Barratt Homes, Britains third-largest housebuilder, posted a 45% rise in profits to £565.5m last year.
Barratt's success is due in part to its huge pipeline of major developments in Southwark, which include Maple Quays (phase 1 of the Canada Water regeneration); The Galleria development in Peckhamand Redwood Park built on former council land in Surrey Quays.
Barratt has also completed 'Blackfriars Circus' a development comprising 336 new homes in 5 buildings ranging up to 27 storeys in height, overlooking South Bank University campus at Elephant & Castle. According to SE1 website the tallest of these will be known as 'The Conquest Apartments'.
This is an appropriate name for a development that was able to convince Southwark council to waiver the tenure requirements of its 35% affordable housing Policy. These would have secured a minimum 70 social rented homes in the development, but Barratt submitted a viability assessment claiming it would only be viable to provide 8 social rented homes, 48 affordable rent and 35 shared ownership. The officer's report explains that the council had the viability assessment appraised by the 'Borough Valuer' and that "Whilst a number of inputs into the valuation have been agreed (including commercial values, ground rents, and professional fees) an agreement has not been reached on two fundamental matters: methodology of calculating the benchmark value of the site; and residential sale values. As such, the applicant and the Borough Valuer have not reached an agreed position about how much affordable housing can be delivered on site." (para. 109)
Despite the disagreement over viability figures, the planning application was waved through without any viability review and clawback mechanism. Demolition works started on the site in 2014 and the site is due for completion in spring 2017.
In September 2015, it was reported that the council is planning to buy the 8 social and 48 affordable rented homes from Barratt, in order to turn them into new 'council homes'. The price it agreed to pay for the 56 units is £10m.
This seems like a high price tag for homes sold with an affordable housing covenant, given that Land Registry deeds show that Barratt sold the 35 shared ownership units for £8m.
Tweets by Cabinet member for Regen Mark Williams and Council leader Peter John
The absurdity of buying homes from developers to convert to social rent when they should have been social rent anyway, is plain for all to see.
Furthermore, this is not council housing as Southwark claims in its press release the rent is 40% market rent. A calculation based on the Council's latest market data gives an average rent of £235 across all flat sizes compared to an average Council rent of under £100 per week.
Extract from Southwark's Market Trends Bulletin Feb 2017
Indeed, other Council data reports show that a social rent in Southwark for a 1-bed flat is £96.88 on average (incl. service charge), which works out to be 25.5% of market rent (£378.79); a 2-bed social rented flat is £110.76 per week (24.2% market rent); a 3-bed is £124.18 pw (22.5% market rent); a 4-bed is £139.69 (19.3% market rent).
What we are seeing at Blackfriars Circus is the introduction of two-tier council housing. Southwark has recently proposed introducing an 'intermediate waiting list' with higher rents, specifically for the discounted market rented housing developers are supplying instead of social rent. The intermedite waiting list will also provide tenants for Southwark's own intermediate rent homes, homes that will no doubt join the pseudo-council homes of Blackfriar's Circus as part of the 11000 council homes building programme.
Extract from the Council's "Southwark Life" magazine