Southwark Council’s planning committee is set to approve the largest planning application ever submitted in the borough this week, when it considers the redevelopment of Canada Water. This huge 21 hectare site includes the Surrey Quays shopping centre and leisure park and the old Daily Mail printworks. Developer British Land’s (BL) proposals for about 7 million sq ft of development will be considered over two planning meetings on the 25th and 30th September.

The masterplan site is the final phase and main component of the Council’s regeneration of Canada Water and comprises a cluster of tall buildings up to 34 storeys, with a mix of residential, retail, office, workspace and leisure uses. It will include a hotel, student accommodation, cinema and community facilities.

The planning application is in two parts. The first part is the main outline application for between 2,000 and 4,000 new homes plus a large element of non-residential floorspace, while the second, is the detailed application for phase 1 of the scheme comprising 265 new homes, a leisure centre (a replacement for the Seven Islands centre largely paid for by Southwark), plus a petrol filling station.

Canada Water Shopping Centre (shaded blue), Print Works (shaded green), Leisure park (shaded purple)

The Affordable Housing

The proposed scheme is for a minimum of 2,000 new homes, rising to a possible 4,000 maximum, 35% of which would be affordable (25% social rent, 10% intermediate housing). This is in line with Southwark’s own local plan.

As well as the local plan requirement, though, the Mayor’s London Plan requires a viability review mechanism, to ensure that if a scheme turns out to be more profitable than predicted, then extra affordable housing can be provided, up to a cap of 50%. Canada Water triggers this review requirement because at least a quarter of the site is either public or industrial land, and more affordable housing is expected from such sites.

But Southwark has compromised with British Land on the review mechanism, in breach of housing policy. It is allowing a 40% cap on any increase in affordable housing, instead of 50%, and is also allowing British Land to discount any profit from the commercial elements (office space, retail etc) of the scheme from any viability review.

Southwark justifies this departure from policy requirements on viability grounds. It agrees with British Land’s claim that the scheme can only viably support 11% affordable housing, not 35%, and thus British Land is incurring a ‘risk’ by committing to 35% “given the current day viability position.” This is a familiar line of argument, recently deployed by developers of major Old Kent Rd schemes. Developers claim a scheme is unviable, while agreeing nonetheless to provide 35% affordable housing, but only if there is no review, or conditions are placed on the review. The true profitability of the scheme is therefore never established.

Extract from the planning committee report

It is difficult to understand why Southwark agrees to undermine reviews with these compromises. If the review shows that no extra profit is made, then the developer does not have to provide the extra affordable housing. If, on the other hand, the review shows enough profit is made to provide 50% affordable housing, then it makes no sense to cap it at 40%. The cap should be restored to 50% and the profit of the whole scheme, not just the residential element, should be measured - it could give us around 400 extra much-needed affordable homes, if the scheme is built to its maximum extent.

Other factors reinforce the argument for not settling for just 35% affordable housing. British Land are receiving a total of £39.1m of public money from the Mayor for the first phase alone. If the Mayor gives grants to developers without ensuring the maximum amounts of affordable housing are secured, then it simply becomes a subsidy for developers’ profit margins.

While the Mayor considers that only the Rotherhithe Police Station is public land, Southwark is in fact the freeholder of 15 hectares of the site - the Print Works and the Surrey Quays shopping centre (for which it collects £400k p.a. in rent and 5% of turnover respectively1), as well as being British Land’s development partner, with a 20% interest in the site’s development, under a Master Development Agreement (MDA).

Finding space for new affordable homes is also becoming increasingly difficult. Last week Southwark approved the purchase of its fifth site in the neighbouring Old Kent Rd area in the last two years alone2.

It would therefore be reasonable to expect that maximising affordable housing on the largest development site in the borough would be Southwark’s top priority on Canada Water, the largest of many large development sites in the borough. Southwark should not just be settling for the minimum its housing policy requires and ignoring the Mayor’s viability review policy.

Green energy

The planning policy governing this scheme said that all developments would be linked up to a district heating network in order to reduce carbon emissions and promote sustainable development.

Extract from the Area Action Plan

However, paragraphs 968 and 969 of the planning committee report quietly mention that any such plans to deliver or connect to a district heating network have been dropped on feasibility grounds.

It is not clear from the report whether the handful of solar panels proposed will now even satisfy the Council’s basic 20% on-site renewable energy policy requirement.

A little history - British Land

British Land is Southwark’s development partner for the scheme and is one of the UK’s largest developers. It is formerly run but still partly owned by property magnate Sir John Ritblat, father of Delancey’s Jamie Ritblat (see E&C redevelopment and its offshore connections). The Ritblats are one of the Tory party’s top 100 donors.

Both Delancey and British Land were named in the Panama Papers leaks for their relationship to a network of offshore subsidiaries/parent companies.

British Land’s network of offshore companies

Footnotes

  1. See para 34 of this council briefing paper. 

  2. Sites bought to date are the PC World site, a site on Verney Rd, a site at 1 Ann Moss Way, the former gas works and the B&M Ruby Triangle site. See this thread for more details.