Sep 22, 2019 12:00 am

15 hectares of public land, 4000 new homes but affordable housing policy requirements not met. -Southwark Council’s planning committee is set to approve the largest planning application ever submitted in the borough this week, when it considers the redevelopment of Canada Water. This huge 21 hectare site includes the Surrey Quays shopping centre and leisure park and the old Daily Mail printworks. Developer British Land’s (BL) proposals for about 7 million sq ft of development will be considered over two planning meetings on the 25th and 30th September.

The masterplan site is the final phase and main component of the Council’s regeneration of Canada Water and comprises a cluster of tall buildings up to 34 storeys, with a mix of residential, retail, office, workspace and leisure uses. It will include a hotel, student accommodation, cinema and community facilities.

The planning application is in two parts. The first part is the main outline application for between 2,000 and 4,000 new homes plus a large element of non-residential floorspace, while the second, is the detailed application for phase 1 of the scheme comprising 265 new homes, a leisure centre (a replacement for the Seven Islands centre largely paid for by Southwark), plus a petrol filling station.

 Canada Water Shopping Centre (shaded blue), Print Works (shaded green), Leisure park (shaded purple)

The Affordable Housing

The proposed scheme is for a minimum of 2,000 new homes, rising to a possible 4,000 maximum, 35% of which would be affordable (25% social rent, 10% intermediate housing). This is in line with Southwark’s own local plan.

As well as the local plan requirement, though, the Mayor’s London Plan requires a viability review mechanism, to ensure that if a scheme turns out to be more profitable than predicted, then extra affordable housing can be provided, up to a cap of 50%. Canada Water triggers this review requirement because at least a quarter of the site is either public or industrial land, and more affordable housing is expected from such sites.

But Southwark has compromised with British Land on the review mechanism, in breach of housing policy. It is allowing a 40% cap on any increase in affordable housing, instead of 50%, and is also allowing British Land to discount any profit from the commercial elements (office space, retail etc) of the scheme from any viability review.

Southwark justifies this departure from policy requirements on viability grounds. It agrees with British Land’s claim that the scheme can only viably support 11% affordable housing, not 35%, and thus British Land is incurring a ‘risk’ by committing to 35% “given the current day viability position.” This is a familiar line of argument, recently deployed by developers of major Old Kent Rd schemes. Developers claim a scheme is unviable, while agreeing nonetheless to provide 35% affordable housing, but only if there is no review, or conditions are placed on the review. The true profitability of the scheme is therefore never established.

 Extract from the planning committee report

It is difficult to understand why Southwark agrees to undermine reviews with these compromises. If the review shows that no extra profit is made, then the developer does not have to provide the extra affordable housing. If, on the other hand, the review shows enough profit is made to provide 50% affordable housing, then it makes no sense to cap it at 40%. The cap should be restored to 50% and the profit of the whole scheme, not just the residential element, should be measured – it could give us around 400 extra much-needed affordable homes, if the scheme is built to its maximum extent.

Other factors reinforce the argument for not settling for just 35% affordable housing. British Land are receiving a total of £39.1m of public money from the Mayor for the first phase alone. If the Mayor gives grants to developers without ensuring the maximum amounts of affordable housing are secured, then it simply becomes a subsidy for developers’ profit margins.

While the Mayor considers that only the Rotherhithe Police Station is public land, Southwark is in fact the freeholder of 15 hectares of the site – the Print Works and the Surrey Quays shopping centre (for which it collects £400k p.a. in rent and 5% of turnover respectively¹), as well as being British Land’s development partner, with a 20% interest in the site’s development, under a Master Development Agreement (MDA).

Finding space for new affordable homes is also becoming increasingly difficult. Last week Southwark approved the purchase of its fifth site in the neighbouring Old Kent Rd area in the last two years alone².

It would therefore be reasonable to expect that maximising affordable housing on the largest development site in the borough would be Southwark’s top priority on Canada Water, the largest of many large development sites in the borough. Southwark should not just be settling for the minimum its housing policy requires and ignoring the Mayor’s viability review policy.

A little history – British Land

British Land is Southwark’s development partner for the scheme and is one of the UK’s largest developers. It is formerly run but still partly owned by property magnate Sir John Ritblat, father of Delancey’s Jamie Ritblat (see E&C redevelopment and its offshore connections). The Ritblats are one of the Tory party’s top 100 donors.

Both Delancey and British Land were named in the Panama Papers leaks for their relationship to a network of offshore subsidiaries/parent companies.

 British Land’s network of offshore companies

Footnotes

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Elephant Park MP5 – the final chapter

Aug 05, 2019 12:00 am

Final phase of Heygate redevelopment proposes increase in homes with decrease in affordable -Developer Lendlease has applied to build 220 more homes than consented while providing 29 fewer affordable homes than consented in the last phase of its redevelopment of the Heygate estate. This will bring the total number of homes to 2,689 of which just 92 social rent without the viability review envisaged in the original planning consent.

In its recently submitted detailed planning application for the last plot of the scheme (MP5/H7) for what is now known as Elephant Park, Lendlease proposes building 424 new homes. There would be 72 affordable units, made up of 37 shared-ownership, 20 affordable rent and 15 social rent.

This would take the total number of social rented units in the development to just 92 out of 2,689 in total, a figure that has crept up from 71 units since 2013 (plus a further eight on Trafalgar Place (Heygate Phase 1)). The overall affordable housing is broken down into 92 social rented, 167 affordable rent and 282 shared ownership.

 Figures for the total and affordable units proposed in planning documents for MP5, the final phase of the development

Lendlease now proposes that the completed development will total 2,689 homes. This is 220 more homes than the numbers agreed by the planning committee in January 2013, which agreed a development of between 2,300 (min) and 2,469 homes (max).

 Development description from planning committee report for outline consent, Jan 2013

While the number of homes proposed exceeds the number consented, Lendlease proposes a reduction in the number of affordable homes. Only 541 of the 2,689 homes will be affordable, 29 fewer than the indicative figure of 570 given to the planning committee in 2013.

The figure for the 570 approved affordable homes was given on page 9 of the 2013 planning committee’s addendum report (correcting a previous figure of 574).

Table 8.1 of the recently submitted Reconciliation Statement for the MP5 reserved matters application shows that only 541 affordable homes are now proposed overall.

 Extract from the addendum to the 2013 outline planning committee report

 Extract from Lendlease’s recently submitted application

Southwark fail to secure housing numbers

The increase from 2,469 to 2,689 total units on Elephant Park has been facilitated by an amendment to the original planning permission. This was made in November 2018 and changed the way the amount of residential space was calculated by replacing the minimum and maximum figures for residential units with floorspace figures. The floorspace figures remained the same as those approved by the planning committee (160,579sqm GEA {min} and 254,400sqm GEA {max}), but by removing the unit figures the amendment enables Lendlease to build more homes within the allowed floorspace.

It also transpires that the number of units to be built were not secured in the original planning permission, thus opening the door to the amendment, which was deemed ‘non-material’ and so was approved by officers and not referred to the planning committee.

Policy compliance

While Lendlease has not delivered the number of affordable homes expected by the planning committee, they are nonetheless able to say they are fulfilling the affordable housing obligation of 25% affordable housing. This is because the amount of affordable housing is measured as a percentage of habitable rooms, not units. The officer’s report to the planning committee noted that there were a relatively high proportion of larger affordable units. These are undoubtedly welcome, but do mean that there is just 20% affordable housing when measured by units.

Viability questions

At the time of the application’s original determination in 2013, a viability review was proposed in the event that the development was delayed, or a change of circumstances occured. No such viability review has occured to take into account Lendlease’s proposed increase in density or reduction of affordable units.

 Extract from the 2013 planning committee report

The increase in maximum units to 2,689 units with the 29 unit drop in affordable housing gives Lendlease about 190 more free-market homes than the planning committee was led to believe would be built. These have a rough estimated value of £80m, a figure that obviously cannot have featured in the 2012 viability assessment. This assessment was made on the basis of 2,462 units and concluded that the scheme could not provide 35% affordable housing and that only a very small fraction could be social rented.

No public funding?

The lack of available public funding was cited in the officer’s report as a factor that diminished the chances of a viable scheme delivering 35% affordable housing, when the application was originally considered.

This came with the reassurance that should public funding become available the affordable housing situation could be improved. There is no indication that this has happened through the duration of Elephant Park’s development, despite the Mayor Sadiq Khan having £4.6bn in his kitty.

Object to MP5 – fight for 84 more affordable homes

Lendlease’s detailed MP5 H7 application is almost the final chapter in the redevelopment of the Heygate estate and it allows us to evaluate what is being delivered, against what was said and what was approved by Southwark Council, back in 2013.

It is now apparent that while Lendlease will fulfil its reduced affordable housing obligation they intend to do so by delivering fewer affordable homes. Lendlease has also been granted a change in the permission that has allowed them to build many more units. The upshot is that Lendlease has about 190 more free-market homes to sell.

Southwark, on the other hand, has neglected to secure the number of homes to be built and is giving Lendlease the opportunity to build more, without getting any improvement in the affordable housing situation. There also appears to have been no effort to take advantage of any public funding.

This final Heygate application must be decided by the planning committee, not officers alone. It must ask why we are getting fewer affordable housing units than it was told to expect, while Lendlease are being allowed to build more units in total. The committee must also ask why there have been no viability reviews since 2013 and what has been done to improve the affordable housing.

Without a viability review, the planning committee must refuse planning permission. The very least Lendlease should do is increase the total number of affordable homes, back to the indicative 570 the planning committee approved, plus 25% of the additional 220 units it has gained over the original maximum build. This would give us a much-needed 84 affordable homes and half of these must be social rented, as Southwark’s housing policy requires.

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