Understanding the Developer’s Position on £30M Upgrade Cancellation

It is no surprise that recent news stories covering the dispute between Ashford Borough Council and property developer Hodson Developments over a £30M Section 106 requirement to build new infrastructure and community facilities have focused on the Council’s frustration.

The public discourse has naturally concentrated on the Council’s decision to suspend further building works while it awaits the outcome of an inquiry hosted by the government-based Planning Inspectorate.

Less attention has been given to the possible reasons why the developer has not proceeded with the funding as initially expected, despite there being a plethora of likely possibilities. The Commercial Property team here at Wolferstans works closely with developers, covering schemes or projects of every size and we understand the challenges faced by developers.

We help them address the challenges they face, whether refurbishing and changing use of existing properties or undertaking ground-up developments. We have experienced many of the likely issues leading to this developer’s decision to seek release from the requirement to stump up £30M for infrastructure upgrades and will highlight a few in this article.

Economic and market conditions

The UK property market has been facing significant volatility since the Chilmington Green garden village project received planning permission in 2014, with rising construction costs, interest rate hikes, a global pandemic and broader economic uncertainty.

Developers operate in a high-risk environment and when initial agreements are made, they often depend on financial forecasts that may not eventually align with current market realities. If the developer’s cost projections have changed substantially since the original agreement, they may find themselves now unable to commit £30M to infrastructure without jeopardising the wider viability of their project or their future.

Shifting viability of the development

Large-scale housing projects rely on financial modelling that balances land acquisition costs, construction expenses and projected sale values. If housing market conditions have shifted, particularly in terms of demand and house prices, then the financial return on the development may no longer justify such a significant additional investment. If the developer is struggling to maintain profitability, they may seek to renegotiate obligations that were initially agreed under more favourable conditions.

Legal or contractual ambiguities

The specifics of the agreement between Hodson Developments and Ashford Borough Council remain unclear in current public reporting. However, it is possible that the developer believes the agreement was conditional rather than absolute, meaning their obligation to pay may be linked to certain planning milestones, such as the completion of 400 homes in this case. If there are ambiguities in the contract, the developer may be holding back funding while seeking legal clarification or renegotiation.

Delays and government contributions

In many large-scale developments, infrastructure projects are funded through a combination of private investment, public funding and Section 106 agreements, which require developers to contribute towards local infrastructure as part of planning obligations. If the local authority or national government has delayed its part of the investment, or if expected funding has been withdrawn, the developer may be reassessing their financial commitment. They could be seeking additional contributions from public sources before committing their own capital.

Infrastructure costs have escalated

The costs of large-scale infrastructure projects have been increasing significantly due to inflation, material shortages and supply chain issues. From July 2020 to July 2022 alone, there was a 46% surge in overall building material prices and despite a slight 0.3% decrease in prices in the past 12 months leading up to March 2025, prices remain significantly higher than a decade ago.

If the original road upgrade was expected to cost significantly less than £30M, the developer may now face an expense disproportionate to their initial estimates. If no cap or financial adjustment mechanism was built into the agreement, the developer may feel it is unreasonable to cover the entire overrun themselves.

Planning disputes or regulatory challenges

Developments of this scale often face ongoing regulatory and planning challenges. If the developer has encountered difficulties with planning amendments, land acquisition, or environmental regulations, they may be delaying their infrastructure funding until those issues are resolved. In some cases, developers use financial commitments as leverage in negotiations with local authorities to secure concessions or ensure planning flexibility.

Dispute over responsibility

Infrastructure responsibilities can sometimes become a grey area when multiple stakeholders are involved. If other developers or landowners stand to benefit from the road upgrade, the developer may be questioning why they are expected to cover the full cost and could be arguing for a shared funding model with the other beneficiaries contributing.

Seeking a compromise

It is also possible that the developer is not outright refusing to fund the upgrade but instead looking for a revised agreement. They may be proposing a phased payment structure, an alternative funding mechanism, or waiting for additional financing. In many cases we have supported developers in negotiations with councils and they take time, with both sides needing to balance public and private interests.

A need for greater transparency and dialogue

Public frustration over infrastructure delays is understandable, but it is important to recognise the complexities involved in large-scale developments, such as this one. Developers, like any other business, must make commercially viable decisions. Significant changes in economic conditions, project viability and infrastructure costs can impact initial agreements.

For a resolution to be reached, an open dialogue is needed to determine a path forward, as the UK still desperately needs these new homes to be built. The outcome may involve revising financial commitments, exploring additional funding sources, or phasing the investment in a way that ensures both the development and the necessary infrastructure improvements can proceed without undue financial strain on either party.

Rather than framing the issue as one of simple refusal, the discussion should focus on understanding the legitimate concerns on both sides and working towards a practical and sustainable solution for the community and the developer alike.

Please get in touch on 01752 292201 if you are facing similar challenges as a developer, whether it’s a simple commercial property project or a large-scale ground-up development, we have the experience and expertise to guide your decisions and reduce your frustration.