The Aylesbury estate regeneration was initiated by Tony Blair as part of New Labour’s ‘Urban Task Force’ inner-city renewal programme. He chose the Aylesbury as the location for his inaugural ‘forgotten people’ speech, directly after being voted in as prime minister in 1997. He visited the estate again in 2005, shortly before the Cabinet decision was made to proceed with the redevelopment.
The project was subsequently awarded £56m funding under the ‘New Deal for Communities’ partnership as part of Blair’s urban renewal programme.
In 2001, residents on the estate were balloted on the prospect of stock transfer and redevelopment by a Housing Association. There was a high turnout (73%) and over 70% of residents voted against the proposals. This council Executive report postulates that one of the reasons behind the ‘NO’ vote was that residents were concerned that they would have to pay higher rents and service charges on the redeveloped estate.
In 2002, the council’s Head of Housing Regeneration said it was planning to press ahead with the redevelopment regardless, claiming that bringing the existing estate up to scratch would cost £200 million, a sum that the council simply didn’t have. The Council then instructed consultants Capita to develop a ‘manifesto for change’ and a ‘renewal strategy .. that culminated in 2005 with the council deciding on a strategy for the demolition and redevelopment of the area’.
Social or ‘affordable’ rent?
Residents’ concerns about Housing Associations charging higher rents turned out to be well founded, when it emerged that Notting Hill Housing (the council’s development partner) had secured funding for the scheme, linked to the provision of affordable rent rather than social rent (nevertheless capped (initially) at around 50% rather than 80% market rent). However, even capped at 50% market rent Southwark’s own housing data shows that the minimum income required to afford this, is twice what Southwark council tenants earn on average. However, the crucial difference between social rent and affordable rent is that the latter is linked to market rents, which in Southwark are increasing at well over 10% per annum.
In 2015, Southwark conducted an Affordable Rent Study, which concluded that “as market rents are very high in Southwark, significant incomes are required to afford high proportions of market rent, but average incomes of people living in Southwark are low.” The study showed that a single person on the average median income for Southwark cannot afford more than 26% market rent and that a lone parent working on average income cannot afford more than 14% market rent.
Southwark Affordable Rent Study 2015
The same affordable rent study shows that social rent in Southwark reflects these very low incomes; the study data shows us 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). These figures are a lot lower than the 35%-40% and 50% of market rent routinely quoted by Councillors, council officers and developers as social rents or their equivalents.
Southwark’s Affordable Rent Study 2015 showing average weekly market and social rents
The council insists that all new rented homes will be social rented not affordable rent, but revelations that Notting Hill had delivered affordable rent instead of the social rent agreed at its Bermondsey Spa regeneration, have further thrown these promises into doubt. The long list of similar tenure switches we have identified shows that this sleight-of-hand is a widespread practice tolerated by Southwark, which in any case doesn’t monitor the tenure-mix of developments post completion.
The council also insists that Notting Hill has a contractual obligation to provide social rent rather than affordable rent in the redevelopment. But its contractual agreement contains no reference to the term social rent whatsoever. Instead it refers just to ‘target rent’ set by government, without any reference to the term social rent or the National Rent Regime regulatory framework which governs it. There is an obvious concern that this could be interpreted as affordable rent, as there are’target rents’ for both social rent and affordable rent set by government.
In any case Southwark’s planning report for the redevelopment admits that there will be an overall loss of between 778 and 1,166 social rented units through the redevelopment (and this is assuming the replacement social rented housing won’t morph into affordable rent:
We note that the replacement social housing is referred to ambiguously as both as social rent and affordable rent throughout the planning application documents and that these would be material considerations should there later be any dispute about the precise definition of the tenure provision intended.
We also note Notting Hill’s predilection for affordable rent. Indeed, its CEO Kate Davies was a fellow of the Centre for Social Justice - the conservative think tank set up and chaired by Iain Duncan Smith, which conceived the idea of both affordable rent and right-to-buy for housing association tenants.
Kate Davies co-authored this report by the CSJ, in which she claimed that council estates are ‘ghettos of the poorest and neediest people’ that are ‘subsidised by the taxpayer’ and provide ‘low cost living for life funded from the public purse’. She said that tenants ‘often pay little or no rent, and get their home maintained in good order for free.’ She concluded that ‘social housing is not a desirable destination’, that ‘private ownership is preferable to state provided solutions’ and that social housing providers should be able to sent rent levels without restrictions.
Kate Davies was also a key advisor to the extremely influential Localis review (Principles for Social Housing Reform by John Hills), the insidious effects of which are well outlined on the Labour Housing Group’s blog. The blog also has an article by former Notting Hill board executive Steve Hilditch, who resigned as a result of the Trust’s change in direction and priorities.
In 2007, she wrote a column in The Times saying “It has become popular to criticise Hills for raising the issue of tenure reform and rent levels. But we need to get away from one type of housing-based answer for so many different types of people. Social housing should not be seen as a destination but as a springboard to a better life; a place from which people can re-establish themselves, improve their prospects and move forward”. She went on to assert that “rolling assured shorthold tenancies .. give landlords greater influence to encourage positive social behaviour.”
In 2008, she wrote in The Times making the case for fixed term rather than secure tenancies - “We need a greater diversity of options in the social sector. For example, some accommodation rented at almost market price.. As well as tenure reform, I would like to see greater flexibility in the housing available and who it is offered to.”
In 2008 she also wrote for the Guardian in defence of Boris Johnson’s introduction of affordable rent and wrote an article on the Conservative Home website arguing that Councils should promote more homeownership.
The Guardian notes that Davies’s partner, Nick Johnson, is chief executive of H&F Homes, the “arms-length management organisation” that manages the Council’s homes and of the council’s tenants and leaseholders.
Kate Davies was recently criticised by local councillors for Notting Hill’s rent hikes and evictions on the St James estate in Bermondsey. Cllr Pollak described Notting Hill as a ‘predatory, rogue landlord’. Kate has clearly come a long way since her days as Kate née Marshall, when she was Secretary General of the Revolutionary Communist Party..
Kate left the RCP when she married disgraced Bexley council leader Nick Johnson, who after filing for early retirement (and bumper pension) from Bexley on grounds of ill-health, went on to set up ‘Davies Johnson Ltd’ - a consultancy employed by Hammersmith & Fulham Council to advise on the redevelopment of council estates in its Earls Court redevelopment.
The most recent phase of the scheme (site 7 - Wolverton/’Harvard Gardens’) is being developed by L&Q and comprises 147 new homes, of which 48 will supposedly be for ‘social rent’. However, the section 106 planning agreement for the site says ‘affordable rent’ and a question put to the Mayor confirms that these will be let at affordable rent of up to 50% market rent.
In October 2015, we managed to obtain the actual rent levels proposed by Notting Hill for its first phase of the Aylesbury. These confirmed that rents are being determined as a percentage of market rent (35% to 59% market rent) and not using the National Rent Regime formula for social rents. They also illustrate the main difference between social and affordable rent, namely that affordable rents rise in line with market rent trends. This is shown by the fact that rents in later stages of the phase are higher as a result of projected increases in market rents over the coming years. Were they truly social rents then they would actually decrease by 1% each year.
Refurb vs Demolition
At the 2015 CPO Public Inquiry, Professor Jane Rendell from the Bartlett School of Architecture questioned the council’s cost/benefit appraisal for its decision to redevelop rather than refurbish. She took the Inquiry through all of the figures and showed that cost estimates for refurbishment had been inflated by nearly £150m. (See AJ article).
Objectors gave evidence showing that later phases of the estate had been allocated funds under the council’s WDS programme (Decent Homes Standard works programme). They showed the Inquiry section 20 invoices that they had been sent by the council, detailing the estimated cost of the Decent Homes Standard major works charges, i.e. bringing the homes up to modern standards. These showed that homes on the estate were being brought up to Decent Homes Standard at an average cost of just £20,261 per home1.
It was also confirmed during the course of the Public Inquiry, that the council has spent a staggering £46.8m on the Aylesbury regeneration scheme to date. This has comprised total capital account costs of £32.1m (demolition & acquisiton) and revenue account costs amounting to £14.7m (Management & Administration).
The council has therefore spent £46.8m demolishing and redeveloping 112 homes2 on the scheme to date (£417k per home), compared to the £20,261 per home it is spending bringing homes up to Decent Homes Standard elsewhere on the estate. We argue that with £52m of council funds earmarked for the scheme over the next 3 years alone, there is a strong business case for a moratorium.
When the Council Executive took its decision to redevelop the estate in September 2005, it did so on the basis of a costings estimate which calculated that the scheme would incur an overall cost to the Council of £16.1m over the scheme’s 10-year development period. However, the Council’s budget books show that it is spending nearly £14m on the Aylesbury scheme during the past year alone. Later figures showed that the Council’s estimated cost of decanting and demolishing the estate had ballooned to £150m3, but it is likely that even this figure will now be well exceeded.
Other London boroughs take a different approach to regeneration. Islington has an estate called the Six Acres estate near Finsbury Park. The Six Acres estate was built at the same time as Heygate & Aylesury, by the same contractors (Laing) using the same system (Jespersen 12M).
Instead of demolishing its estate and handing it over to the private sector at a loss, Islington Council chose to refurbish the Six Acres estate in 2012. The 473 homes on the estate were refurbished with new external wall insulation, new entry doors, exterior furnishing improvements, green roofs and cycle shelters.
The entire Six Acres estate refurbishment and public realm improvement works cost a total of £17m, which works out at around £47k per dwelling; far less than the Council is spending per dwelling on demolishing its homes on the Aylesbury.
Clearly the business case for refurbishment is much stronger than that for demolition. However, Southwark says it’s not about the fabric of the estate but its design. In her Public Inquiry evidence, Southwark’s in-house architect confirmed that “the condition of the buildings does not, itself present a case for demolition and redevelopment” but that the “fundamental issue is the estate layout and the poor urban environment this presents”. In paragraph 5.3 of her evidence she gives examples of this ‘poor urban environment’ which include criticisms that:
“The scale and orthogonal formation of the blocks (some of the longest in Europe) does not correspond to human scale, nor does it create opportunities for neighbourliness and local neighbourhood identity.”
“The estate roads, which serve to access gargages, typically terminate in dead ends, and have little relationship to front doors of dwellings”. This means that “residents are deprived of a clear address, and identity, and experience various practical inconvenincies i.e. deliveries finding it difficult to locate front doors.”
“Lack of ownership” of the estates green spaces, means that “they are under used”.
So translating the architect speak to plain English we can say that Southwark is spending twice as much demolishing the Aylesbury estate than it would cost to refurbish it, on the grounds that the green spaces are “under used” and the lack of a traditional street layout “deprives” residents of a “clear identity”.
More criticisms of the estate and grounds for its demolition can be found in other officers’ proofs of evidence submitted to the Public Inquiry:
Jackie Fearon - Aylesbury Area Manager, Southwark Council
Elaine Taylor - Senior Regeneration & Development Manager, L&Q Housing
Mark Maginn - Sales & Acquisitions Manager, Southwark Council
Tim Cutts - Planning Policy Team Leader, Southwark Council
Jane Seymour - Development Partnership Broker, Southwark Council
One fact that receives little mention in the CPO papers is that the Aylesbury estate is not exclusively concrete construction; there are over 300 brick built properties on the estate equally earmarked for demolition.
One block of over 300 red brick properties on the Aylesbury estate
Bridging the (viability) gap
The Aylesbury scheme requires a phenomenal amount of public sector funding. The scheme has been allocated 46m from the government’s Estate Regeneration Fund and £27m from GLA funding to date, plus £13m of HCA funding (for the completed phase 1 of the scheme). In addition, the Council has spent a considerable amount of its own funds on the scheme (£28.5m to date), and has committed a further £52m to the scheme over the next three years alone. In addition, the scheme has received £56m from the government’s NDC (New Deal for Communities) programme. This amounts to a total of £222m of public funding allocated so far, of which £97.5m has been spent.
Notwithstanding this, documents show that the Aylesbury scheme as envisaged is still not viable and that the viability gap is being bridged by shortchanging leaseholders. In Jan 2009, the draft Aylesbury Area Action Plan showed that there was a funding shortfall of £299m.
However, one of the requirements of an Area Action Plan is that it must be shown to be viable and therefore deliverable. The inspector flagged up the significant funding gap to the Council and her final report on the AAAP shows that the Council’s solution was to arbitrarily slash the cost estimates, without providing any evidence base or justification for doing so. The £130m originally estimated for leasehold acquisitions of the circa 500 leasehold properties on the estate was slashed by half. There is no explanation as to why the Council slashed its estimate of the market value of leaseholders’ homes by 50% overnight.
Table of Recommended Changes to AAAP (2009) showing cost estimates slashed
Altogether, the cost estimates were reduced by around a half, reducing the funding gap from £299m down to £169m and this is the figure given in the final adopted version of the AAAP.
Extract from final adopted version of Aylesbury Area Action Plan 2010 showing the funding gap
The Council was expecting to cover the funding shortfall with government PFI funding and this is how the Area Action Plan was deemed sound at its Examination in Public. However, just under a year after the Area Action Plan was adopted, the government withdrew all PFI funding for the scheme.
The AAAP goes on to explain possible scenarios for bridging the funding gap should funding and viability issues arise; these include “delivering different and more financially viable tenure mixes”.
Extract from final adopted version of the AAAP
Development schemes in Southwark are currently delivering on average 3% affordable housing, largely with social rent substituted for affordable rent. So we find it hard to believe that Notting Hill can deliver a scheme with 50% affordable housing comprising 75% social rent. We find it even more difficult to believe that Notting Hill is also expecting to extract a 21% profit margin (representing ca. £150m) and Southwark is also expecting to receive payments for the land sale.
Despite its new transparency policy the Council rejected our FOI request for a copy of Notting Hill’s viability assessment for the Aylesbury redevelopment. Despite being a registered charity, Notting Hill has claimed commercial confidentiality as the grounds for its redactions. In April 2016, the Information Commissioner upheld our complaint and directed Southwark Council to disclose the unredacted viability report. The disclosed viability assessment reveals that Barratt will make a minimum (guaranteed) 21% profit from the scheme, expected to amount to a minimum of £163m, while Southwark will receive staged land payments calculated as a residual value once scheme costs including Notting Hill’s 21% profit have been deducted4. The assessment shows that the Council’s return is currently expected to amount to just £51m - well below the £150m it is spending on decant and demolition.
Southwark does have the benefit of a planning overage clause where it receives 50% of any overage sales profit, but this is only triggered once sales values exceed £471 per sqft5 and this depends on how Barratt and Notting Hill manage the development account. Other profit share deals the Council has struck for estate regenerations have resulted in zero sum shares for the Council.
It’s also important to note that Notting Hill won’t be building the new homes. This
to Barratt Homes in a joint-venture agreement, which will see Barratt also
receive a healthy slice of the profits. The development agreement allows Barratt to keep half of the proceeds from its sale of the 1700 private units being built as part of the scheme (based on sales values of £451 per sqft), minus
a 21% guaranteed profit for Notting Hill. According to Notting Hill’s viability assessment its 21% profit extracted from the redevelopment will amount to £163m6.
The Council has argued that the regeneration is providing public benefits including a new library, a new GP clinic, and new nursery facilities. But what is not publicised is the fact that these are all being funded 100% by the Council, they are not being funded by Notting Hill or its development partner Barratt. Neither is it explained that these new facilities are replacements for the those closed down or demolished by the Council.
Aylesbury Medical Centre, East St Library, Wells Way Library, Aylesbury Learning Centre
In conclusion, the Aylesbury redevelopment is not viable. It is only being made viable via a combination of huge public subsidy from the Council, shortchanging the leaseholders and substituting social for affordable rented tenure.
The Aylesbury estate masterplan outline planning application gave consent for a total of 1,378 parking spaces in the new development, equating to four out of ten new households with parking.7
The officer’s report for the Aylesbury masterplan application also confirms that there will be a net loss of 1.8 hectares of open space as a result of the redevelopment:
Further, the new open spaces in the development will not be public open spaces adopted by the council; they will be privately owned and managed by a subsidiary of Notting Hill Housing Group.
Generous existing open space that will not be replaced
Loretta Lees, a leading professor of Human Geography has published a study researching the displacement of Aylesbury estate tenants as a result of the regeneration.
She also gave evidence at the Aylesbury CPO public inquiry showing how leaseholders were also being displaced, not just from the area but to outer boroughs and beyond as a result of the low compensation payments they receive. Of the circa 250 leaseholders ‘decanted’ off the estate to date, only 7 have taken up shared ownership on new homes provided by the scheme.
In Sep 2016, the Secretary of State announced that he would be blocking Southwark’s application for a Compulsory Purchase Order, on the grounds that the scheme is in breach of basic human and equalities rights. The Secretary of State’s decision was based on the fact that many elderly residents and those from black and ethnic minority groups were being forced to relocate elsewhere, rather than being rehoused on the scheme footprint. Southwark subsequently appealed the ruling and has applied to the High Court to have the decision overturned.
Both leaseholders and tenants have set up action groups to fight the Council’s demolition plans. We have helped by setting up a crowdfunding campaign to help with legal costs in fighting for their right to remain.
Video footage of the 2015 Aylesbury estate CPO public inquiry. 2005 Frost Associates report. April 2005 BPTW report. (Redacted) Development Partnership Agreement(DPA). (Redacted) DPA Appendices. (Redacted) DPA Appendix 7 - Business Plan. Audit showing community spaces lost Albany Place - DHN info
https://www.architectsjournal.co.uk/news/aylesbury-estate-southwark-councils-judicial-review-application-over-cpos-refused/10016008.article https://www.theguardian.com/cities/2016/sep/20/aylesbury-estate-ruling-future-regeneration-sajid-javid https://widerimage.reuters.com/story/residents-resist-demolition https://www.architectsjournal.co.uk/news/assessing-aylesbury-whats-the-true-cost-of-demolishing-council-estates/8692267.article https://www.theguardian.com/society/2016/jul/13/aylesbury-estate-south-london-social-housing
Aylesbury homes demolished to date: 1-41 Bradenham & 1-12 Red Lion Close (site 1a), 1-59 Wolverton (site 7) - [Total = 112]. ↩
See paragraphs 26 and 27 of this Executive report which say that a fixed land receipt has been agreed for the First Development Site (£17.5) but that land receipts for remaining phases will be calculated on a residual basis. ↩
Paragraph 19 of the closed version of the above closed report says “Barratt will agree to pay NHHT at practical completion half of the private sale Gross Development Value (based on £451 per sqft) less 21% which they retain in profit.” ↩