Barratt Homes, Britains third-largest housebuilder, has just posted a 45% rise in profits to £565.5m during the last financial year.

Barratt’s success is due in part to its pipeline of major developments in Southwark, which include Maple Quays (668 homes in phase 1 of the Canada Water regeneration); The Galleria development in Peckham; Redwood Park (212 homes on former council land at Surrey Quays) and the 60-acre, 3,500-home Aylesbury estate redevelompent for which Barratt is Notting Hill Housing’s development partner.

Barratt has also recently started work on its ‘Blackfriars Circus’ development, comprising 336 new homes in 5 buildings ranging up to 27 storeys in height, overlooking the South Bank University campus near 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 dupe Southwark council into waiving 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 and 48 affordable rent homes. 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)

Nevertheless the planning application was waved through and demolition works started on the site earlier this year. However, it is now being reported that the council is planning to buy these 8 social and 48 affordable rented homes from Barratt, in order to turn them into social rented council homes at a cost of £10m.

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. However, it also appears that Southwark is paying well over the market price: the £10m price tag for 56 affordable housing units seems an awful lot compared to the £3.1m paid by L&Q for 54 affordable homes it brought from Heygate developer Lend Lease at Trafalgar Place.

Maple Quays

In 2013, Barratt completed its Maple Quays development at Canada Water. This first phase of the Canada Water regeneration comprised 9 buildings ranging up to 26 storeys, providing 668 residential units of which 123 were supposed to be social rent - according to the council’s planning report for the planning application:

However, when the section 106 legal agreement was drawn up, there was no mention of social rented housing - only ‘affordable rent’ (i.e. 80% market rent):

Chambers Wharf

It is starting to look this these tenure switches have become routine practice for new developments in Southwark. The arrangement suits both developers and the council, who can claim the credit for delivering new social rented housing, which is in actual fact affordable rent. We recently discovered such a tenure switch at Chambers Wharf, Berkeley Homes’ latest development on Southwark’s riverside. In May this year, Councillor Williams proclaimed the completion of “106 social rented apartments and 14 social rented family homes,” which he claimed was proof that the council is “tackling the housing crisis head on and are doing all we can to build the quality affordable homes our residents so desperately need”. But what Councillor Williams’ press statement didn’t say was that the 89 of the social rented homes had been converted to affordable rents of 65% market rent by mutual agreement with the council, following a ‘viability review’ of the scheme in 2013.

Will the Aylesbury follow suit?

Questions are being asked whether the replacement social rented housing on London’s largest council estate redevelopment scheme will meet the same fate, i.e. end up being delivered as affordable rent?

Three weeks ago the council published its Section 106 agreement with Notting Hill Housing for the Aylesbury redevelopment, which covers both the First Development Site (FDS - phase one) and the Outline Development Site (the rest of the scheme). We have had a thorough read of the agreement and have got some serious concerns about the wording, which we think could open the door to interpretation as affordable rent on the Outline Site.

Our main concern is that the agreement’s affordable housing schedule prescribes ‘social rented’ housing for the First Development Site (FDS), but the wording for the Outline Site has omitted the word ‘rented’ and says just ‘social’ housing. Given the fact that there is no definition elsewhere in the agreement for the term ‘Social’, we are worried that any future legal dispute over the interpretation of this term may fall back on the statutory definition, which includes affordable rent under the broad definition of ‘social’ housing in section 68 of the Housing and Regeneration Act 2008.

Of additional concern is that various references can be found in the agreement in relation to social rented housing on the FDS, but there are no specific references to social rented housing in relation to the Outline Site:

We have written a letter to Councillor Williams setting out our concerns in detail and requesting that the S106 agreement be amended.

If the council and Notting Hill are genuinely committed to the provision of social rented rather than affordable rented housing on the Aylesbury, then we see no reason why they wouldn’t agree to these amendments.