Dodgy developers overstate costs and underestimate profits to make new social housing ‘unviable’
DODGY developers are overpaying for council-owned land to flout rules requiring some affordable housing to be built, a letter sent to London Mayor Boris Johnson revealed yesterday.
Luxury apartment builders overstate their costs — and underestimate profits — to make local authorities sell land for reduced numbers of social housing units in return.
Developers do this by claiming in top-secret assessments that social housing levels set out in original agreements would be financially “unviable,” before council planning officials have a say.
The letter comes after Tory PM David Cameron announced that 100 “sink estates” would be bulldozed — which he admits follows “decades of neglect” and chronic government underfunding.
The London Assembly planning committee wrote to Mr Johnson urging him, and his successor, to enforce consistency and transparency in how so-called viability assessments are compiled by estate agents so that developers dodge their social housing obligations.
“Disappointingly the committee has heard real evidence that some developers are gaming the system, leading to an escalation of land values, resulting in rising rents and higher house prices,” wrote planning committee chair Nicky Gavron.
Inflated land prices become “benchmarks” for future council sell-offs and the “self-perpetuating” market puts affordable housing at more risk, said Oxford Brookes University academic Dr Sue Brownhill at a committee meeting last November.
This occurs all across Britain but the problem is hitting Londoners the hardest, Ms Gavron added.
“If we’re to get out of the housing crisis, the next mayor needs to show real leadership and encourage developers to build homes for Londoners of all walks of life.”
Shadow housing and planning minister John Healey said that “the hands-off approach from Conservative ministers and the Conservative mayor isn’t working.”
Labour mayoral candidate and frontrunner Sadiq Khan says he would push developers to include 50 per cent truly affordable homes in their London developments.
Today, he said: “Londoners are being priced out of our city by the Tory housing crisis and the cost of commuting — missing out on the opportunities that London gave me.“If we don’t act now, it could be too late.”
There are 29 developments in Southwark, south London, not fulfilling social housing quotas according to the 35% Campaign that lobbies for a minimum of 35 per cent social housing in each project.
The huge 25-acre Heygate Estate was knocked down after Southwark council sold it for £50 million to Australian developers Lend Lease in 2010.
Lend Lease are only building 82 social rent flats in place of the 1,000 lost. This is less than 4 per cent of up to 2,600 new homes including private, shared-ownership and so-called “affordable” rent properties being built.
Housing association Notting Hill Housing has also been exposed by 35% for twisting the definition of “affordable housing” to justify turning its back on providing social rent homes.
As part of its Bermondsey Spa “regeneration,” also in Southwark, 54 council homes were demolished and replaced with 205 flats, of which only 44 were “affordable social rent.”
But the association, according to 35%, was renting these out at up to 63 per cent of market rents, rather than social rents which are around 25 per cent in Southwark.