Comment: Viability has become a liability
PUBLISHED: 11:16 28 June 2017
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We can't trust councils to renovate social housing safely, but we can't put our faith in developers either. It seems the market won't provide, and then there are those who resent it when it does. Is this the start of the housing Hunger Games?
Camden Council has responded quickly in the aftermath of Grenfell, evacuating four blocks on Adelaide Road.
But along with flammable cladding experts also found 1,000 missing fire walls, exposed gas pipes and inaccessible stairways.
The private firm who had carried out the work was Rydon.
People can’t trust their council to oversee a renovation scheme that doesn’t turn their home into a death trap.
So how could we trust them to oversee the building of the homes the city still so desperately needs?
We can’t trust in private developers either. We’ve been told the market will provide, but you can have too much faith in the market.
High demand commands high prices. High prices mean profit for private house builders, but here they enter their own Catch 22 situation. Building more houses means demand falls and then prices fall. Falling prices mean developers stop building until demand builds up again.
And falling prices or stagnating sales means developers won’t eat into their profit margins for the sake of subsidised housing.
Because we haven’t had enough nausea inducing irony these past few weeks, the developers behind the Battersea power station have announced they’re cutting 250 ‘affordable’ homes from the site.
They’d originally promised 636, but now it is apparently only viable to build 386.
The culprit? Stalling sales for multi million pound flats.
Enough ire has been heaped on the hubris of the Power Station project. Suffice to say there are too many units in a location that hasn’t yet become desirable enough.
Wandsworth Council is morally reprehensible but they haven’t got any chips to bargain with.
The development is still building some ‘affordable’ homes and they’re still building an extension to the tube.
Councils can’t build because central government capped the debt they can incur from the up front cost of a build would.
Building is precariously expensive. The viability argument isn’t necessarily a fabrication.
Construction often starts before the full project has been funded (hence their fondness for off plan cash buyers) and small shifts in sales numbers or the cost of importing materials can start to cause big problems.
Part of the issue is that we’ve had government controls in all the wrong places.
Stamp Duty has savaged the prime and super prime market, biting huge chunks out of £5 million plus prices and leaving the £1.5 million middle ground frozen in fear.
Meanwhile Section 106 has proved to be utterly toothless.
Under these planning regulations developers and councils are obliged to come to a private arrangement whereby councils prescribe the number of affordable homes and/or developers mitigate their impact by contributing to public services or provide compensation.
This is where viability becomes a liability. If it’s not viable (read profitable) to build affordable homes/ build some transport infrastructure/ pay a fine the council has little power to remonstrate with the developer, who inevitably have better (read more expensive) lawyers.
There are those developers who do seem prepared to honour the arrangement.
One piece of not-terrible news was that the City of London Corporation had stepped in to buy £10 million worth of flats in a local development to re-home some of the displaced Grenfell families.
Whilst the headlines made much of the fact that apartments at 375 Kensington High Street go for £2.4 million, the units in question are in fact social housing that was always intended for this purpose.
They’re also not being ‘given’ the flats. Sold at cost price, the City of London now owns them as assets.
Recipients of housing benefits never actually see their rent payments; they go straight to the landlord. This is why council housing so easily pays for itself.
It’s not charity, but that didn’t stop the current residents volunteering their distinctly uncharitable thoughts, along with all and sundry on social media.
The avariciousness was shocking. Some people apparently felt genuinely cheated by the news.
Residents worried that the victims’ presence would drag the price of their property down, even though the social housing had always been part of the plan.
Regular homeowners were incensed that they’d worked hard and saved harder and hadn’t been handed a flat in zone 1.
I wonder if any of them have read the Hunger Games, a series of novels set in a post apocalyptic future where teenagers undergo a traumatic, televised fight to the death for the prize of a house in the ‘Victors’ Village’.
It’s never a good sign when the lines between dystopian fiction and reality start to blur.
Mixed private developments, where expensive apartments fund affordable houses and social housing are eminently preferable to pristine gated communities next to crumbling council tower blocks.
I’ve challenged developers before on the numbers when it comes to affordable homes or social housing schemes and been told that it’s the buyers that don’t like them being there.
I’d always thought, privately, that I was being palmed off, and it was the developers who didn’t want to accommodate affordable or social rented homes.
Now, I’m not so sure we haven’t got the housing crisis that some deserve.