Wednesday, 16 January 2013

Heygate Estate, Lend Lease, Southwark, Elephant and Castle, London Intelligence

A midnight gamble. A roll of the dice into an uncertain future with £1.5 billion at stake, writes Paul Coleman.
   Just after the stroke of midnight, at the end of a six-hour meeting punctuated by protest,  Southwark's elected politicians vote four to two, with one abstention, to approve global developer Lend Lease's plan to redevelop the landmark Heygate Estate at south London's Elephant and Castle.
   Lend Lease chief Dan Labbad and Southwark leader Peter John voice delight at the outcome. "This is a once in a lifetime opportunity," says Labbad. "Despite challenging financial times, we have the financial capacity to commit to this scheme."
    But local people packed into the meeting express their dismay at the loss of over 1,212 council homes on the Heygate. Lend Lease are now committed to building between 2,300 and 2,469 new homes across the site. But local people point out only 71 'social rent' or council homes are earmarked across the £1.5bn re-development scheme.
   Over 200 former Heygate tenants still want to exercise a 'right to return', according to Adrian Glasspool, a Heygate leaseholder. Southwark Council has promised residents they could return if redevelopment plans were approved.

Viability gap
Just before the midnight hour vote, Lend Lease corporate officers persuade a majority of councillors that its financial capability as a global developer means it can include 25 per cent 'affordable housing' across the development. Studies though put viability at just 9.4 per cent. Any more affordables and this viability gap means Lend Lease won't get a return on the scheme.
   Affordable homes will be a mix of shared ownership and 'affordable rent' aimed at 50 per cent of the market rate.
  Thousands of residents living in the Heygate were moved over the last decade to other parts of the Elephant, across Southwark and to other parts of London and south-east England. But Glasspool refused to be moved and his home is now subject to compulsory purchase.
   Looking further ahead, the plan's magnitude means Lend Lease's self-certified financial muscle could well be needed as economic  uncertainty and a lack of government funds for new homes could dominate the next decade. 
   How long will demolition and redevelopment of the Heygate take? Southwark and Lend Lease say more than ten years.

Paul Coleman, London Intelligence, January 2013

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