Victorian affordable housing developer Nightingale has finally broken ground on its first Sydney development, a build-to-rent project at Marrickville.

But an all-out legal battle with the Inner West Council over the heritage value of the site, and an additional discretionary contribution levy in excess of $1 million has significantly blown out the cost of the project.

Nightingale Housing founder Jeremy McLeod estimates legal fees, time and a new developer levy will add about $32,000 to the cost of each proposed build-to-rent apartment.