there was no reason why it could not have been retrofitted to meet C21st standards, either as a single family home or subdivided for multiple occupants. Instead, it has been replaced by a carbon-intensive concrete and glass structure.

The scale of the redevelopment also required the removal of half of the mature trees on the plot, with all the accompanying biodiversity loss. It remains to be seen how many of the trees which the planners required to be protected from the developers’ chainsaw do actually survive the aftermath of the construction process, especially the deep excavation of the basement parking bays.

Finally, the footprint of the building relative to the size of the plot has made it hard to contain its negative externalities. There have been repeated issues with contractors parking on the pavement on Queen Edith’s Way, blocking the shared use path and damaging its surface. And the need to upgrade the utilities supply to the property has led to two weeks’ of lane closures on Hills Road (electricity) and now a full three week closure of Queen Edith’s Way (sewer upgrade). These have had a significant effect on people’s ability to travel safely and conveniently around the area, particularly the loss of segregated cycle provision on Hills Road which has encouraged cyclists on to the pavement, bringing them into direct conflict with pedestrians. Congestion, air pollution, lost productivity – I could go on.

And the promised upside …?

This is the point at which we shift focus away from the material cost to our neighbourhood and explore instead the nature of the public goods which, so the pro-development narrative tells us, this development will bring about.

The most obvious proposition is that it’s replaced housing for a single household with housing for 15 households, and that this should override all other considerations due to pressure of demand on Cambridge’s housing market. But as I’ve emphasised in previous posts, there is no possibility that we can build our way out of what is an affordability crisis because of Cambridge’s almost unique status as a magnet for global investment.

So the question then is – who is buying the property and what they intend to do with it? Is it individual owner occupiers, or is it investors who snap up Cambridge flats in particular because they know they will generate high yields as rental units? BBC journalist Mark Williamson has highlighted concerted efforts to promote Cambridge properties to the Chinese investment market, on websites like this and YouTube channels like this. Homegrown agents such as Savills are also in on this extremely profitable act. Note that the Savills website quotes the price of flats at 291 Hills Road in both UK and Hong Kong currency.

And happily for them, investment buyers are responding enthusiastically to the offer. I checked the Land Registry records earlier this week and, of the five sales recorded so far at 291, three have been made by an apparently Far East buyer via a London solicitor; one by directors of an investment company with £12m of properties; and one (perhaps) by someone who might actually live there.

Note also that the new flats at 291 are priced very much at the top end of the Cambridge market. The one bed flat currently on sale for £440k is the fourth most expensive property of its type on Rightmove today. Put down a 20% deposit (£88k) and you would still need an annual household income of £80k to qualify for a mortgage. The annual average salary within the Cambridge is £36k. And even that ‘average’ figure is distorted by the very high earners at the top of the distribution curve – a different picture would emerge by looking at the incomes for the 25th and 75th quartiles.

Of course, none of this is news. Savills noted the discrepancy between local sales and local purchasing power in a report they undertook for the Greater Cambridge Partnership back in 2017 (p22): “The large amount of new supply absorbed at values over and above what might be expected from the local income distribution suggests that sales may be being supported by investor buyers and higher salaries (potentially including London commuters).”

What all of this means is that, contrary to the impression presented to Planning Committee, the high cost of owning or renting these flats makes it shrinkingly unlikely they will be occupied by keyworkers at the Biomedical Campus, thus yet another missed opportunity to enable low-paid workers to live close to where they work.

However, an often-voiced proposition is it doesn’t really matter who buys the market housing provided that developers are required to deliver a proportion of affordable housing alongside. Well, that rather falls over when developers – such as those at 291 – submit viability assessments to planners which enable them to escape this responsibility. From 17/1372/FUL “A development appraisal which has been assessed by an independent valuer confirms that the development cannot support any affordable housing”.

You might find that conclusion surprising. I certainly did. So let’s quickly cross-check what we know so far. The site was sold in 2017 for £1.7m. The new development will comprise 1 x studio flat (£300k); 5 x 1 bed flats at £440k generating sales revenue of £2.2m; and 9 x 2 bed flats at £480k generating £4.32m. Of course, the developer may not achieve these numbers but as a rough estimate, they will get a return of £5.1m (£6.8m – £1.7m) after paying for the site and before deducting building costs, professional fees, etc.

It seems extraordinary to me that this is not deemed sufficient to make a contribution towards the city’s acute need for affordable housing; but because the details of these viability assessments are deemed to be commercially confidential and are redacted, we cannot see the numbers for ourselves. However, what we do know is that the project has contributed £36k in S106 payments ‘to mitigate the impact of development’. £36k on an assumed total sales revenue of £6.8m represents 0.5% of the value of the project coming back into our neighbourhood.

291 Hills Road is just one example of what’s happening in our city. There may be others where the profit and loss balance looks rather more favourable. But in either case, we deserve much more detailed scrutiny about what we are actually getting out of this, and who the winners and losers are.


Sam Davies


  • We despair! Thank you for your detailed research but what power does the ordinary citizen have to counter big investment corporations, here or elsewhere.

  • Another on the nail evaluation, Sam. Hard to believe that NO OTHER COUNCILLOR is bright enough to notice what’s going on.

  • Hi Sam,

    I agree those viability assessments are simply not credible. Together with Lewis Herbert I was involved in what I think was the first of these, this time relating to the old Cambridge Water site on Rustat Road.Planning Councillors were bombarded( bamboozled?) with complex calculations, lots of unfamiliar acronyms, redaction of information through so called commercial confidentiality, all of which said the developer would struggle to make a profit. So the number of affordable units was cut drastically.

    But the sort of simple common sense calculation you did with ‘291’ shows the scheme would be profitable. Indeed in this case developer 1 sold the site to developer 2 making several £m profit compared to purchase price and there is little doubt that developer 2 also made a handsome profit.

    I thought then that the Planning Officers made it really difficult for lay Councillors to properly understand and engage with the methodology of viability calculations. It would seem that little has changed since then.

    And as far as we can see there are very few owner occupiers in the 100 plus apartments. Many are BNB; will 291 be the same?

  • “…there is no possibility that we can build our way out of what is an affordability crisis because of Cambridge’s almost unique status as a magnet for global investment.”

    This is probably the most insightful comment in this article for me, but is something that most people don’t get.

    It’s the same effect as Quantitative Easing: if you pump more money into the system then inflation takes off.

    That’s precisely what’s going on in the Cambridge house market. The only way to get out of the house price trap is to make sure you’re the personal recipient of some of that investment cash.

  • Hi Sam,

    Thanks for the excellent article – I have a question; does the (pitifully small) S106 calculation take into account the impact (inconvenience, environmental, etc) of the 2 week closure of Queen Edith’s Way at the junction with Long Rd and Hills Rd? That would seem reasonable.
    I am presuming that the closure is part of the development works, apologies if it not.


  • The noise, the upheaval, the deliveries all at rush hour on Monday mornings, the waste of resources, the loss of greenery, and for what? Help to buy is advertised, what are the conditions I wonder?

    overseas owners what’s that all about, the promise of local housing for local workers is that now defunct?

    Keep going Sam and we thank you for your efforts

  • Thankyou for writing this Sam. What are residents supposed to do in situations like this? We can see exactly what is going on, but are unable to oppose such schemes. So very sad to see such a beautiful old house torn down.

  • Thank you for this article – one despairs of the Planning Department and what it allows BUT the recent demoting of the Uttlesford Planning Department by the Government is an alarming happening, Because the planning department were refusing permission for what they considered unsuitable development in their beautiful area, they have now been virtually bound and gagged, their powers removed and are to be overridden on decisions. Democracy seems to be being eroded at an alarming rate and I despair both for our once beautiful city and the countryside surrounding it.

  • Age 19 I came to work and live in Cambridge now on 3rd year of a Biomedical Degree, I also work and volunteer and I could not afford to buy now or ever, I could not even rent on my salary in Cambridge.
    I like many of my friends work for the NHS, I work 9-5 they work 13 hour shifts. They rent one room from £600 -£800 a month depending on how near to work, nearer is better due to long hours, night shifts reducing travel but catch 22 nearer and rent then goes up.

    “A single person in the UK needs to earn at least £13,400 a year or £157 per week for a minimum standard of living according to the Joseph Rowntree Foundation” with 30% on average of your income spent on rent. In Cambridge due to costs of housing renting my friends tell me takes 45% + of their income never enabling them to save to buy, which on their salaries they cannot compete with investors and property developers buying to then rent (they cycle of affordability to rent or buy just goes on).
    The properties on Hills Rd say they support Right to Buy – can the scheme the Gov set up really enable an average income person to buy in Cambridge or compete with bids on properties at 400K for 1 bed with a 5% deposit – who can save 20K here?

    400k mortgage over 25 years £1,897 monthly cost – many do not earn that much a month!
    Then there will be monthly service charges, bills, food, travel etc. on top!

    The Help to Buy scheme offers an equity loan where the government lends first-time buyers in England money to buy a newly built home.
    This must be used to buy your main residence, and can’t be used to buy a second home or a buy-to-let property.
    You need a deposit of at least 5% of the purchase price.
    You can borrow 20% (40% in London) of the purchase price. This amount is interest-free for five years.
    After the interest-free years, you’ll be charged 1.75% on the outstanding amount as interest. This fee will increase each year by RPI plus 1% You only repay the interest, not the equity.
    The amount you owe isn’t fixed. …
    Your loan will become more expensive. …
    Only certain lenders offer Help to Buy mortgages. …
    It can be hard to remortgage. …
    Help to Buy is only available on New Build Homes. …
    You need permission to make improvements.

  • Not mentioned – 15 – 20 residents cars exiting immediately onto one of the city’s busiest junctions, adding to congestion and pollution. As you say Sam yet another ill-conceived residential scheme granted consent ignoring local comments and commonsense. Repeated failure to provide affordable in several schemes is a disgrace, but even affordable is not affordable for so many in Cambridge, and Sec. 106 payments are so often paltry relative to the developers profit, and is the money always spent appropriately??

  • Thank you for clearly examining where the profit arises and where the loss is felt in this example. What would it take for a realistic profit/loss account to be required as a public document before permission is granted and available to focus discussion then provide subsequent comparison. Might be the only way for the planning process to absorb this learning about the gap between claims as to local benefit and the reality that ensues.
    An example is the Stapleford retirement village, which was approved at appeal in December. The inspector made much of the gap in retirement housing that is estimated for the Cambridge area and the contribution this will make. However, those of us who attended the consultations were told clearly by the developers that they would be looking to market these units globally.

  • This development may have been responsible for the demise of the original developer, Gibson Developments Limited.

    Gibson Developments purchased “Raylands”, the original detached house on the site, for £1,715k in October 2017. After a long struggle, they finally obtained planning permission to develop the site, and sold the property on for £1,700k in February 2020, £15k less than the original purchase price. Along the way, they incurred substantial costs which totalled £751k (finance costs £281k), professional fees £206k, stamp duty £169k and disposal fees of £95k). As a result, they made a loss of £766k (i.e. £15k + £751k).

    In April 2021 Gibsons went into voluntary liquidation and the company was wound up.

  • The City Council’s Planning Committee turned down the original proposal because it didn’t make any provision for affordable housing, which would have been helpful for would-be buyers working on the Biomedical Campus site. Gibson Developments presented figures to the planners to demonstrate that they expected to make a profit of just £55k (1%) on sales of £5,452k, assuming 14 flats. BNP Paribas carried out an independent review which confirmed Gibsons’ figures. On that basis, the development was granted planning permission with no affordable housing.

    Sam is now forecasting sales of £6.8m, which is an increase of £1.35m on the original forecast. This is partly because there are now 15 flats, 1 more than the original proposal.

    When the Planning Committee gave their approval, there was discussion of a financial “clawback”, in the event that the financial results were better than forecast. The planners should certainly review the financial results when all the flats have been sold.

  • So well researched, Sam, and so depressing. Greed and greenwash. If this is the way things work, then sooner or later Cambridge will strangle itself as no-one will be afford to live here, and there will be no key workers to be part of this unequal society.

  • Perhaps we need our own plan for the area but this is time consuming and may be ignored by developers even if adopted.
    Great Shelford has a local charity which develops housing for local needs. Another good idea.
    I have heard that flats have been purchased for babies to facilitate their future study at Cambridge university and remain empty for many years. Another purchaser of a house at Trumpington on hearing it only had one parking space immediately purchased the house next door.
    A recent newspaper article announced Cambridge housing had become more affordable with average salaries rising due to new incoming professionals.
    The pricing out of purchasers seems like a form of “social cleansing” dislocating families and communities.
    Oh dear and the government thinks the growth is marvelous.

  • Hi Sam,

    I am ashamed to have taken so long to thank you for your excellent ‘Profit and Loss’ blog regarding 291 Hills Road. But I do thank you for such a clear, detailed and pertinent piece.

    And of course there must be many similar examples in the city which will have made powerless residents feel both complete frustration and shame. Shame at the greed so nakedly involved in these developments when so many people are unfairly priced out of ever owning a home of their own in Cambridge.

    At the opposite end of Queen Edith’s way from Hills Road, a four house development which mirrors some of the aspects raised in your blog, is likely to be completed and on the market within the next few months.

    In excess of 30 trees were removed and a green corridor destroyed in order to build it. Gone is the local wild fox, the deer, the bats and the cowslips. In their place the four bulky homes, which loom over eight traditional semis, have a footprint so wildly disproportionate to the size of the plot, that their ‘gardens’ will be mere strips around the houses.

    We learn that the smallest of the four homes will go on sale for almost £1.7 million. No prices are yet available for the remaining three properties.

    There is no wonder that local residents see it as a monument to greed.

    Most interestingly, a letter in today’s Guardian on the chronic housing shortage and sent in by a district councillor in south Oxfordshire points out that “ you cannot buy a house in Oxfordshire (either old or new) unless you are, or intend to become a resident”.

    She goes on to argue that all homes should be sold for residential purposes only, ending the problem of housing for investment. There will be many in Cambridge who look at the housing inequality which surely blights our city and would agree with her.

    Thank you again,