A MULTI-MILLION pound scheme to build hundreds of homes on a former asbestos factory site has racked up losses of more than £4m, it has emerged.

Dunelm Homes and others have built 165 homes on the former Cape asbestos factory site, in Bowburn , County Durham, and have planning permission for another 128.

But the proposals were drawn up before the housing market collapsed in 2008 and analysis shows Dunelm has, to date, lost £4.4m on the scheme.

George Brooks, the firm’s commercial director, told a Durham County Council meeting that Dunelm had bought the site for £7m and spent £2m decontaminating it but the current land value was only £2.4m.

The project benefited from Kickstart funding from the Government, aimed at boosting house building, but Mr Brooks appeared before councillors to ask for a cut in the project’s “affordable homes”

requirement.

Planning permission was granted on condition that 30 per cent of the new homes (88) would be affordable. Dunelm wanted to reduce this to 20 per cent – the 59 which have already been built on site.

When pressed by Councillor Jane Brown, Mr Brooks said the project was still expected to make an eight per cent profit, but he did not have actual figures to hand.

Councillor David Freeman said he was not convinced a lot had changed since the committee, the council’s central and east area planning committee, rejected an identical bid by Dunelm in July and he proposed throwing out the latest attempt too.

However, council planning officer James Taylor said the latest assessments of the housing market in County Durham indicate only 20 per cent affordable homes are needed on new developments.

The application was approved by five votes to three at County Hall, Durham, on Wednesday.

Dunelm is to make a £147,000 contribution to build four affordable homes off-site.