Norwich City Council is set to miss out on more than £590,000 towards affordable housing as a former four-storey office block off Prince of Wales Road is converted into 41 new flats.

The block at 60 St Faith's Lane is classed as an 'aparthotel' - an apartment complex using a hotel booking system.

But several residents this newspaper has spoken to say they had to sign a minimum six-month lease to rent their rooms and they live there long term.

Owners Max Estates submitted plans to the city council to convert the 47 bedroom block into short-term lets of 41 studio and one-bed flats.

Given the scale of the development, according to the Joint Core Strategy, 33pc of the units should be turned into affordable housing.

'In this instance it was considered unlikely a registered provider would find the site attractive,' case officer Joy Brown told the city council's planning committee on Thursday.

Instead the developer can offer money to the council to provide affordable housing elsewhere in the city. According to city planning policy, the developer should have to pay £697,977 towards affordable housing.

But after the scheme was valued by Savills through something called a viability assessment, the developer argued that to pay the cash would leave them with a loss of more than £500,000, meaning they couldn't afford the project.

In a review of Savills' assessment, a Government organisation called the District Valuer Services found they had over-estimated the land value of the site by £670,000. Under the new valuation of £3.5m the project would make a profit of £107,000.

Max Estates agreed to pay that lower figure of £107,000 as a contribution rather than the original figure of almost £700,000.

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Green councillor for Nelson ward Denise Carlo told the planning committee she was concerned the £107,000 for affordable housing 'was really rather small', and queried whether building larger, luxury apartments would yield a greater return.

Further concerns were raised over five of the 41 flats which are smaller than the national space standard.

Simeon Jackson, Green councillor for Mancroft, added: 'I would say clearly some of these flats are not sufficient for residents.'

The development was approved, with two votes against and one abstention. Max Estates has been contacted for comment.