35% Campaign update – Elephant Park – final phase, final windfall for Lendlease

Elephant Park – final phase, final windfall for Lendlease

Feb 21, 2020 12:00 am

Last phase of Heygate regeneration set for approval with increase in number of homes but no increase in affordable. -We blogged last year about the final phase (MP5 H7) of the Heygate regeneration.

Lendlease’s application for 424 new homes (15 social rent) in this final phase is now set to be approved by the Council’s planning committee on Monday.

If approved without a viability review it will seal an increase in the number of new homes beyond that approved by Southwark’s planning committee back in 2013, without any increase in the number of affordable homes. This will result in a total of 2,689 homes (220 more than approved in 2013) of which 92 will be social rent.

 Extract from the 2013 Outline application Committee report

This windfall gives Lendlease the revenue of 220 extra homes that were not included in the original viability assessment of the scheme, which was based on 2,469 units. This allowed Lendlease to build 25% instead of 35% affordable housing and to reduce the required amount of social rented homes to next to nothing. Taking account of the 220 extra homes could have improved both the viability of the whole scheme and the affordable housing offer.

Reviewing viability

We noted in our previous blog that Southwark has neglected to carry out any viability review. Monday’s planning committee report reiterates this, stating: “The council has no mechanism to insist on a viability review” (para 129)

However, this looks to be contradicted by the terms of the Regeneration Agreement between Southwark and Lendlease, which provides a mechanism for the affordable housing mix to be reviewed on an annual basis.

If these annual reviews had been taking place it should have been reflected in higher levels of social rented housing. The fact that the tenure mix hasn’t changed suggests that they haven’t.

Grant Funding

We also noted in our previous blogpost that the 2013 planning committee anticipated that the regeneration could benefit from public funding if it became available.

 Extract from the 2013 Outline application Committee report

This was in line with the Regeneration Agreement, which also obliged the parties to seek grant funding:

Such funding has been available since 2016 when Sadiq Khan announced a £4.6bn funding programme, but despite the 2013 planning committee’s intention and the Regeneration Agreement’s obligation, Lendlease has made no funding application.

Also, despite this clear contractual obligation, Southwark nonetheless states in Monday’s committee report for the final phase“There is no obligation on Lendlease to seek public funds.” (para 283)

Given the clear obligation on Lendlease to seek grant funding, we say that until Lendlease does so Southwark should reject this final phase application.

Southwark should also reject the application unless Lendlease commits to a viability review. There are a number of reasons why this is necessary. Not only was the original viability assessment based on fewer homes than the number actually being built, but also the free-market homes are being sold for twice Lendlease’s viability assessment estimate.

Another significant change to viability since the original assessment has been Lendlease’s recent decision to let, rather than sell homes in the later phases of the scheme.

Monday’s planning committee should also take account of Policy 3.12 of the Mayor’s London Plan, which says that “The maximum reasonable amount of affordable housing should be sought .. having regard to .. individual circumstances including development viability, {and} the availability of public subsidy.

The Elephant Park development lost Southwark 1,200 council homes. This final phase is Southwark Council’s last chance to (partially) redeem itself by insisting Lendlease abides by its obligations, reviews the viability of the scheme and applies for grant funding.

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35% Campaign update – The Biscuit Factory is back

The Biscuit Factory is back

Feb 17, 2020 12:00 am

Sadiq gives the Duke of Westminster a second chance -We blogged back in 2018 about the redevelopment of the former Peek Freans biscuit factory and adjoining Bermondsey college campus site.

Grosvenor Estate, headed by Hugh Grosvenor the 7th Duke of Westminster, London’s largest landowner and the world’s richest man under 30 (worth over £10bn), proposed 1,343 new homes, none of which were to be social rent. The site is next door to two Bermondsey wards with some of the most deprived neighbourhoods in the country and the complete lack of any social housing was too much for both local councillors and Southwark’s planning committee, who early last year rejected the scheme.

However, Mayor Sadiq Khan overrode Southwark’s decision by ‘calling it in’, citing Southwark’s failure to meet its affordable housing targets, and is now set to approve the scheme, after a public hearing at City Hall on the 21st February.

Still no proper social rent

The original scheme has been amended, with an overall increase in the number of homes, by 206 units, including 160 affordable, up to 1,548 units in total. But because the scheme remains Build to Rent (BtR), with none of the homes for sale, there will still be no proper social rented housing. Instead 140 of the 160 affordable units will be ‘social rent equivalent’ (SRE) – a pseudo-social rent on 3-year tenancies, with just a ‘presumption’ of renewal, not the lifetime assured or secure tenancies of proper social rented housing.

Even were we to accept SRE as social rent, the 140 SRE units still amount to less than 10% of the 1,548 total number of homes.

The SRE rents will be Target Rents, which are higher than most Southwark council rents (eg one bed would be £134pw, compared to council rent of £107pw). The SRE service charges are unquantified, with only the assurance that they will be ‘controlled’ (para 249).

Most of the affordable housing, though, is made up of Discounted Market Rent (DMR) – 343 units to be let at much higher rents than SRE, eg £354pw for a one-bed. It is not clear if these rents include service charge, There will be no units let at London Living Rent, the Mayor’s preferred rent level, which would have much reduced the DMR rents (para 250).

(Another) non-viable development.

At the bottom of the poor affordable housing offer is Grosvenor’s rehearsal of the well-worn developer claim that this is a non-viable development. A non-viable development is one where the developer’s own profit target is not met, not one where it makes no money. In this case Grosvenor’s profit target is 12% IRR, and they say they can make barely half that (6.53%) and the affordable housing offer is the best that they can do. GLA and Southwark agrees, but any confidence we can have in these judgements is undermined by huge disparity in the estimates of profits; Grosvenor estimated they would make a £189m loss on the original 2017 planning application, while Southwark said they would make £101m profit. Now Grosvenor claims a profit of £13m on the amended scheme. We don’t know the GLA’s profit estimate, because it hasn’t published its own appraisal, despite the Mayor’s commitment to transparency.

Early and late stage reviews of the scheme are offered and should there be any increase in profitability, extra social rent equivalent or London Living Rent homes will be provided, but only by reducing the DMR rents, not by converting market-rent units, so there will be no increase in the number of affordable units.

Mayor misses 50% affordable housing opportunity

In October 2018 Southwark’s regeneration boss, Cllr Johnson Situ, commented on the original application: “With over 10,000 people on our housing waiting list it is very disappointing to see such a little amount of social or genuinely affordable housing in this application. As it stands, we are still a long way from agreeing a scheme that meets the council’s policies.”

Southwark has followed this up by making a representation on the amended scheme to GLA, reiterating some of the objections that led to the original scheme’s rejection, but Southwark has not argued for the amount of real social rented housing that its own policy requires – 35% of the total amount of housing, 70% of which social rented housing – 30% intermediate. This would give us around 380 social rented homes and 162 DMR homes.

Indeed, it is arguable that the affordable housing requirement should be nearer 50%, given that nearly three-quarters of the Biscuit Factory site is former industrial land. The GLA report recommending approval of the scheme skips lightly over the fact that such land should deliver 50% affordable housing, in line with the Mayor’s ‘strategic’ target (Policy H4, pg 188), by saying ‘the site currently comprises a privately-owned commercial complex, the previous industrial use having ceased over 30 years ago’ (para 232) and so is subject to a 35% requirement instead.

While Southwark has been reduced to a bystander in the decision making, GLA has indulged in a pick n mix of the bewildering number of affordable housing policies (paras 220-236) and decided that only 140 pseudo-social rent homes need to be built, with 342 DMR at much higher rents – an exact reversal of the proportions of social to intermediate housing, required by Southwark’s policy.

In sum, a Labour Mayor has called in a development that a Labour council has rightly refused because it has no social rented housing, ignored that council’s own affordable housing policies, and applied his own, weaker policies, all to help a developer build something without any proper social rented housing.

Keeping Build to Rent rented

Many of the other BtR provisions are familiar from the proposed BtR development of the Elephant and Castle Shopping Centre. As at the Elephant a legal covenant is needed to ensure that the BtR development remains for rent, not for sale. The covenant for the Biscuit Factory is only for 20 years though, whereas Southwark required thirty years from developer Delancey for the shopping centre; in any event the covenant does not entirely stop a developer selling on, if they are prepared to pay a penalty, known as ‘claw-back’.

Poor doors

Besides being BtR, there is much else not to like about the development. One of Sadiq Khan’s manifesto pledges was that he would ban poor door’s in London’s housing developments. He has held true on this pledge to the extent that separate entrances for private and affordable tenants are indeed a thing of the past and instead we now see entirely separate buildings (see Heygate, Aylesbury and most major schemes approved in last 5 years.)

Grosvenor are following this trend‘consolidating’ most of the Biscuit Factory’s affordable housing into separate blocks.

 Extract from Grosvenor’s Affordable Housing Statement

Renewable energy

Despite both the Mayor and Southwark Council having formally declared a ‘climate emergency’, Grosvenor’s scheme fails to comply with the either the Mayor’s or Southwark’s minimum 20% requirement for on-site renewable energy supply.

Policy 5.7 (para 5.42) of the Mayor’s new London Plan requires that ” all major development proposals will seek to reduce carbon dioxide emissions by at least 20 per cent through the use of on-site renewable energy generation” via the use of “renewable energy technologies such as: biomass heating; cooling and electricity; renewable energy from waste; photovoltaics; solar water heating; wind and heat pumps”.

Southwark’s sustainability policies also require this minimum 20% on-site renewable energy generation (see policy 13 of the Core Strategy) and Policy 3.5 of its Sustainability SPD:

Grosvenor’s Energy Assessment proposes just 0.7% renewable energy generation (see para 7.6) using a handful of solar panels and some air conditioning units in the commercial units that can also provide heat.

Grosvenor also falls short of the London Plan’s zero-carbon requirement, opting to make a £1.137m payment in-lieu instead (para 470).

More Build to Rent, less Social Rent

The proposed Biscuit Factory development demonstrates why we do not have enough homes that people can actually afford to live in. It could deliver nearly 50% affordable housing, around 700 units of which nearly 500 would be social rented, if the Mayor abides by Southwark’s adopted policy and the site is treated as former industrial land. Even reduced to 35% affordable housing, applying Southwark’s policy would get around 380 social rented units. Instead it is only delivering 140 pseudo-social rent, plus 20 Discounted Market Rent.

The Biscuit Factory also demonstrates the threat of BtR developments for social rented housing. Build to rent schemes do not provide social rented housing, only a pseudo-social housing and very little of it. The more Build to Rent schemes we have in London the less social rented housing there will be.

The Mayor cited Southwark’s failure to meet housing targets as reason to call-in the application. This is justifiable, but his concern is headline figures, not meeting the priorities of local housing need, which in Southwark is for proper social rented housing (pg 67).

The Mayor’s pre-election manifesto promise was to build ‘genuine affordable housing’, including social rented housing, and he pledged to ‘support councils to…maximise the affordable housing’. The Mayor has also made much of his 50% affordable housing target. If Grosvenor’s proposals for the Biscuit Factor gets the go-ahead he will have failed to live up to all these promises, approved a scheme that has less than 10% genuinely affordable housing (if we were to accept ‘social rent equivalent’ as real social rent) and thwarted Southwark’s attempts to get anything better.

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Southwark Homeowners Conference Spring 2020 – Saturday 7th March 2020

Homeowner Council

Southwark Homeowner Conference – Spring 2020

The conference will be held on Saturday 7th March 2020 between 9am to 5pm at the William Booth College, Champion Park, Denmark Hill, Camberwell, SE5 8BQ.

This Homeowner Conference, organised by Leaseholders for Leaseholders, will be discussing housing and leasehold issues. Leaseholders and freeholders who live in Southwark Council managed properties will have a chance to find out about Southwark Housing matters, changing legislation, service charges and Section 20 Major Works.

It will provide an opportunity to hear from various independent organisations about Homeowner rights and responsibilities, as well as available services and support.

Council officers will be on hand to answer your questions and help you understand how bills are calculated. There will be presentations from the council and independent professionals and an opportunity to ask questions that are relevant to you. The Conference is chaired by Martin Boyd, from the Leasehold Knowledge Partnership.

Confirmed guest speakers include:

  • Cllr Kieron Williams – Cabinet Member for Housing Management & Modernisation
  • Michael Scorer – Director of Housing & Modernisation
  • MP Helen Hayes – MP for Dulwich and West Norwood
  • Amanda Gourlay – Barrister
  • Mari Knowles – Solicitor
  • Katie Kendrick and Cath Williams – National Leasehold Campaign
  • Sebastian O’Kelly – Leasehold Knowledge Partnership

The conference features a market place with information stalls. Exhibitors include:

  • Homeowner Council (Volunteer homeowners)
  • Citizens Advice Bureau (Free, Confidential, Independent & Impartial Advice)
  • Leasehold Knowledge Partnership (Charity Protecting Ordinary Leaseholders)
  • LAS2000 (Leaseholders Association of Southwark 2000)
  • Leasehold Advisory Service (Govt Funded Advisory Service)
  • Service Charge Construction & Major Works Team (Southwark Council)
  • Communal District Heating Team (Southwark Council)
  • Communities Division (Southwark Council)
  • My Southwark Homeowner Agency (Southwark Council)

Register for a free place

Or copy and paste the following link into your browser: https://southwarkhomeowners.co.uk/conference-registration/

If you have any questions, phone the council’s Resident Involvement team on 020 7525 1239 or email resident.involvement@southwark.gov.uk

Cllr Kieron Williams – Cabinet Member for Housing Management and Modernisation

Resident Involvement Review Update

Dear all,

I hope this finds you well. Further to Cllr Williams email below please see the following link where you can find the Resident Participation Cabinet report which was published today. You can find the report and appendices under item 8.

http://moderngov.southwark.gov.uk/ieListDocuments.aspx?CId=302&MId=6419&Ver=4

Southwark Resident Participation Framework

Appendix 1 Resident Involvement Consultation Findings

Appendix 2 Resident Participation Implementation timeline

Appendix 3 Areas map

Kind regards,

George Changua

Tenant & Homeowner Support Officer

Southwark Council || Communities Division || Housing & Modernisation

160 Tooley Street || 5th Floor || Hub 3 || SE1 2QH

T: 0207 525 3326 || E: george.changua@southwark.gov.uk || Website: www.southwark.gov.uk

www.southwark.gov.uk/mysouthwark For council services at your fingertips, register online.