Southwark turns blind eye to social rent homes let at market-related rents

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Southwark Council has declined to take any action to recover nine social rented homes that have been lost from Gutenberg Court, a housing development on Grange Road in Bermondsey. Southwark Law Centre made a formal complaint in October 2021 that homes were being advertised on the Council's Homesearch website at over twice the average social rent levels. After a lengthy delay the Council have now replied that it will not be taking any enforcement action.

Image: Social rent homes at Gutenberg Court advertised at twice social rent levels

Gutenberg Court was given planning permission by the Council in July 2011. The officer's report states that the 38 units development would include nine units of social rented housing. The applicant's planning statement for the development also says that there will be nine social rented units.

Image: Planning statement for Gutenberg Court

Council fails to enforce affordable housing requirement

The Council, however, say that the s106 agreement between themselves and the developer, which should say how much affordable housing a new scheme delivers, has ' specific requirement provide affordable housing to be let on social rent terms.' and 'we have therefore concluded that there is no clear breach of the section 106 agreement and no basis for enforcement action...'. The Council says that the matter has been raised with the Housing Association (PA (Paragon Asra) Housing) but that they are 'not willing to alter the status because they are complying with the terms of this agreement'.

While the Council says that there is 'no specific requirement provide affordable housing to be let on social rent terms' the s106 agreement says otherwise:

Image: Section 106 agreement for Gutenberg Court

Southwark ignores this part of the s106 agreement, which clearly says that the nine rented affordable homes should be consistent with social rent levels. Further, Gutenberg Court's market-related rents (known as 'affordable rent') were not introduced as an affordable housing tenure until 2012 - after the s106 agreement was signed.

Instead they point to a recent Local Government Ombudsman decision that says it has a proper affordable housing monitoring system in place and that the system shows that the borough has received over 1400 more social rented units from developers than s106 agreements require.

Public funding at stake

The Mayor of London's grant funding database shows that Gutenberg Court was awarded a total of £386k grant funding from the Mayor's Affordable Housing Fund for the 13 affordable homes, at a time when the development's housing association was known as Leicester Housing Association. This raises a question of whether the Mayor has been properly monitoring the delivery of social housing he is paying for.

A further question arises around the price paid for the affordable units. Land Registry documents show that the housing association paid the developer £650k for 14 homes. If nine of these were to be let at market related rents, not social rents, then the price would probably have been greater, improving the viability of the scheme and the scope for additional affordable housing.

Image: Details of Mayoral funding for Gutenberg Court

Some questions for Southwark Council

Gutenberg Court is one of seven developments that the Southwark Law Centre's Planning Voice project raised with Southwark Council, where the social rents appear higher than they should be. The Council's limp response effectively concedes that the nine social rented homes promised for Gutenberg Court have not been delivered; what is worse, the Council makes it clear that they intend to do nothing further to retrieve them. This is wrong, Southwark should take robust enforcement action, not just to retrieve these social rented homes but to send a strong message to developers and housing associations that when they agree to build social rented housing it must be delivered.

Southwark should also explain why it took no action until it received a complaint from Southwark Law Centre, when its own audits noted the discrepancy with the comment: "9x Social Rent units delivered as Affordable Rent." This should have prompted immediate action. Affordable rent can be up to 80% market rent and is not considered a suitable tenure for Southwark according to the Council's own website.

Instead of addressing these points, though, Southwark hides behind the Ombudsman's decision that a monitoring system is in place and that this shows that private developers have delivered over 1300 more social units than they should have.

There is a simpler explanation for this 1300 figure, though, and that is that the audit is flawed, as Gutenberg Court demonstrates. The audit depends upon accurate returns from many housing associations, big and small and if the figures do not add up that requires a better explanation than 'we are getting more social housing than we thought'. Southwark should identify this 'extra' social housing by address, to be sure it is social housing, let at social rents, and not just an accumulation of errors and inaccurate reports.

Image: Southwark's audit results for Gutenberg Court

Southwark Law Centre's Planning Voice says...

'Given the desperate need for social rented housing in Southwark, the lack of action from Southwark Council despite its own affordable housing audit's findings is very worrying. There are thousands of families who are in dire need of housing at social rent levels, when social housing is promised, it is vital that it is delivered'.