Council accepts £5.9m for social homes which will now go for higher price

By Robert Firth, Local Democracy Reporter

Social homes that a developer promised to build above a Travelodge will now go at full price after a council accepted a £5.95million payment instead.

Developer Neobrand 2 Ltd originally agreed to reserve 16 homes in the 24-floor tower, the first 11 floors of which are a hotel, at lower prices after Southwark council gave the development in Elephant and Castle planning permission in 2017.

But the developer said it couldn’t find any housing provider to take them on, despite contacting 24 housing associations and the council’s own housing team.

The flats, which are located on floors 12 to 15 of the finished tower, will now be advertised at much higher market prices after Southwark councillors agreed to accept millions from the developer to go towards building affordable homes elsewhere instead.

Half of the 16 homes were due to be available at the cheapest social rents. The weekly price of a one-bedroom social rent home is currently capped at £155.73 by the government.

In comparison, new one-bedroom flats in Elephant and Castle are regularly advertised at prices in excess of £550 per week on Rightmove as of April 2023.

Dipesh Patel from Southwark’s planning team assured councillors there would be no “financial benefit” to the developer by letting it ditch the commitment to provide affordable homes and instead make a payment.

He told a planning meeting on Monday: “We’ve ended up with the applicant’s offer of £5.95million which is higher than the calculated surplus according to Savills [the developer’s advisor] and Avison Young [the council’s advisor].”

Mr Patel said the council would look at using the money to kick-start the building of 34 affordable homes on the Elim estate, which has yet to receive planning permission.

The £5.95million of the developer’s money would cover around a third of the £18m project.

But Patel added the council had “no commitment” to spending the money on the Elim estate development.

He said if the money wasn’t used for the project, council staff would look to spend it in Chaucer ward, where the Elim estate is located, then the wider Elephant and Castle area and finally across all of Southwark.

Southwark Law Centre, a charity that provides free legal advice, had urged councillors to refuse the developer’s request to make a payment instead of providing the 16 affordable homes in the hotel, Patel noted.

The charity had argued that Southwark has an urgent need for affordable housing that is ready to move into and had expressed concern that the £5.95m wouldn’t cover the full cost of 16 affordable homes that it was substituting.

Patel himself admitted council officers were unsure if the £5.95m would cover 16 affordable homes, but said the cash would allow building work to finally begin on the stalled Elim estate project.

He added that if councillors refused the application to swap the affordable homes for the payment, the 16 properties in the tower on Newington Causeway would remain empty and unlet for the foreseeable future, due to the lack of interest from housing providers.

It is the second time this year that Southwark councillors have allowed a developer to make a payment instead of providing affordable homes, as previously agreed.

In January, councillors voted to let a developer pay £1.99million instead of providing four affordable homes at Gilkes Crescent in Dulwich Village.

Pictured top: The affordable homes were going to be in the Travelodge building, to the rear right of the Belisha Beacon (Picture: Google Street View)