Merton Council to give up millions of pounds in profits from housing association homes sold

By Tara O’Connor, local democracy reporter

Merton Council will give up the right to millions of pounds in profits from homes sold by Clarion Housing.

The authority hopes this will fill a funding gap in the borough’s billion pound estates regeneration plans for Clarion housing association – who manage the council’s housing stock.

The project will be carried out by Clarion over the next 15 years across the Eastfields, Ravensbury and High Path Estates.

But in April 2020, the housing association admitted to the council that work at Eastfields was behind schedule and there was a funding gap in the whole programme.

In just one year, the finances swung from being in the black to being in the red – the details of how much debt has mounted up have not been revealed by the council.

The shortfall has been blamed on increased construction costs and a worse economic outlook for house builders.

For this reason, Merton Council will surrender the right to receive five per cent of the value of properties sold by Clarion as part of the estates regeneration.

This means the authority will likely lose out on millions of pounds – but it will ultimately depend on house prices and the final project costs.

But the council claims this will mean the new homes can be built without having to use council taxpayer cash.

The council’s cabinet gave the green light to the change on Tuesday night (September 6).

It comes after “disturbing” living conditions were exposed on the Eastfields Estate in Mitcham one of the three undergoing regeneration.

Overall, 2,550 homes will be built, almost 1,200 will replace existing homes on the estates.

Councillor Martin Whelton, cabinet member for housing, said: “Rebuilding High Path, Eastfields and Ravensbury was first given the go-ahead back in 2014, we recognised that the estates needed rebuilding as much of the housing had come to the end of its life but also the amount of overcrowding.

“The regeneration is the largest regeneration scheme in the 56 years of Merton Council.”

Cllr Whelton added that if the project swings back into surplus, the council could have the chance to reinstate the right to five per cent of the profits of sales.

Outline planning permission for the project was granted back in 2018 by the council’s planning committee.

The first stage of work at Ravensbury has been completed and the first stage at High Path is near to completion.

Cllr Whelton added: “All of us are aware of disturbing insight that many residents in Clarion have been living in and the failure of Clarion to carry out basic repairs on the estate.

“We have been very clear that this is unacceptable and that the regeneration cannot be used as an excuse not to undertake basic work which has always been an obligation of Clarion.”

Cllr Whelton stands by the belief that the best thing for people living on the three estates is for new homes to be built.

Clare Miller, group chief executive of Clarion Housing Group said: “We are very pleased that the cabinet has voted in favour of the regeneration plan. Clarion wants to work across the whole community to deliver our vision and this is a welcome and important decision.