This week’s special report has revealed that Southwark Council seriously considered acquiring over 2,000 Aylesbury Estate homes from the developer Notting Hill Genesis (NHG). The fact the council even considered such a drastic move raises serious questions about the original deal.
But before asking those questions, it’s important to note that Southwark Council has faced a turbulent economic situation through no fault of its own. It signed its development partnership agreement (DPA) with NHG back in 2014 – before Brexit, before Covid-19, before Russia’s invasion of Ukraine and before Liz Truss’s disastrous mini-budget.
In various ways, all these events have hurt the UK and global economies, causing borrowing and construction costs to spike. Clearly, housebuilding is considerably more expensive than it was back in 2014.
Therefore, it’s understandable that Southwark Council might want to change the terms of the DPA. And if, as it claims, it would have resulted in more social housing, that’s a good thing.
Exclusive: Southwark Council planned to take over 2,000 Aylesbury Estate homes from developer
But while Southwark Council is right to “leave no stone unturned” in its bid to deliver the best Aylesbury Estate possible, you have to question why such a dramatic U-turn was being considered. If Southwark Council was so eager to scrap the deal on the table, how bad is it that deal?
Yes, it’s true that circumstances have changed. But shouldn’t multi-million-pound infrastructure projects be resilient to economic change? One of the most common arguments for public-private partnerships is that the private developer brings expertise which ensures projects are delivered on time. This regeneration has already been delayed four years until 2036. Now neither Southwark Council nor NHG will give an updated completion date – ignoring our inquiries about the deadline.
Also, if this deal had gone through, would it have been a good one for the council? Let’s not forget that this land recently belonged to Southwark. This deal would have meant the council selling off the family silver – only to buy it back a few years later. We’ve seen this sort of thing happen before in the case of Dulwich Hospital. That site was sold to a private developer only to be leased back to the NHS a few years later. This is exactly the sort of pawnshop economics Southwark Council shouldn’t be dealing in.
Despite this paper’s enquiries, neither Southwark Council nor NHG gave any indication of how much this deal would’ve been worth. We do know, however, that when Southwark Council bought 280 Aylesbury Estate homes off NHG in 2020, it cost £193 million – equivalent to £690,000 a home. Translate that to 2,000 homes, and the figures are astonishing.
For now, the deal looks set to stay put. Perhaps, over the next few years, the economy will improve and Southwark Council will reconsider taking over the development. If this means more social housing, then that’s great news. But can it do that without breaking the bank?