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RISING interest rates and ongoing market turmoil are a threat to £120m plans to rebuild Horatia House and Leamington House in Somers Town, Portsmouth City Council's cabinet member for housing has warned.

Councillor Darren Sanders said the project was 'still expected to be within budget and on time' with the deconstruction of the latter due to be completed on Friday (October 14).

But he said potential limits on affordable rents and any failure to reduce interest rates ‘may affect the viability’ of their replacement.

‘Events of the last two weeks, if left unresolved, have a real chance to affect my assessment of this project,’ he said at Tuesday's full council meeting. ‘These circumstances affect all councils. They affect all development projects, indeed any project in our city and our country.’

Horatia House in Somers Town has almost been taken down to the ground. Right, after cladding was removed in 2018 Picture Darren Barnett / Habibur Rahman

The decision to replace the two blocks was taken in 2019 after work to replace cladding found the buildings were structurally unsound with all 272 households relocated.

A year later, the council approved the redevelopment of the site with plans drawn up to build 440 new homes, including at least the replacement of all 272 of the lost council homes at affordable rates.

These have been drawn up through the creation of a community panel made up of Somers Town residents, businesses and schools.

Cllr Sanders said planning applications for the project were on track to be submitted 'later this year'.

'The community panel has come up with plans that give a real chance of making the area a place people want to go to, not stay away from,' he said, adding that this arrangement has allowed the council to have 'positive discussions' with Homes England about potential funding.

Asked whether rent levels for the new homes would be set at affordable or social rates, Cllr Sanders said his 'ambition' was for them to be 'as low as possible'.

'I don't want to be in a position to chance it and say one thing and then go back on it in two weeks, or in two days or two hours,' he added. 'I think that that damages credibility when we want to make sure that the scheme is is sensible.

'We have said that the scheme is viable but the current market conditions, I believe induced by the mini budget, are making matters worse.'

Horatia and Leamington House in Portsmouth: Economic turmoil could prove a threat to £120m Somers Town regeneration plan