An Elephant and Castle developer has avoided its initial affordable housing commitments and can now put its social rent homes on the open market.
Neobrand 2 got permission to build a hotel with apartments on the upper floors on Newington Causeway in 2017, now occupied by a Travelodge.
Permission was given on the condition that a third (16) of the residential units would be affordable.
But the developer has now claimed that housing associations did not want to purchase the affordable properties.
So it has agreed to pay Southwark Council £5.95 million instead of providing the affordable homes originally intended for local families. The money will go towards building affordable housing elsewhere in the borough.
It comes amid fears that more and more developers will sell or privately let affordable housing in this way.
Speaking against the proposal, housing advice group Southwark Law Centre warned of the desperate need for affordable housing in the borough.
The group said, given the housing waiting list numbers approximately 17,000 households, there was “pressing and urgent need” for the physical delivery of affordable housing.
During the planning committee meeting, a council officer spoke in favour of the proposal.
He said the £5.95 million could help fund the stalled 32-social-rent-home Elim Estate development near Tabard Gardens.
However, he conceded that £5.95 million would not cover the full cost of the estate’s development.
In fact, it is uncertain whether it would even cover the cost of sixteen affordable homes.
Under planning policy, the developer only has to show they are gaining “no financial benefit” from the changes.
It does not need to show that the compensation provided would fund the same amount of affordable homes as initially planned.
There are fears that Southwark Council will see more and more developers drop their previous affordable housing commitments in this way.
In January, a developer was permitted to pay £1,991,470 instead of providing four affordable homes on Gilkes Crescent, Dulwich.
A similar agreement was also reached at the beginning of 2022 for a site on Rotherhithe Old Road.
At the meeting, Labour Councillor Sarah King asked “whether this is a growing trend that planning committee are going to see?”
The council officer replied: “We are hearing from developers that they are finding it challenging to get registered providers to take on schemes… that might be a trend and it is certainly something we and the GLA are looking into to see how real it is.”
However, they also noted that the fact the homes were above a hotel may have put off housing associations.
That’s £270k per home. Theses no way council will be able to build a 2 bed flat around there for that price. We got a poor deal.