THE DEVELOPER behind the ill-fated New Homes Project is preparing a possible legal challenge which could end up costing taxpayers millions of pounds.

Karis Developments spent four years working with Lewes District Council on the project to deliver hundreds of affordable homes in Newhaven, Peacehaven, Seaford and Lewes.

But councillors agreed to end the scheme yesterday, after a Lewes District Council report found it was no longer financially viable.

Josh Arghiros, managing director of Karis, said: “We have spent four years working on good faith with the local authority.

“A new leader comes along and scraps everything we have worked towards. Therefore of course we are talking to our lawyers about how we move forward and what we do. Why would we stand by and see all our efforts and good ideas go to waste? Of course we are not going to just accept it.”

Councillors were told at a cabinet meeting in Lewes that legal advice had warned covenants on two key sites, the Buckle car park and Normansel Park Avenue in Seaford, restricting the scale of development would be difficult to overturn and made the scheme financially unviable.

The decision was criticised by former council leaders James Page and Rob Blackman who claimed it was made out of “political cowardice” in the face of residents’ opposition.

The pair claimed that pulling out of the contract could eventually cost taxpayers £15 million in a potential legal claim from Karis, £3 million in lost government grants and wasted council officer hours.

But the council has hit back at those claims saying that the contract was designed to allow for a break within five months of its signing in July without legal repercussions.

Officers also said that “lost” Government grants totalled only £1 million, and could be applied for again, while £444,000 of the £570,000 the authority had spent would not be wasted but used preparing potential housing developments at Robinson Road and Meeching Down in Newhaven.

The remaining costs were spent on consultation, traffic studies, land valuations and legal fees.

Cllr Smith said that an independently chaired working party set up to investigate the project would be free to establish their own “terms of reference” and none of its findings would be kept private from taxpayers.

The council leader apologised for how the scheme had been handled and in particular to businesses at Steyning Avenue in Peacehaven whose “livelihoods had been put at risk” by the New Homes project and said future housebuilding projects would not be sprung on residents without proper consultation.

He said: “This project was about building social and affordable housing but as it progressed, it started costing more and more meaning we would have to borrow more.

“People might say it looks like we don’t know what we are doing but we do know what we are doing.

“We are not complete amateurs here.

“We are trying to be open and rebuild that trust and confidence [with residents].”