Cornwall Council’s huge flagship Langarth development – a scheme to create a new town the size of Wadebridge as an urban extension of Truro – has been “severely constrained” due to the economic downturn and its effect on a volatile housing market.

Cornwall Council originally allocated £159-million to support the development of Langarth Garden Village, which was first mooted ten years ago. Around 150 houses, the first tranche of Langarth’s 4,000-homes project, were due to be delivered by the end of 2026, but a meeting of Cornwall Council’s corporate finance committee today (Tuesday, October 15) heard that is now unlikely. However, there are still hopes some housing for key workers near the Royal Cornwall Hospital can be built within the next two years.

The committee discussed an interim business plan which has been drawn up for the next two years in a bid to find a model that works to deliver the massive development in the current difficult economic climate.

A limited liability partnership (LLP) – LGV Property Holdings LLP – was created to oversee what will effectively be a new Cornish town and is 98 per cent owned by Cornwall Council and two per cent owned by the council’s arm’s length construction company, Treveth. Langarth is due to be built in phases over the next 20 to 30 years

Phil Mason, the council’s strategic director for sustainable growth and development, said the LLP was set up with the intention of delivering the masterplan for Langarth – including the houses, new schools, play and leisure areas, as well as commercial and retail builds – straight away.

“But the context in which the development is going to take place has been severely constrained by what’s happened over the last few years in terms of the development market, costs going up, land values going down, interest and gilt rates being high and it’s really hard to find at the moment a delivery model that works,” he added.

“The intention here is that we will have a plan that focuses on the first two years. In those first two years we want the LLP focusing on and engaging with the market, finding that model of delivery that is going to work so we can deliver this in the commercial way.

“This isn’t about stopping, it’s about finding a model that works and an interim way in which we can get some early delivery, principally around housing which would suit key workers; people who would need homes near the hospital and college.”

Mr Mason said the council and Treveth was concentrating on an early phase of work, including both the western end in a part of the scheme called Pollard’s Field and the hospital end, which has the working title of Penventon Village.

Committee chairman John Keeling said: “It seems to me it’s the start of a long journey. “We started ten years ago,” came the response from officers and fellow councillors. “At least the restart of a long journey,” replied Cllr Keeling.

Cllr Stephen Barnes said: “I’m very disappointed with this. This doesn’t look like a very good bet to me for investing money. I think it’s a bit woolly to say the least.

“Being this far into a plan, I would have hoped we would have a better idea of when we’re going to get some money back.” He added there had been no mention of delivery of affordable housing for local people as part of the scheme.

Mr Mason responded: “The purpose of our intervention at Langarth has always been about those public goods such as delivery of affordable housing and delivery of a place that works as a community. That’s always been a primary aim of this scheme. We wouldn’t be investing in this scheme as an investment – I wouldn’t be advising that at all. I would advise that this scheme is delivering those very things that the public need.

“The money has been used to buy a series of land-based assets which are of a value and always will be. What we need to do is work out the best way in which we can use those assets to deliver both the public goods – the new homes, schools, sports facilities, etc – as well as not taking money from the council at the detriment of other services; how quickly can we turn this from something we are funding to something which is cost neutral and then in the future gives us some money back as well.”

Tim Mulholland, managing director of Treveth, said: “This is an interim holding position because the market is as hard as it’s been for 15 years. What we’ve got to do is get involved in the right partnerships and the right consortiums. Once we’ve got that, we can clearly break down the full business plan, when the break-even point will be, when we can accept receipts and you’ll have that true timeline, but that’s probably going to be 12 to 18 months away.

“This is very much a plan to get us into that position. At the moment, it’s a finger in the air. The market is still so volatile and we’re still waiting for the Autumn Statement to see what will happen.”

Cllr Julian German asked what learning had been taken from the stalled Pydar development in Truro.

Mr Mason said there were two principal issues learned from Pydar – “one is that we are in a time when it is actually very difficult to get delivery to happen and that’s led to us thinking we do need this two-year plan to find a way forward that works. The other thing I’ve learned from Pydar is the need for flexibility and going back to address the elements of schemes.

“We know we will need to revisit the Pydar permission because things like the Building Safety Act are now having an impact on the height of buildings. We may need to address the balance of the ingredients of that scheme as well to make it work for the future.”

Mr Mulholland added: “Pydar will come back, the market will pick up and the gilt rate will come down. We’re seeing a slight drop in the costs of delivery. That will only improve.”

Cllr Adam Paynter said of Langarth: “We’re partway through a very large development which a lot of people are uneasy about because of all the variables and a volatile market. There are a lot of people not really understanding what’s going on as far as residents and local businesses are concerned and how this is going to impact.”

In terms of consultation with the public, there is a “very good job being done”, said the council’s Conservative deputy leader David Harris, who praised local member Dulcie Tudor for being fully engaged with residents. He also mentioned the Langarth Working Group and Kenwyn and Truro councils’ involvement.

The meeting heard that the sports hub and community pitch alongside Truro City FC’s pitch would be rolled out within the next two years for the benefit of the local community. Eventually, it is hoped around 250 homes a year will be built.

The Langarth Business Plan 2024-26 will now go to Cornwall Council’s Conservative Cabinet for approval.