Developer Delancey has finally submitted its application for the redevelopment of the Elephant & Castle shopping centre and London College of Communication campus. It will be a mixed use development of shops, offices, homes and campus facilities.

Affordable housing

According to the affordable housing statement all of the proposed 979 residential units will be for rent, none for sale. There will be 35% affordable housing, but none of it will be social rented or part-buy/part-rent. Instead the affordable housing will be something called ‘Dicounted Market Rent’ (DMR), let at up to 80% market rent, but supposedly at a ‘blended percentage’ of 57% market rent. The application promises that at least 40% of the affordable housing will be let at or below the new London Living Rent, which would currently equate to around £1000pcm for a 1-bed flat at the Elephant. The ‘affordable housing’ tenants would be on 3-year assured short-hold tenancies, not on assured tenancies with no time limit, as issued by housing associations. In addition, the ‘discounted market rents’ will only be discounted for a period of 15 years, after which time the developer is free to sell them on the open market. This is a major flaw in the Mayor’s new Build to Rent housing product.

Extract from the Mayor’s new Affordable Housing SPG

The ‘Build to Rent’ affordable housing will not be let or managed by a housing association, as is usual, but will be privately managed by Delancey subsidiary Get Living London. Despite managing over £1bn worth of PRS homes Get Living London has never paid a penny of corporation tax. This is because its parent companies are Qatari Diar and Delancey’s tax-avoiding offshore investment fund DV4 registered in the British Virgin Islands. The Elephant and Castle shopping centre is currently owned by one of the fund’s shell companies registered in the BVI and whose directors are registered in Bermuda and Kuwait. We have shown before how Delancey uses a complex network of offshore companies to avoid paying tax.

Delancey's Elephant & Castle holdings registered in the BVI

Delancey claims that providing a policy-compliant affordable housing mix with social rented tenure would render its development unviable, but has refused our request to see a full copy of its viability assessment. The Council’s planning policy for the Elephant & Castle says that at least 35% of all new homes must be affordable, of which 50% social rent. This would provide 171 much-needed social rented homes for local people.

Extract from the Council’s planning policy for E&C

Delancey make it clear in their Affordable Housing Statement that the application has been drafted after ‘extensive discussions…with the Council…and…GLA’ (para 5.1). It is also clear that much of these discussions were about changing the affordable housing rules to allow Delancey to avoid building social rented housing. Southwark has shown its affection for so-called ‘Build to Rent’ in its recent draft of the Old Kent Rd Area Action Plan/Opportunity Area Framework and the ‘flexibility’ this allows ‘Build to Rent’ in the delivery of affordable housing is duly noted by Delancey (para 3.32). Our new London Mayor, Sadiq Khan, also reveals his entusiasm for ‘Build to Rent’ in the just issued draft Affordable Housing and Viability Supplementary Planning Guidance, so Delancey can confidently state that the Mayor’s ‘Housing SPG will likely promote the 100% discounted market rent solutions on large scale sites’.

So, while this application is from Delancey, there can be little doubt it is coming forward with the blessing of both Southwark Council and the Mayor of London. None of the latest London Plan or local plan documents Delancey refers to in justification of its departures from affordable housing policy have been adopted; they are out for consultation or still to be consulted on. They all promote radical changes to affordable housing policy, changes that will exclude social rented housing from major new developments. Southwark Council and the Mayor should be telling Delancey how unacceptable this application is, not changing planning policy to ensure its success.

The development adds to the other towers of shame at the Elephant where we now have a pipleline of 6228 new homes, of which a pitiful 82 will be social rented.

Development Total homes Social rented
Heygate (12/AP/1092) 2704 82
Strata Tower (05/AP/2502) 408 0
One the Elephant (12/AP/2239) 284 0
Elephant One (08/AP/2043) 640 0
Eileen House (09/AP/0343) 335 0
London 360 Tower (07/AP/0760) 457 0
Skipton House (15/AP/5125) 421 0
Shopping Centre/LCC (16/AP/4458) 979 0
Total: 6228 82

What about existing retailers?

As expected the shopping centre is to be demolished and there will be no room for most of the existing retailers. Delancey’s planning statement contends that ‘it is recognised that some existing retailers in the area are benefitting from disproportionately low levels of rent…‘ and concludes that ‘it may not be financially viable for them to survive in the area in the longer term’. Delancey offers a ‘relocation strategy’, but says that it’s only on condition of being awarded planning permission and fails to provide any details of what its ‘relocation strategy’ entails.

This is a clear breach of paragraph 5.1.7 of the Council’s planning policy framework for the Elephant & Castle, which requires a number of ‘affordable retail units which are made available to existing occupiers displaced by development’, in order to ‘ensure that development opportunities provide opportunities for existing and future SME businesses’.

The framework policy says that a minimum of 10% of retail units in large developments must be affordable and makes the very specific requirement to provide such units at no more than 40% market rent for the first 5 years.

Extract from the Council’s planning policy framework for E&C

in 2007 the Council’s Executive approved a ‘Traders Charter’ setting out detailed policies on how traders would be secured tapered rent subsidies not just on the retail in the new shopping centre but all new S106 retail and also Southwark’s own commercial retail premises in the area.

Extract from Southwark’s ‘Traders Charter’

In October 2015, Southwark resolved to undertake an Equalities Impact Assessment, in order to fulfill its Public Sector Equality Duty to the shopping centre traders and explore how the impact of the redevelopment can be mitigated. This assessment was never undertaken, the Council is neglecting its duty and allowing Delancey to progress the scheme in total disregard for the existing traders. In 2005, Southwark was slated by Lord Ouseley after an independent review found that its regeneration policies failed retailers and traders from BME communities. These failings clearly continue.

In 2015, we revealed how Delancey had successfully lobbied the Council to change the conditions of its planning permission for its neighbouring Elephant One development. This was supposed to provide a handful of small retail units specifically allocated to traders displaced from the shopping centre at reduced rents; instead these have been replaced by a Sainsburys.

Delancey’s application is just another step down the gentrification road. The shopkeepers and small traders, many from ethnic minority backgrounds, who have worked hard to become an integral part of the community, are deemed to be ‘not financially viable …to survive’. Southwark Council and the Mayor should be telling Delancey how unacceptable this application is. They should be promoting London’s diverse economy - not letting developers like Delancey kill it.

Less than a year ago Southwark’s Cabinet member for Regeneration promised to ensure that existing traders were included in the redevelopment plans. This can now be added to archive of regeneration promises that have been broken.

Quote from an interview with Cabinet member for Regeneration, Mark Williams

Southwark claims that as a private developer it can’t influence Delancey’s plans, but we point out that in 2011 Southwark signed a development agreement with the then then shopping centre owners, which Delancey inherited when it purchased the site.

Southwark also has a land interest in the site; it owns the pavement and public realm surrounding the shopping centre, which it has signed over to Delancey to enable the redevelopment.

History

The Elephant & Castle shopping centre used to be owned by Godfrey Bradman, the property tycoon who redeveloped the City of London’s Broadgate estate in the 1980s.

Bradman was originally selected as the council’s development partner for the E&C regeneration back in April 2000, but his masterplan came to an abrupt end when Southwark terminated negotiations in April 2002.

The shopping centre was then sold to a joint-venture between Kuwaiti real-estate group Salhia and West Midlands-based regeneration developer St Modwen for £29m in 2004.

Having lost out to Lend Lease in its 2007 bid to be the council’s regeneration partner for the Elephant including the Heygate, St Modwen put forward its proposals to the council for the redevelopment of the shopping centre. But it was knocked back due to the large number of residential units it wanted to build on the site; St Modwen said it needed to include 1000 residential units in the development to make it viable, but the council said it would refuse to consider more than 500.

As a result of the stalemate, St Modwen sold the shopping centre in 2014 for £80m to Delancey DV4, a developer funded by George Soros, managed by Tory donor Jamie Ritblatt, registered in the British Virgin Islands and which has been accussed of ‘aggressive tax avoidance’. Jamie is son of Sir John Ritblat, property tycoon who owns British Land and is a long-standing Tory donor. British Land has been selected as the Council’s development partner for its massive 46-acre Canada Water regeneration scheme.

Jamie Ritblat(left) and Sir John Ritblat(right)

Delancey, which is also developing neighbouring site (Elephant One), has employed former deputy Southwark council leader Kim Humphries to advise on its development and lead its consultation plans. Kim is now Carvil Ventures Ltd - an independent corporate finance and real-estate consultancy, which is advising Delancey. Kim made his name in the Heygate clearances and is not the first Council member to disappear through Southwark’s revolving doors.

Kim Humphries Former deputy Council leader Kim Humphries - now working for Delancey

Coronet

Delancey has dismissed the campaign to save The Coronet. The Coronet takes up a sizeable part of the shopping centre site. A music and event venue, it has also been a cinema and music hall dating back to 1872 and is a popular local institution. Attempts have been to try and have it listed on the basis of its Art Deco interior and exterior, which currently remains hidden behind its blue corrugated facade, but Delancey has the backing of the Council and wants to see the venue bulldozed. The Theatres Trust has submitted a strong objection to Delancey’s planning application.

Transport

Transport for London has written to the Council outlining a number of significant transport issues that need to be resolved. One of these is the access route for service vehicles to the new shopping centre, which was originally going to be provided by an underground tunnel from Delancey’s neighbouring Tribeca Square development. Indeed, Delancey’s viability assessment for Tribeca Square argued that the ramp for the underground tunnel would cost £12.5m and the development could therefore not viably provide ANY affordable housing. The council accepted the argument and even signed over land to Delancey’s shell company (Eadon Ltd), in order to build the underground access tunnel. However, Delancey’s planning application now says that it wants to use a different, direct access route off New Kent Road instead. TFL says that this will cause congestion for buses and affect safe passage across the new pedestrian routes.

TFL also raises the issue of the mainline train station, for which - whilst having to cope with a huge capacity increase and which despite sitting in the centre of the redevelopment - Delancey doesn’t propose any improvements whatsoever. Another major question surrounds the proposed Bakerloo line extension and how this will impact on the Elephant’s transport links. The development plans were drawn up before this was announced, so its impact and resulting increase in capacity requirements means that Delancey and the Council need to go back to the drawing board and come up with a new plan that is going to provide for the next 50-100 years. The original masterplan envisaged an ‘integrated transport interchange’ linking the mainline train station with the Northern and Bakerloo lines, and which was central to the entire masterplan. Transport needs to be brought back in to focus and not sidelined by profit. Regeneration should be more than just letting developers build lots of private luxury homes.

Transport interchange envisaged by original masterplan

Together with the shopping centre traders association, we have launched a dedicated campaign group www.uptheelephant.com to tell Southwark that Delancey’s plans are not acceptable. We are holding our next public meeting on 21st March 2017 to discuss how to proceed. The meeting is being held in the unit above the Tesco supermarket on the first floor of the shopping centre - it is open to all. Here you can view our presentation slides from the last meeting.

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