Lambeth Council further loans £5.5 million to its house building company despite concerns

By Grainne Cuffe, local democracy reporter

Lambeth Council has loaned a further £5.5 million to its wholly-owned house building company, added to £5 million loaned last year.

It comes as a progress report on Homes for Lambeth’s business plan for 2020-23, approved by cabinet on March 15, stated a lack of resident support was a “likely” risk to its regeneration programme.

The council’s controversial programme, run by HfL, is focused on six estates, including Westbury, Knights Walk, South Lambeth, Central Hill, Cressingham Gardens, and Fenwick.

The loaned money is expected to be paid back out of “project surpluses”, profit made from the new homes.

But the Green opposition, who are against the demolition of the estates, have warned it is a risky strategy and HfL could end up like Croydon’s failing housing company Brick by Brick.

According to the council the programme “remains financially viable”, despite the risks outlined in the report.

The risks include lack of support from residents (likely), failure to deliver the HfL regeneration programme (likely), potential impacts of the Covid-19 pandemic (very likely), impact of Brexit on the availability of labour and minerals (likely), and a change in regulatory or subsidy regime (very likely).

According to the report: “HfL has made good progress over the last year, securing five planning consents and starting the construction of new homes at the South Lambeth Estate.

“The sites that have secured planning consent will deliver 123 new homes, 66 per cent of which will be affordable homes.

“Furthermore, through optimisation of its ‘small sites’ projects it has identified a further 47 homes that can be delivered across the programme.

“This increases the number of homes in the programme to 4,889, of which 2,067 will be affordable homes.

“In addition, a minimum of 1,268 homes are proposed to be delivered at council level rent.”

The report states that the number of homes expected to be delivered over the three years has decreased from 383 to 349.

But the council expects to “claw back” the reduction by the end of year five, with 1,184 “homes forecast to be delivered, a modest reduction from the 1,196 stated last year”.

The report includes plans to contract consultant teams to start the process of designing masterplans for the Central Hill, Fenwick, and Cressingham Gardens estates.

The report mentions “mitigation panels” having been deployed to help vulnerable residents, though these have been criticised by some residents for not being useful.

At the cabinet meeting Cllr Matthew Bennett, cabinet member for planning, investment and new homes, said he visited the Westbury Estate before Christmas with tenants who were viewing their new homes while they were still under construction.

“We’ve spent a lot of time over the last few years arguing over the principle of what we’re doing.

“And arguing facts, and non-facts in some cases, back and forth about what this council is doing.”

“But to see the looks on people’s faces as they stepped into new homes […] made everything worthwhile,” he said.

Gerlinde Gniewosz, board member and resident and on Cressingham Gardens, said there will be no net increase of homes at council rent on the estate.

HfL’s CEO later said there would be, but said she would speak to the resident privately about it.

Ms Gniewosz said: “There are no benefits for Cressingham Gardens, instead Lambeth will have reduced the rights and security of all tenures, driven up housing costs, and resulted in no reduction in Lambeth’s waiting list.

“Lambeth has also breached its key guarantees to residents, explicitly. Guarantee seven to tenants and guarantee six to leaseholders, that says residents will be able to influence decisions around the phasing of building of new homes.

“Lambeth have not involved residents in the planning of the phases, indeed you have completely failed to engage with residents on phase one, with some not even able to view the detailed plans.”

Davida Dawkins, who lives in temporary accommodation in Denby Court, raised concerns about residents in new homes facing shorthold tenancies and losing security.

“The reason low-income households need to rent from a social landlord is that the tenancies have more security and rents are set by a Government formula that would require no more than what is obviously available from their low-income source.

“Can you confirm to me that with the intention of using shorthold tenancies council renters will lose this security, sustaining their levels of poverty, and that taxpayers will have to pay the increase used in welfare subsidies?

“Is this the council’s and HfL’s attempt to tackle their council housing crisis by tapering down the existing housing stock by removing existing standards and being more closely aligned to the nature of a private rental market?

“The joint delivery plan does not address the equalities impact to temporary accommodation tenants and effects don’t seem to be intended to be addressed, which is worrying considering increasing numbers of homeless households Lambeth Council is growing,” she said.

Ms Dawkins raised concerns about equalities data and said her ethnicity wasn’t recorded correctly.

“Why are the mental and physical health effects on temporary accommodation tenants being neglected and why are the negative effects being forced onto their children, fueling their deprivation and the deprivation in the Lambeth borough,” she asked.

James Haddock, a chartered accountant from the Central Hill Estate, said the figures in the plan were not accurate and that there were no details on how the council is going to fund all the buy backs, estimated to cost about £150 million.

He warned about the falling population in London.

“The knock-on effects are already being seen in lower rents and will more than likely be seen in lower house prices eventually.

“But somehow this isn’t a top five risk […]” he said.

Cllr Pete Elliott raised concerns about sustainability, the impact of regeneration on residents, and financial risk.

“Cabinet has previously been informed of health and safety issues on the Westbury Estate and for the last 12 months it has been the turn of South Lambeth Estate where residents have been hospitalised.

“What has gone wrong there? And what lessons have been learned to ensure residents are not put in tortuous positions again?”

He said HfL has “failed to deliver on time almost everything it has set out to do”.

“There is too much to pick apart here, and as we’ve seen in Croydon with Brick by Brick, this project is a massive risk for all of the rest of the council’s operations, let alone those residents in desperate need of secure, affordable housing,” Cllr Elliott added.

Cllr Donatus Anyanwu said it would be “good to get answers” to the questions raised by residents.

Cllr Sonia Winifred, cabinet member for equalities and culture, said she would respond to Ms Dawkins as soon as possible and spoke about the equalities impact assessment.

“We have looked at this thoroughly, this is the second year that we’re looking at this subject.

“It was a thorough and robust discussion around all the mitigations and impacts on those protected characteristics,” she said.

Caroline Pillay, chair of HfL, said: “We can come back with details to members about how we are absolutely assuring the safety and the involvement of the residents on all of the estates[…]”

Despite claims to the contrary from residents, Jitinder Takhar, HfL CEO, said: “In terms of health and safety on the South Lambeth Estate we regularly meet with residents. This hasn’t been easy during the pandemic where we’ve had to hold meetings virtually.”