The mixed-used re-development of Skipton House was approved by Southwark Council’s planning committee last Tuesday. It will have 421 new homes with an estimated average price of £820,0001. The development should have provided 35% affordable housing, which would have equated to around 150 affordable units, 75 of which would have been social rented. However, it was argued that delivering affordable housing on site would render the scheme unviable (or rather unprofitable enough).

Instead developer London & Regional Properties Ltd will build, or fund the delivery of 89 ‘affordable’ homes elsewhere, off-site, at a cost of £16.8m – just 2% of the scheme’s total development value of £747m. Meanwhile, a minimum 17.5% developer profit margin has been ring-fenced in the viability assessment, representing a guaranteed windfall of £130m for the developer2.

L&R’s viability assessment assumes a minium developer profit of 17.5%

L&R’s viability assessment estimates the Gross Development Value at £747m

L&R hits the jackpot

This is a win on many counts for London & Regional (L&R). It avoids building the full 35% affordable housing required by policy, at a loss to the community of around 60 affordable homes. It avoids sullying the purity of its 100% private development, allowing L&R to sell them at premium prices. In addition, by agreeing to build or fund the delivery of the off-site affordable units, it avoids Southwark’s tariff for payments in-lieu of affordable housing. This in-lieu payment would have amounted to £47.8m3. By getting away with a paltry £16.8m L&R has really hit the jackpot.

Off-site affordable housing - who knows where, who knows when

The sites for the 89 off-site units that L&R are committed to build or fund, are pencilled-in for Salisbury Close, Manor Place and Braganza St4, but no planning approvals have been secured for these sites and while applications are anticipated before the end of the year, Southwark’s planning officers made it clear that the homes could be built elsewhere (Peckham and Camberwell were mentioned). It could also take a while before they are built – the delivery of affordable housing will be ‘dovetailed’ with the Skipton House redevelopment, but L&R have been allowed a generous 5 years to get their scheme off the ground, instead of the customary three years.

Only £16m for affordable housing

L&R achieved this stunning victory for profit over affordable housing, by successfully arguing that there was only £16m in the kitty for affordable housing and if they paid anything more their development would be rendered unviable (not profitable enough). It was able to pull this off, in part, because it had bought Skipton House for £54.5m in 2001 and then sat on it, while land values rose, enabling it to enter a figure of £120m as Skipton House’s current market value into the viability assessment. This was the bulk of a £137m valuation of the whole site, raising the benchmark measure for viable development and reducing the margin available for affordable housing. This flies in the face of Southwark’s new Development Viability SPD, which specifically states that Current Use Value (CUV) should be used as the viability benchmark - not market value.

Southwark’s Development Viability SPD

£16m versus £67m

Southwark’s expert consultant questioned L&R’s use of market value as the benchmark and also L&R’s claim that only a maximum of £16m was available for affordable housing; he came up with a much higher figure - £67m5. However, the planning committee was easily persuaded to settle for the lower figure by the promise of a viability review, after development has started, which might get further payments for affordable housing, if, amongst other things, residential and office values rose and building costs fell.

Abject Labour

The Labour members voted as a block in favour of the development. The Lib Dem councillors Adele Morris and Hamish McCulloch voted against. Local Cathedral ward councillor David Noakes also spoke against the application.

The result…

Skipton House joins a shameful list of developments at the Elephant, approved by Southwark but without affordable housing, or without social rented housing – Tribeca Sq, One the Elephant, Strata Tower, 360 Tower, Eileen House.

To boot, the Skipton House scheme involves booting out the NHS from its existing offices and demolishing a library and Council-owned Homeless hostel.

Council-owned Keyworth Homeless Hostel and Perry Library - both earmarked for demolition

Skipton House shows why Southwark is in the bottom 3 London boroughs for affordable housing delivery. Southwark is gullible and weak in the face of property developers and, in despite of its much-vaunted ‘we will build 11,000 council homes’ boast, building affordable housing is its lowest priority.


  1. Calculated using the weighted average of the 421 units from the column ‘unit price’ on the penultimate page of the viability assessment.

  2. See paragraph 10.4 on page 39 of the viability assessment which says that the minimum required profit level is 17.5% of the Gross Development Value. The viability assessment shows the Gross Development Value as £747m. Therefore the minimum required profit is £130m (17.5% of £747m).

  3. Southwark’s tariff for in-lieu payments is £100k per habitable room of affordable housing not provided. The scheme is proposing 1,366 habitable rooms in total; 35% of 1,366 is 478 habitable rooms; 478 X £100,000 = £47.8m

  4. See paragraph 69 of the planning committee report

  5. See paragraphs 77 & 78 of the planning committee report