PCLR impact on London LNWIs and HNWIs: Acronym soup

London's journalists enjoy conjuring acronyms to tribalise the city's different people, writes Paul Coleman.

  During the post-‘Big Bang’ era, we invented the 'Yuppy’, the 'Young Urban Professional' puppy. Then came the ‘DINKY’ tribe – ‘Double Income No Kids Yet’.

   And, latterly, the media demonises working people on lower incomes as ‘Chavs’ – or ‘Council Housed And Violent’, according to some definitions. 

High Net Worth Individuals 

HNWIs, or ‘High Net Worth Individuals’, refers to Planet Earth’s affluent folk who congregate in Hong Kong, Melbourne, Mumbai, New York, Paris, Rio de Janeiro, Shanghai, Singapore and, of course, in ‘prime resi’ central London.

   Apparently – and so we must weep – HNWIs trying to buy a modest £2 million property in any one of those cities are hindered by a range of costs and obstacles.

   Apparently too – and so we must rejoice – London rates joint second with Hong Kong in a Savills survey of the best cities for HNWIs to buy property. New York comes out slightly on top.

   London levies £144,000 on a £2m home, including 7% stamp duty, or 15% if HNWIs buy via an offshore company. HNWIs also get nipped for another £4,000 on Land Registry, legal and survey costs. Let’s not forget annual Council Tax of between £1,500 and £4,000. 

ARPT 

We’re not quite finished either. From this April, HNWIs with a slab of ‘prime central London resi’ valued at £2m and over, bought wholly or partly via a company, will be subject to a new Annual Residential Property Tax. For instance, prime Kensington properties worth £2m-£5m will incur £15,000 ARPT.

   ‘Prime resi’ homes in the top band of £20m and over will cost £140,000 per year. Future owners of the £70m valued Eaton Square property (see yesterday’s post) might end up with this bill. Hey, HNWIs – guys - best buy with cash.

London's HNWI offer 

Rio is cheapest for HNWIs to buy a £2m property with taxes and costs levied up to £52,000. But London offers HNWIs lower crime, better schools and, crucially, sustainable property values.

   Property agent Knight Frank reckons 73% of new PCLR – Prime Central London Resi’, (c’mon keep up) – homes in 2012 were bought by foreign HNWIs, mainly Singaporeans.

   But what factors seem to sustain central London’s ‘prime resi’ high values – especially since the financial meltdown of 2007-09 damaged every other slice of the global economy? 

And, by definition, if HNWIs exist, so too must ‘Low Net Worth Individuals’. How does a booming PCLR market affect London's LNWIs? 

Reflections on possible answers to follow future postings. 

Paul Coleman, London Intelligence, February 2013

Local Housing Allowance (Housing Benefit) Caps: Impact in Camden, Westminster, Haringey, Prime Central London 'Resi'

The rights and wrongs of housing benefit 'reform' continue to provoke argument. But the likely impact of housing benefit caps is now also disputed, writes Paul Coleman.

   Camden Council are reportedly planning to move 761 households - comprising 2,861 adults and children - out of its slice of central London because the government is capping welfare benefit payments at £500 per week. It's said these capped families will no longer be able to afford to pay their rent.

    For instance, Camden offered to rehouse one single mother of four children in Liverpool. Her Camden rent for a two-bedroom flat is £340 a week.  But the coalition government will cap her housing benefit at £204, leaving her to make up the weekly shortfall of £136.

   Families on benefits - including many working on low-paid jobs - will need to find an average £360 per month extra to stay in their Camden central London home.

New home, new school

The impact on the 761 households that may have to move includes an estimate that 900 schoolchildren might have to move home and to a new school - not in London - but in Birmingham, Leicester and even as far as Bradford. But that's only if homes and school places are available in those cities. 

   The average Local Housing Allowance benefit payment to cover the weekly rent for a three-bedroom home in Birmingham and Leicester is  £127.

Camden market

House prices  in Camden have remained high since the 2007-09 financial meltdown. 'Camdenites' earn an average £37,000, way above the £24,000 national average.  

   The borough's wealthier residents have created a Camden market where rents are the fourth highest in England. Camden Council has a long waiting list for its social (council) rented homes.

Social cleansing

Westminster Council says 2,327 households and Haringey Council in north London says 1,000 households might be similarly affected when the benefit caps bite. 

  Critics accuse the government of 'social cleansing' - using the caps to move poorer people out of central London. This leaves more room for the 'High Net Worth Individuals' who invest in central London's 'prime' residential property market.

  The government says the caps redress a moral imbalance where benefit claimants no longer receive taxpayers' money to enjoy a bigger income than many other working families. The government also says local authorities do not have to resort to moving all affected households as individual circumstances mean many families can adapt.

For more on the impact of housing benefit caps, read my feature in 24 Housing magazine

http://www.24dash.com/magazine/issue/2012/02

Paul Coleman, London Intelligence, February 2013

   

   
  
   
  
  

Super-prime London, £70m Eaton Square, Belgravia: London's chronic housing shortage

Do you have £70 million spare to buy a central London home?

  A seven-bedroom, six-storey Eaton Square house in Belgravia with a gold-lined swimming pool – at £6,500 a square foot – is now London’s most expensive home.

   That’s even more expensive than the Candy brothers One Hyde Park apartments…(still known to the milkman as ‘100 Knightsbridge’).

   The Government can expect up to £5m Stamp Duty if the Eaton Square home’s asking price is met. The ‘super-prime’ property has shot up in value since last sold for £33m in 2009 and for a mere £9.5m in 2005.

Two-tier market

But you don’t need to look at ‘super-prime’ to see how central London and south-east London properties are creating a two-tier housing market. A relatively small family home in Putney could buy a whole street in Sunderland. A £5m home in a rich enclave like St George’s Hill in Weybridge – a London ‘satellite town’ in Surrey – could buy a street of homes in Glasgow’s Ibrox district.

    The combined property values of London boroughs – Barnet, Bromley, Camden, Ealing, Hammersmith & Fulham, Kensington & Chelsea, Lambeth, Richmond upon Thames, Wandsworth, and Westminster – is estimated at £552 billion, equal to the total property values of Northern Ireland, Scotland and Wales.

    The London and south-east England property market is worth an estimated £2 trillion – 40% of the UK market by value. Such stats stun folk on average and lower incomes but excite estate agents.

Chronic shortage

But beneath the gloss festers London’s chronic shortage of genuinely affordable homes. The conjured stats beg the question: who will be able to afford to live in 21st Century central London?

The Eaton Square home (above) is on the market with Knight Frank; Knightsbridge office, of course!

Paul Coleman, London Intelligence, February 2013

Mayor Koch, New York: "How'm I Doin'?"

Brash and opinionated New York City mayor Ed Koch would stand at  subway entrances and ask his electors, "How'm I doin'?" 
    So, how's Ed doin' now? Well, Koch's obituaries strive to balance his mayoral record (1978-89).

   Koch is credited with New York's transformation from a city on the verge of bankruptcy to its emergence as a global financial powerhouse.

  But Koch is also derided for failing to stem New York's crime wave, crack cocaine epidemic, AIDS crisis and descent into racial tension.

  After losing his last election in 1989, Koch dismissed calls for him to stand again. "The people threw me out and now the people must be punished."

  Koch, born in December 1924, died on 1 February.

Paul Coleman, London Intelligence, February 2013
 

AAA rating, Moody's, Bank of England, Mervyn King: Renminbi swap lines

Much fuss surrounds the loss of the UK economy's 'AAA' status, writes Paul Coleman. 

   In late February, ratings agency Moody's downgraded the UK to 'Aa1'. Meanwhile, the Bank of England's continued its search for new ways to lubricate the UK's banking and financial services sector.

   Outgoing Bank of England governor, Mervyn King, sought to 'Quantitatively Ease' (QE) another £25 billion into the sector. But King's colleagues voted him down. 

   The BoE had already created £375bn of 'new money' to buy government bonds and other assets from banks. Trouble is, the banks have stashed this new income, helping to recapitalise themselves, stabilise their own balance sheets and keep bankers' bonuses flowing.

  Unwittingly - perhaps - QE has starved the 'real economy', especially businesses in need of loans to bridge cashflow gaps and start-ups needing investment.

   So, the UK central bank revealed its next ploy to prod the financial sector towards more generous lending - 'swap lines'.

Buy Renminbi

King visited People's Bank of China governor Zhou Xiaochuan in Beijing to cement a proposed three-year 'swap line' agreement that would allow the PBoC to print UK pounds. UK importers using China's renminbi currency to pay Chinese suppliers could enjoy discounts; and, UK banks could offer investors renminbi.

  But the main thrust of the deal means the City of London's financial sector could earn extra revenue - and personal bonuses, no doubt - as a renminbi 'offshore trading hub'. 

   Way to go though; renminbi trades account for only one per cent of the world's $4 trillion daily currency transactions. 

   But King and the Bank of England calculate, if that percentage increases, the City of London ought to benefit as it enjoys over 35% of the world's daily currency trade flows. 

   Big question though: if renminbi trades do boost the City, will the 'real economy' benefit too?

Paul Coleman, London Intelligence, February 2013

Arsenal, Arsene Wenger & Austerity: Football clubs and social and affordable housing

Following cup knockouts and defeat by the '3Bs' - Bradford City, Blackburn Rovers and, last night, to Bayern Munich in the UEFA Champions League - Arsenal fans can't decide whether to blame coach/manager Arsene Wenger or the famous London club's board of directors for failing to spend money on top quality new players.

   Football writers like Simon Kuper describe the club's failure to replace top departed stars, like Cesc Fabregas and Robin van Persie, as 'Arsenal's austerity'. 

   But D. Carnock Thomas, writing in the Financial Times, says: "Thrift on the pitch has allowed the board to finance a huge development of housing around the Emirates stadium.

   "An investment in property is likely to yield much larger and much more certain long-term pay-offs than an investment in here-today-gone-tomorrow footballers."

"Collateral damage"

However, Carnock Thomas adds the "self-serving" board's property investment has wreaked "collateral damage". He concludes: "The real effect of Arsenal's chase for money will be most keenly felt by the local community through...less social housing".  

   True, up to a point. Arsenal's gleaming 60,000-capacity Emirates arena stands amidst some 3,000 new homes, part of the Arsenal Regeneration Area. Half of these homes are open market homes but the remainder are a mix of 'affordable' homes - split between 'shared ownership', 'key worker intermediate' and 'affordable rent'. 

    Of course, the almost meaningless definition of 'affordable' depends entirely on an individual's ability to afford one of those reduced cost homes. 

Truly affordable social, or council homes to use their dying label, form little or no part of the ARA 'regeneration' - that is homes rented via a local authority at normally between 35% to 40% of the local district's average market rent.

Link

If you're interested to know more about football clubs and their role in the provision of new homes, tap this link: 

http://www.24housing.co.uk/home-win

(Top): Former Arsenal striker Thierry Henry on-site at an ARA housing development.

(Above): New homes reflected in Arsenal Emirates' stadium frontage.

Photos: Newlon Housing Trust.

Can austere Arsenal's Arsene Wenger turn his players into footballing mountaineers so they can overcome their 1-3 deficit against Bayern Munich from last night? Arsenal's second leg of their UEFA Champions League tie takes place in Munich on 13 March.

Paul Coleman, London Intelligence, February 2013

  

Feelings Run High: Heygate CPO Public Inquiry, Elephant and Castle, Southwark, Lend Lease

To read this scribe's full account of the Heygate Estate CPO Public Inquiry, visit the link below to 24 Dash, the social housing and public sector website.

http://www.24dash.com/news/housing/2013-02-11-Feelings-running-high-as-Heygate-Estate-public-inquiry-closes

Paul Coleman, London Intelligence, February 2012

Compulsory Purchase Order Public Inquiry: Heygate, Elephant and Castle, Southwark

At 5.45pm (8 February), Government Inspector Wenda Fabian closed a four-day Public Inquiry into Compulsory Purchase Orders issued by Southwark Council against three Heygate Estate leaseholders.

   Southwark Council, represented at the inquiry by Mary Cook, a leading CPO and development specialist, said the CPOs were necessary to deliver new homes, jobs, shops and parkland via a 12-year regeneration scheme with developer Lend Lease.

   Southwark Council has moved out nearly all of the Heygate's 1,200 or so Council tenants and leaseholders, many of whom had lived at the estate at Elephant and Castle since it was completed in 1974.

   One of the three leaseholders, Adrian Glasspool - and the only person still now resident - told Fabian the CPOs were unjustified as the Southwark-Lend Lease scheme for the Heygate was not "financially and socially viable".

  Fabian now reports to the Secretary of State who ultimately decides whether to confirm the CPOs.

More to follow on this...

Paul Coleman, London Intelligence, February 2013

An Inspector Calls: CPOs, Heygate, Elephant and Castle, Southwark, Lend Lease

Moji Ojeikere, mother-of-three and civil servant (above left), invited government Inspector Wenda Fabian (right) to look around her home yesterday (6th February), a sturdy apartment on the fifth floor of a Heygate Estate perimeter block overlooking south London's Elephant and Castle.

   Fabian walked around the vast and almost empty Heygate in her role as Inspector gathering evidence for an ongoing public inquiry into Compulsory Purchase Orders issued by Southwark Council against Ojeikere's leasehold property and that of Adrian Glasspool, another Heygate leaseholder.

   Fabian was accompanied by Southwark Council officers who want the Secretary of State to confirm the CPOs after Fabian concludes her inquiry at Southwark's Tooley Street HQ. 

   The Council says only then can its Regeneration Agreement with global property developer Lend Lease demolish and clear the 22-acre Heygate for a phased 12-year redevelopment that will deliver thousands of new homes - including 'affordable homes' -  local jobs, retail units and parkland.

Citizen v corporation 

If nothing else, Fabian's inquiry has given Ojeikere and Glasspool the opportunity to publicly question Lend Lease's land and planning director, Rob Heasman. In a kind of David and Goliath exhange, Glasspool quizzed Heasman about independently reported scenarios that raise doubts about the viability of Lend Lease's plans to deliver 25% per cent of new homes as affordable.

   Heasman described Lend Lease's commitment to 25% affordable housing as "a one hundred per cent guarantee". 

   Glasspool asked Heasman if the 25% plan was a viable proposition for Lend Lease.

 "We'll make it viable," replied Heasman.

Inspector Wenda Fabian with 'security assistant' (rear)
and Southwark Council project director Jon Abbott (left).

Truly affordable

Michael Edwards, an economist and senior lecturer at University College London, told the inquiry that the Southwark-Lend Lease scheme will not satisfy the huge local need for new social or "truly affordable" homes. Glasspool and Ojeikere told Fabian the scheme will provide less than 80 social homes.

   "It would be wrong to approve the CPOs in pursuit of a deficient scheme," concluded Edwards.

  Heasman told the inquiry the CPOs were vital for the new mixed-tenure development to proceed. "We understand scale and size and take a long-term view on creating new places," said Heasman. "But we will not sit on our hands. We want new homes to come out of the ground."

   Southwark councillors approved an outline plan for the Heygate's redevelopment last month. A detailed application on the first phase of the scheme was approved by councillors on Tuesday.

   The inquiry continues.

Paul Coleman, London Intelligence, February 2013

Photos: © Paul Coleman, London Intelligence. No re-use without permission.

   

  

The Planning Inspector Calls: Compulsory Purchase Order Public Inquiry: Heygate, Elephant, Southwark

Today, (6th Feb) a small gaggle of leaseholders, objectors, council officers, lawyers - and at least one scribe (this one) - is due to accompany government Planning Inspector Wenda Fabian on her official visit to the Heygate Estate in Elephant and Castle, south London.

   Fabian, to her credit, says she's already strolled solo around the estate permimeter. Perhaps she admired Heygate Street, one of London's most impressive tree-lined avenues, overlooked north and south by majestic London Planes.

   Strangely, Fabian also revealed she'd been warned not to venture inside the Heygate's perimeter because of 'security'. Who on earth - and why - would anyone have told the Inspector such a tall tale?

Compulsory regeneration?

Fabian heard a lot about the Heygate's vast tree 'canopy' as she presided at today's opening of the public inquiry into Southwark Council's Compulsory Purchase Orders issued against the last few Heygate leaseholders.
   Fabian listened as Southwark Council officers said  they understood that compelling people to leave their homes is a serious business - even if you believe, as Jon Abbott, Southwark Council's Elephant and Castle Project Director,  said: "There is a compelling public interest case for confirming this Order."
   Abbott and co say the Heygate must be emptied so developer Lend Lease and Southwark's regeneration deal can deliver new homes, jobs, shops and parkland for local people.
   But Fabian also heard objections to the CPOs from  long-term resident leaseholders like  Adrian Glasspool and Moji Ojeikere - and former residents like Jerry Flynn. Their wide-ranging objections against the regeneration deal include its likely net loss of over 1,000 local council homes  - just so Lend Lease, they say, can turn a handsome profit.

   Fabian's fact-finding trip might include visiting Glasspool's maisonette home.
The hearing, expected to last possibly four days, continues.

Paul Coleman, London Intelligence, February 2013

  

  

Post-Redaction Stress Syndrome: Southwark, Lend Lease, Heygate, Elephant and Castle

Redaction used to be blindingly simple in the good old days.

   A government official would simply and thickly block out sensitive words with a black marker pen. Then bury the printed paper in a file and hide the file in an archive; all done with the emotional intensity of a cricket umpire.

   Even if citizens or journalists discovered the document, the blocked out passages would merely raise questions but provide no answers. The secretive could sleep easily.

   But redaction in the digital age doesn't seem so simple in south London. I received an email containing a link to an apparently "badly redacted" commercially confidential document published by Southwark Council on its website. The document seems to be the controversial regeneration agreement between Southwark and global developer Lend Lease.

   According to local residents campaigning against Southwark and Lend Lease's planned regeneration of Elephant and Castle, the full contents of the redacted document were simply revealed by copying and pasting the text of the published PDF document into a Word file. Oops!

Staggeringly cheap

Residents say the 'inadvertently' revealed redactions show Southwark sold Lend Lease 22 acres of publicly owned land - the Heygate Estate - just a couple of miles from central London for an embarrassingly and staggeringly cheap £50 million. 

   Lend Lease so far are saying nothing. And Southwark Council leader Peter John (Labour) denies any embarrassment and says the deal will deliver new homes, shops, jobs and parkland.

  But the offending document has now been completely removed from the Council website. 

And, I am left to wonder if  - inside Southwark fancy Tooley Street HQ - an ass today is being kicked for incompetence or mischief.

Paul Coleman, London Intelligence, February 2013

   

Can a city go bust? Harrisburg, Pennsylvania, and a sinkhole feeling

Can a city go bust? Just ask mother of two Sherri Lewis who literally felt the bottom fall out of her hometown of Harrisburg, Pennsylvania.

   Sherri and her children were forced to leave their home after leaking pipes and sandy soil ripped a 50-feet long and eight feet deep sinkhole that swallowed  the entire street.

   The City of Harrisburg couldn't afford to repair the damage - nor to the state capital's 40 other sinkholes. The city was shut out of municipal money markets used by American cities to fund the building and repair of roads, schools...well, almost everything.

Swallowing streets

Harrisburg politicians and officials had borrowed heavily to upgrade existing large plants, such as a waste incinerator. Bankers and lawyers enjoyed huge fees for setting up these earlier loans. But Harrisburg's taxpayers couldn't afford to repay. And the sinkholes kept swallowing the city's streets.

   Worse still, the city couldn't pay its employees. Talk of short-term bridging loans followed. A Receiver took control of finances. Bankruptcy was averted by the City borrowing $4 million from its own waste and sewer revenues.

  Of course, money to repair the pipes and sinkholes still needed to be found. Contractors became wary of taking on work from a city with no cash. And willing lenders emerged but offering 10 per cent plus interest.

Fresh heartbreak

Sherri Lewis returned with her children from their temporary accommodation  to fresh heartbreak.  Their home had been burgled. Thieves stole her late mother's jewellery and her son's computer. 

   And, apparently, the human damage of municipal financial failure extends to other cities in other US states. 

Paul Coleman, London Intelligence, February 2013