Old Kent Road
The first stage towards knocking down the Heygate estate was to call the Elephant & Castle an ‘Opportunity Area’. So anybody living on a Council estate down the Old Kent Road can be forgiven for being a little worried by Southwark’s proposal to call it an Opportunity Area with a draft Area Action Plan on top.
This is a map of all of those Council estates that fall within the Opportunity Area and proposed Area Action Plan boundary.
Southwark’s ambition is to build at least 20,000 new homes within the Opportunity Area and while it says it’s going to focus on industrial and retail land, it does not rule out building on existing housing land.
Extract from draft OKR Area Action Plan
The Council’s Cabinet report accompanying the draft Area Action Plan says that in order to find space for the 20,000 new homes it “would not preclude development” on existing housing estates, but that consultation on such proposals would be “carried out in accordance with the principles set out in the July 2015 Cabinet report.”
Extract from Cabinet report accompanying draft Area Action Plan
The July 2015 Cabinet report referred to, is the one which accompanied the Savills ‘asset performance evaluation’. This was the controversial audit of the borough’s Council stock which rated estates according to their Net Present Value (NPV) and a ‘social sustainability’ score allocated on the basis of indicators like residents’ average income. We have blogged about this extensively and explained how Savills recommended “alternative options for poorly performing stock, such as small scale regeneration or redevelopment.”
Savills Asset Performance Evaluation - rankings
The report speaks of “high investment need estates” and “a legacy of poorly designed and built housing,” coupled with “opportunities to increase the amount of council housing through wider estate regeneration.”
It goes on to highlight “the need to make difficult choices” accompanied by “the prospect of leveraging in private sector investment”.
Mind the gap
Development in the new Opportunity Area will be driven by the construction of the Bakerloo line extension with two new tube stations along the Old Kent Road. The tube extension is estimated to cost a total of over £3bn. Council documents show that the funding requirement just for the two new Old Kent road tube stations is a staggering £1.25bn, to be funded jointly by TFL and planning gain from the developments that are going to provide the 20,000 new homes. This will create pressure on affordable housing, which Southwark emphasises will be ‘subject to viability’ rather than simply stating the 35% requirement of its Core Strategy - an open invitation to developers to reduce it to a minimum.
The first major development along the Old Kent Road ‘Bermondsey Works’ shows what can go wrong when developments are ‘subject to viability’. As the result of a ‘tailored financial viability assessment’ created by ‘Affordable Housing Solutions Ltd’, this 19 storey, 158-unit scheme is providing just 10 affordable homes (none social rented) and contributing just £88,546 towards the cost of the new tube stations.
Bermondsey Works - 158 homes currently under construction
This works out at just £560 per unit and if this precedent is followed, Southwark would only receive £11.2m from its 20,000 new homes towards the £1.25bn cost of the tube stations. If Southwark can’t do better than that, the only opportunities down the the Old Kent Rd will be for developer’s profit.
Extract from Bermondsey Works S106 agreement