Huge deal for new Leeds orbital road and 5,000 homes

Leeds City Council is considering entering into a multi-million pound deal with insurance giant Legal & General to fund the East Leeds Orbital Road.

The agreement would see L&G part fund the project and then have its investment repaid using cash paid by developers building on land unlocked by the new road.

The road is the key part of a wider project known as the East Leeds Extension which will see the building of around 5,000 new homes alongside commercial development and the creation of a 47-hectare public park.

Under current plans, the majority of the estimated £116m cost of the road will be met by a grant from the West Yorkshire Combined Authority with the remainder covered by Leeds City Council.

The council would borrow the money and then charge a so-called “roof tax” on developers to recoup the money over a period likely to last 20 or 30 years.

The deal being explored with L&G would see the company replace with council’s role in providing funding and receiving the ‘roof tax’ income.

The authority is exploring the idea because it would remove the risk to the public purse of borrowing money over such a long period taking in several cycles in the property market.

But the discussions surrounding the scheme are at a very early stage and would need to explore whether L&G could secure the return it would want on its investment without the ‘roof tax’ charges discouraging developers from building in the area.

And the council is stressing that with a publicly funded plan already in place, the building of the road is not dependent on reaching an agreement with L&G or any other private sector investor.

L&G already has a major financial interest in the area, having last year taken a 50 per cent stake in the Thorpe Park development which has its own extension plans.

A Leeds City Council spokeswoman said: “Leeds City Council welcomes the investment interest shown by Legal & General in the East Leeds Extension and East Leeds Orbital Road as another positive sign of the strength of the Leeds economy and the potential of that area of the city.

“However, these are the early stages of discussions and we will be working closely with L&G, and with developers in the area over the coming months, to explore the options around accelerating and delivering housing growth supported by the right transport infrastructure and ensuring value for public money at all times.”

Leeds City Council’s executive will discuss the potential for an agreement at a meeting next week.

Senior councillors will be asked to authorise council officers to explore the deal in more detail before any further decisions are taken.

The East Leeds Extension grew out of the original Thorpe Park business park, which was first developed in the 1990s. Many years later plans were formulated to expand the park with retail, leisure and housing.

The project is made up of several key components, with Thorpe Park and the former Vickers munitions factory site sitting on one end, and the council-owned Red Hall site at the other.

Several smaller housing developments, including part of the former Vickers site and the former Optare site, have already started.