35% Campaign update – Ruby Tuesday

35 per cent

Ruby Tuesday

Oct 08, 2018 01:00 am

First major Old Kent Road application goes to committee –

The first of the very large planning applications lining up to take advantage of the proposed Old Kent Rd Opportunity Area goes to Southwark’s planning committee tomorrow (Tues 9 Oct). It is for a mixed-use scheme that would include 1152 homes, with 40.5% affordable housing, two-thirds of which would be social rented. A residents’ gym and sports hall and new ‘pocket park’ are also promised. The scheme dubbed ‘Ruby Triangle’ is proposed by a joint venture between A2Dominion Housing association and recently-formed developer Avanton Ltd, which is chaired by former defence secretary Sir Michael Fallon.

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Despite the affordable housing offer, the application has nonetheless excited much passionate opposition. The site is designated by the Mayor as a SIL – Strategic Industrial Location and the loss of industrial workspace is contrary to the local plan. The proposed development has 3 towers, one of 48 storeys, another of 40 storeys. The VitalOKR group, a coalition of residents, businesses and community groups, have objected to the loss of industrial land and impact on jobs. Thirteen businesses and a church currently occupy the Ruby Triangle site.

Among the businesses is a waste recycling facility (Southwark Metals), which has been recycling metals on the site since 1980 and a data management company that lists both Southwark Council and the GLA amongst its clients. Another business ‘Constantine Ltd’ employs 130 local people and provides fine-art logistics to clients such as the Natural History museum and the Tate. It has lodged a formal objection to the planning application, claiming that the developer has made little effort to engage about alternative premises and surrender of their lease which runs for another 10 years.

Objectors point out that, while 40% affordable housing appears generous, the threshold for affordable housing is 50% for SIL sites in the Mayor’s draft New London Plan. Local residents in the neighbouring Canal Grove Cottages fear loss of daylight, and the detrimental impact on the local environment of a scheme that is nearly four times denser than the local plan allows (2,701 habitable rooms per hectare against a maximum 700h hbr per hectare)1. Related to this, there is no information on whether any of the 1,152 dwellings proposed comply with the BRE’s minimum daylight requirements – a requirement of Southwark’s planning policy2. In its report to planning committee, Southwark’s Design Review Panel (which reviews all major developments on the Council’s behalf) raised concerns about the lack of sunlight/daylight analysis and expressed serious reservations about the architectural quality of the scheme in general, not least because a very high proportion (50%) of the new homes will be single aspect (10% north facing). The Mayor’s new London Plan says that schemes should “avoid the provision of single aspect dwellings” (Policy D4(E)).

Parking the park

The Design Review Panel said that it was “also concerned that part of the ‘green heart’ that is being proposed as a key public benefit of the scheme, falls outside the site boundary”. The site ownership boundary plan submitted by the developer shows that more than half of the proposed ‘pocket park’ is located on land that it doesn’t own. A seperate successful planning permission from the neighbouring landowner would be needed to deliver the whole park, presupposing that they actual want they to develop the land and include such a park.

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The Review Panel concluded that it cannot endorse the scheme in its current form while further adding that “the panel fear that the AAP will be used to justify opportunistic and piecemeal over development of small sites, with each proposal leaving future developments to provide the public realm strategy and improvements that are required to support such high density schemes.”

This echoes objectors’ fears that developers and Southwark are getting ahead of themselves. The Opportunity Area (and accompanying area action plan) has not completed its own progress through the planning system; a public inquiry (EiP) that examines the Opportunity Area’s merits and makes recommendations for amendments is not due to be heard until the new year.

Enough affordable housing?

The 35% Campaign is always pleased to see a development that offers more affordable and social rented housing than the local plan stipulates, but where more affordable housing is required, and it is 50% under the emerging, draft London Plan, that should be delivered.

Closer inspection raises some other concerns.

There is an ambiguity over the social rented housing; the application and officer’s report refers to social rented housing, yet the GLA Stage 1 report refers to same units as ‘affordable rent’, which can be up to 80% market rent.

rt3Extract from the GLA’s stage 1 report

The GLA Stage 2 report is not available at the time of going to committee, a departure from usual practice.

The involvement of housing association A2Dominion as a development partner in the scheme also rings an alarm bell. They featured in our successful complaint to the Ombudsman about tenure switching, where affordable rent was substituted in developments where social rent had been approved, in this case the Colorama development in Blackfriars where A2Dominion acted as both developer and registered provider. A2Dominion, was also subject to a planning breach investigation from Southwark Council for its development at 166-178 Camberwell Rd, which has stood half-finished since 2015.

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Profit vs affordable housing – what’s reasonable?

There is an unresolved dispute about the reasonable level of profit to be assumed in the viability assessment for the private housing. This could have a bearing on the final amount of affordable housing, to be calculated by the late viability review mechanism. Crudely, the higher the profit the less that is left for affordable housing. The developer wants 20% profit on GDV (Gross Development Value), while the Council’s independent assessors’ report argues that this is too high and that 17.5% is reasonable. This is backed up by the Council’s own viability study commissioned for the OKR AAP, which assumes a developer profit of 18% (para 4.39).

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Extract from the Council’s independent viability review

In cash terms Southwark’s assessor gives £73.8m as a reasonable profit for the private housing. According to their own viability assessment, where the profits are listed as ‘miscellaneous fees’, the developer’s 20% profit target amounts to £92.21m for the private housing, providing an overall profit assumption of £101.36m, when profits for affordable housing and commercial premises are added in.

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Extract from the viability assessment

Viable or not viable?

A peculiarity of the Southwark assessor’s appraisal of the viability assessment is that it concludes ‘that the proposed scheme would not be viable with a 35% affordable housing offer…, but that ‘stand back’ analysis (using evidence of local land sales with planning permission to ascertain a price per habitable room) indicates that it would be deliverable’. 3 This raises the question of how useful the viability assessment can be, if its conclusion can be discarded and an alternative (undisclosed) ‘stand back’ analysis, with a different conclusion, is depended on instead.

Similarly, the caveat that an undisclosed ‘sensitivity analysis applied in this review also shows that relatively small changes in key variables would result in a viable scheme’ illustrates the uncertainties surrounding the viability assessment for this scheme. 4

Reprovision of recycling facilities – at whose cost?

The capital has a shortage of waste recycling facilities, so the Mayor’s London Plan stipulates that any waste recycling facilities lost through redevelopment must be reprovided. The planning committee report explains that the Council has bought land in the vicinity in order to reprovide the existing waste recycling facilities (Southwark Metals), but doesn’t say whether this will be at the Council’s or the developer’s expense.

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Extract from the planning committee report

The planning committee meets at Southwark Council’s offices at 160 Tooley St at 6.30pm Tues 9 Oct.

Footnotes:

  1. See paras 221 and 222 of the planning committee report 
  2. see section 2.7 of Southwark’s Residential Design Standards SPD 
  3. See para 507 of the planning committee report 
  4. See para 507 of the planning committee report 

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Shopping Centre redevelopment – Delancey tries again

35% Campaign update – Grosvenor takes the biscuit factory

Grosvenor takes the biscuit factory

Sep 25, 2018 01:00 am

Bermondsey’s Biscuit Factory redevelopment falls well short of policy requirements –

1300 new homes, no social rented

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While most eyes have been on developer Delancey’s plans for the redevelopment of the Elephant and Castle shopping centre, on the other side of Southwark an equally large proposal to build over a thousand homes without any social rented housing has been stealthily making its way towards planning permission.

Grosvesnor Estates bought the Biscuit Factory site in Bermondsey in 2013. The total site combines the former homes of biscuit manufacturer Peek Freans and the former Bermondsey campus of Lewisham and Southwark FE College. Peek Freans closed in 1989, the college left in 2013 and the site is currently occupied by a variety of businesses and offices.

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Grosvenor proposes a £500m mixed-use development of 1343 new homes with 21000 sqm of other uses, and a new school. The homes will all be Build to Rent (BtR), owned and managed by Grosvenor; none of the homes will be for sale. Grosvesnor are offering 27.5% ‘affordable’ housing at an average of 75% market rents, near the allowed maximum of 80%. No social rented housing or ‘social rent equivalent’ affordable housing is proposed. Grosvenor offer to be ‘flexible’ about the range of affordable rents, but insist that the average of 75% must be maintained, so any gains at the bottom end would force rents at top end, beyond even 75%, or further reduce the overall quantum of affordable housing.

Southwark Council’s adopted housing policy does not support BtR. The housing policy for this part of Bermondsey requires 35% affordable housing, 70% of which should be social rent. This would amount to around 470 affordable units in total, 330 of which should be social rent. Policy also requires that the remainder of the affordable housing be shared ownership. By contrast, the affordable housing in Build to Rent is a form of affordable rent, at up to 80% market rent. Since 2011 Southwark have maintained that affordable rent does not meet the borough’s housing needs, but it is now in the middle of a sharp policy u-turn, which proposes allowing affordable rent (called Discounted Market Rent) in the latest version of the local plan, the New Southwark Plan (NSP) (see policy P4). Grosvenor are taking advantage of the situation (and employing the same tactic as Delancey) by relying on this so-called ‘emerging’ policy, rather than the policy as it stands, to get their BtR application through planning committee. The London Plan, Sadiq Kahn’s draft housing strategy 2016 and the government’s White Paper also provide encouragement to impatient BtR developers.

Even if ‘emerging’ policy were applied to allow a BtR development, Grosvenor’s affordable housing offer still comprehensively fails to fulfill its demands. The NSP Policy P4 for BtR requires 35% total affordable housing, made up of 12% ‘social rent equivalent’, 18% London Living Rent, and 5% for £60k-£90k incomes. Grosvenor falls short on every measure – 0% social rent equivalent, 0% London Living Rent, 100% at £60k-£90k market rent, and only 27.5% affordable housing in total.

Other areas where Grosvenor’s scheme fails policy tests are the number of studio flats – (146; there should be no more than about 70 (5%), according to Southwark’s Core Strategy) and the length of covenant keeping the BtR units as rented tenure (a 15 year covenant is offered, emerging policy requires thirty years). Management and lettings of affordable housing also appears to be a problem. Grosvenor makes no mention of using a registered provider and is evidently reluctant to extend tenant nominations to Southwark. Grosvenor stresses that while ‘it will work with LBS to enable prospective tenants to be sourced from any such list’ (ie Southwark’s proposed intermediate housing list)The lettings and nominations arrangements will need to recognise that Grosvenor will need ultimate control over the occupation and management of the Proposed Development’.

Estimated profit of £99m not enough

As always the lack of affordable housing is justified by viability and it is no surprise to see that the viability assessment has been drafted by DS2, who did the same job for Delancey’s shopping centre development. In keeping with Southwark’s development viability policy we won’t get to see the full assessment until a week before it goes to planning committee, and have to rely on an executive summary for any idea of the scheme’s finances. The executive summary is deficient, policy-wise, in several respects; the construction, acquisition and other development costs and professional fees are lumped into one figure, instead of given seperately. Instead of developer profit (on cost) Grosvenor has submitted an ‘Internal Rate of Return’, which is given as an obscure percentage (7%), not as a readlily understandable cash figure. Despite the obscurity, we have run our own calculation of profit (on cost), by subtracting the total costs listed from the gross development value, which gives a figure of £99m. This is not enough for Grosvenor, who reckon a ‘reasonable return’ is 12% IRR and they‘therefore cannot afford to deliver any affordable housing’.

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Southwark’s required format vs Grosvenor’s submitted FVA summary

In the viability assessment summary Grosvenor’s total scheme costs are combined together as a lump sum of £755m. This is significantly higher than the £500m estimate stated in its marketing material, press release and media reports. Given that we are not privy to the full viability assessment or its appraisal by the Council’s appointed experts GVA, we can only hope that Grosvenor are asked to explain this £250m discrepancy…

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Extract from Grosvenor’s marketing material

School’s out

Grosvenor also claim that there can be no affordable housing because of a list of other benefits the scheme provides, including ‘the delivery of a new school’, despite Section 13 of its Planning Statement acknowledging that ‘the construction of the new school is anticipated to be funded by the ESFA (Education and Skills Funding Agency)’.

All is not lost though, because Grosvenor generously propose that ‘notwithstanding the overall scheme viability, it would be willing to offer 27.5% affordable housing, delivered as discount market rented (“DMR”) homes (“Grosvenor’s Offer”).’ The average discount would be 25% ie 75% market rents, close to the maximum of 80% allowed for ‘affordable rent’. Exactly how much this will be we are left to guess – unlike Delancey’s proposals for the shopping centre Grosvenor does not provide any rent tables for either the market or affordable housing. Current new-build market rents in the SE16 postcode are upwards of £1500pcm.

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The House of Westminster

The Grosvenor Estate ‘represents all the business activities of the Grosvenor Family, headed by the Duke of Westminster’. One of its three arms is Grosvenor Group which ‘represents the majority of the Grosvenor Estate’s urban property activities and is its largest business’. This in turn includes Grosvenor Americas, Grosvenor Asia Pacific and Grosvenor Britain & Ireland, which has £5.1bn of assets and is the applicant for the Biscuit Factory. The Biscuit Factory is also the number one development listed in the Grosvenor Britain & Ireland’s summary of developments.

Thanks to a secretive network of offshore firms, the Duke of Westminster is reputed to be worth £9bn and is the world’s richest man under 30. The Biscuit Factory on the other hand, is on the doorstep of South Bermondsey and Rotherhithe, two of six Southwark wards with neighbourhoods classified as being in the bottom 10% most deprived in the country, so the need for social rented housing hardly needs demonstrating.

Grosvenor’s spin on the Biscuit Factory that it will bring life to a ‘burgeoning new neighbourhood in London’, artfully propogated by the usual community engagement soft-soap, but if Grosvenor had any genuine interest in the community it would simply build the affordable housing that local planning policy requires and build social rented housing; the demands are not onerous. As it is, one of the very richest families in the country will be getting richer at the expense of people in one of its poorest areas, by depriving them of the homes they need.

This is not a planning application that deserves approval, by any measure. Southwark’s planning committee came close to throwing out Delancey’s shopping centre application; it should make no mistake this time and send Grosvenor and its dreadful planning application packing.

You can help by objecting to the application, either by following this link or by using the automated objection form below with our suggested wording.

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Comment: Dear Southwark Planning, I am writing to object to the planning application for the redevelopment of the TOWER BRIDGE BUSINESS COMPLEX, 100 CLEMENTS ROAD AKA THE BISCUIT FACTORY & BERMONDSEY CAMPUS SITE, KEETONS ROAD LONDON, SE16 4DG (ref:17/AP/4088). Affordable Housing: This application does not propose a policy compliant affordable housing mix. Southwark’s policy for this site requires a minimum of 35% affordable housing, of which 70% must be social rented. This should provide around 470 affordable units in total, about 330 of which should be social rent. Grosvenor is proposing 27.5% affordable housing, but not social rented housing. The affordable housing will also be affordable rent at an average 75% market rent, near the maximum 80% market rent allowed. Since 2011 Southwark Council has maintained that affordable rent does not meet the borough’s housing needs. The development will be on the doorstep of neighbourhoods that are amongst the most deprived in the country and the borough has a desperate need for social housing. There can be no justification for approving this application and it should not be considered until there is a policy compliant mix of affordable housing. Yours sincerely,

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EAN meeting – Tuesday 18th September 7pm

Dear Friend

The next meeting of the Elephant Amenity Network will be on 7pm Tues 18 Sept 2018 Bingo Room, 3rd Floor, Elephant and Castle Shopping Centre.

The agenda will include;

  • report back on meeting of shopping centre traders and GLA
  • Castle Square planning application for temporary facility for traders
  • Crowdfunding and campaign activity
  • The London Plan – Examination in Public
  • Latest on the Old Kent Rd Opportunity Area planning applications