Elephant & Castle affordable housing slashed in economic slump

A year ago Southwark Council's planning committee resolved to grant planning permission for a 44-storey tower designed by Rogers Stirk Harbour on the site of the London Park Hotel at Newington Butts.

The scheme included 470 homes, 40 per cent of them 'affordable' social rented and shared ownership units – along with a 200-seat auditorium to be a new base for Southwark Playhouse.

No longer viable

Now developer First Base claims that the 360 London scheme as approved is not viable due to plunging values and soaring construction costs.

Director Richard Powell told Southwark Council's planning committee on Tuesday night that he was "frustrated" to be making a request to reduce the level of affordable housing in the development but it was "the only course of action available to us to crack on with the scheme".

The planning committee voted unanimously to grant a deed of variation to the section 106 agreement slashing the affordable housing element by 122 habitable rooms to 31.5 per cent of the total rooms in the scheme.

Councillors – who fear that this will be the first of many attempts by developers to water down commitments made before the so-called credit crunch – are anxious to avoid setting a precedent.

Members went to some lengths to set out why they considered this to be an extraordinary case.

Cllr Gordon Nardell described the "exceptional significance of this scheme to the Elephant & Castle regeneration" as the most important factor in the decision facing the committee.

He also highlighted the involvement of a public body – English Partnerships – in the scheme, which set it apart from a purely speculative market-driven development.

"Dreadful irony"

The development is backed by the Government regeneration agency English Partnerships which bought the London Park Hotel site for approximately £18 million with the express intention of developing affordable homes for key workers.

It is the 159 "intermediate affordable" units which have taken the biggest hit, reduced by 43 homes to 116 units.

Social rented homes will be increased from 29 to 35, with the number of apartments to be sold on the open market increased from 282 to 319.

Committee chair Cllr James Gurling noted the "dreadful irony" that the Government had spent millions of pounds acquiring the site – part of it from Southwark Council – for housing for people who can't afford it and now the committee was being asked to back a reduction in the number of such homes.

"A lot of money has gone round in a big circle and the net losers will be the people who need the help most," he added.

"Pre-'credit crunch' terms"

"We have effectively secured pre-'credit crunch' terms of funding for this scheme," Richard Powell told the committee.

"If we're able to reach financial close in the next few weeks those terms stay in place. If we fall out of the window for that funding then we're in a very different place."

Timetable for construction

The committee heard from Powell that First Base plans to start enabling works on the site before the end of this year with a three year construction programme beginning in January 2009.

Wider progress of Elephant & Castle regeneration

Cllr Gurling acknowledged that the lack of progress at the Newington Butts site made local residents "worried for the future of the overall development".

First Base, the developer of the London Park Hotel site, is also part of the consortium led by Lend Lease selected last year as Southwark's partner for the overall regeneration of the Elephant & Castle.

Powell was able to tell the committee that "the southern roundabout scheme ... will start very soon with the Mayor's approval".

He also said that the masterplan planning application – covering the shopping centre site and the Heygate Estate – is scheduled to come before the planning committee in May or June 2009.