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How luxury flats avoid affordable housing regulations

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Thursday 26 May 2016 3.21pm
Can't argue with what you say, SJAC. As usual it's a very well thought out response. In an ideal world I'd like to see us all living side by side in the same building, or at least next to one another (perhaps like you suggest with Southwark Council owning the site next door), but it's the execution of it that is wanting. When haven't the politicians just told us what we want to hear?!
Thursday 26 May 2016 6.11pm
Well, well. Jenkins the old miserablist certainly got us all talking to one another. Love our differing views.
Maybe not such a "weak post" after all??
Thursday 26 May 2016 6.46pm
sjac wrote:
Gavin Smith wrote:
Unfortunately, terms like "viability" are too often bandied about without any substance to them...
Viability is based on forecast and models, so while there will be a fair amount of substance, it's obviously predicated on moving targets so difficult predict with certainty...

No, in this context "Viability" is artful dodging by the developers, as this piece, previously alluded to on this forum, clearly demonstrates.

“Viability has driven a coach and horses through the planning system,” says (Dr Bob) Colenutt (at the University of Northampton). “All the things that are supposed to determine the best use of land – mix of uses, massing, density, social mix – have been trumped by finance. And it’s a form of financial modelling that’s hidden from view, entirely determined by the developers themselves. Councils are held over a barrel with the implied threat that ‘If you don’t play ball, we’ll go elsewhere.’ It’s what the development industry has always wanted. They cannot believe their luck.”

sjac wrote:
And odds are that Southwark Council probably owns the site next door anyway, so can just build there.
Offhand I can't think of any examples in Southwark of luxury developments and new housing for ordinary folk springing up alongside each other, the latter financed by the former. Can you? Happy to be proved wrong.

sjac wrote:
Pretty weak contribution Jazzy - a grauniad article written by an anti-development, anti-everything miserablist...
Hmm.
Thursday 26 May 2016 8.21pm
The Grauniad just keeps those stories coming linked to the disgrace that is our property market. What do you make of this installment?

http://www.theguardian.com/money/2016/may/26/revealed-9-rise-in-london-properties-owned-by-offshore-firms
Thursday 26 May 2016 9.17pm
JazzyQ wrote:
Well, well. Jenkins the old miserablist certainly got us all talking to one another. Love our differing views.
Maybe not such a "weak post" after all??

Touché, JazzyQ. I was just expecting a more developed argument from you (which you regularly present with eloquence) instead of a link... But admittedly you got me and Gavin into a good debate, so maybe you knew what you were doing! ;-)

I also enjoy many of the discussions on this site (some get a bit personal and snippy, but I avoid those), as it's clear that there are no easy answers to the issues that we face in SE1. At least we all agree that it's an amazing place to live.

The only issue that I'd raise with your second Graun link is that there are many legitimate reasons for someone to want to be an anonymous property owner. Celebrities and corporate executives may be very sensitive to their privacy in order to protect themselves and their families, which I respect (and they pay a chunky SDLT cost for choosing to do so). That said, I totally support a requirement for the ultimate owner to be disclosed to the government and law enforcement, and any suggestion of money laundering, tax evasion, or other sinister acts should be pursued vigorously. Unsurprisingly, this isn't really a problem in SE1 though - we don't even make the 1% list (behind Hounslow and Salford!).
Thursday 26 May 2016 9.54pm
I was pleased to see that Southwark was not on that list, and I hope it never is.

I agree that privacy is to be respected, but details must be given to HMRC and law enforcement, and the sorry mess of corruption, money laundering, gold bricks and all the rest of it dealt with.
Did you see the video when the Panama Papers information first came out? It was about the hidden victims of corruption, some of them children. Dirty money is at the bottom of this stinking mess.
Thursday 26 May 2016 9.57pm
Dave - your turn for my response... :-)

Sandgrown Dave wrote:
No, in this context "Viability" is artful dodging by the developers.

It's important to note that things like uses, massing, density, and social mix all form part of initial plans and pre-application discussions with the council, and truly shape the development proposals. If finance truly trumped them all, I'm sure a way could be found to stick on several extra floors and additional footprint to increase value and thus increase the available affordable housing provision.

There's also one element that is almost always forgotten: time. The longer the process takes (due to things like council delays, revised applications, and judicial reviews), the more the returns on initial investment are stretched. Developer returns need to meet MOIC (multiple on invested capital) and IRR (internal rate of return) hurdles in order to attract capital or meet shareholder expectations (and don't forget, the biggest investors in these large developers are pension funds and insurers, so it's your money they're trying to grow/protect!). If the approval process could be streamlined, I'd expect that there would be an noticeable reduction in these subsequent viability adjustments.

Sandgrown Dave wrote:
Offhand I can't think of any examples in Southwark of luxury developments and new housing for ordinary folk springing up alongside each other, the latter financed by the former. Can you? Happy to be proved wrong.

The One Tower Bridge development is the obvious example.

I also think that we need to be careful in how we define "luxury developments" and "ordinary folk". Most developments (even those with flats that cost many hundreds of thousands of pounds) are no more expensive than any of the existing private housing stock in the northern SE1 area, so can't really be considered "luxury flats". And in this part of London "ordinary folk" include the hundreds of thousands of City workers who make a very good wage compared to the national average (and can maybe squeeze to afford a small flat in SE1), but are far from rich. This is a very big part of the SE1 community - let's not ignore their needs.


Think you missed my point on my first response to JazzyQ, but hopefully clarified in the second.
Thursday 26 May 2016 9.58pm
JazzyQ wrote:
I was pleased to see that Southwark was not on that list, and I hope it never is.
I agree that privacy is to be respected, but details must be given to HMRC and law enforcement, and the sorry mess of corruption, money laundering, gold bricks and all the rest of it dealt with.
Did you see the video when the Panama Papers information first came out? It was about the hidden victims of corruption, some of them children. Dirty money is at the bottom of this stinking mess.

Totally agree. Let's hope they take down every one of them.
Friday 27 May 2016 1.12pm
sjac wrote:
It's important to note that things like uses, massing, density, and social mix all form part of initial plans and pre-application discussions with the council, and truly shape the development proposals. If finance truly trumped them all, I'm sure a way could be found to stick on several extra floors and additional footprint to increase value and thus increase the available affordable housing provision.

There's also one element that is almost always forgotten: time. The longer the process takes (due to things like council delays, revised applications, and judicial reviews), the more the returns on initial investment are stretched.

I agree that all those things shape the proposals - of course the proposals have to tick the right boxes to get the go-ahead. The "trumping" comes in when the developers then play the viability card (mixed metaphor alert) to get the goalposts moved after the match has kicked off.

OK, so you see beleaguered developers having no option other than to beg for release from onerous constraints so that they can eke out a fair return on their investment. I see them signing up for projects with the cynical intention from outset of later using financial sophistry to renege. Probably we'll have to agree to differ.

sjac wrote:
Developer returns need to meet ... shareholder expectations (and don't forget, the biggest investors in these large developers are pension funds and insurers, so it's your money they're trying to grow/protect!).
Well, speaking for myself, I'd rather my money wasn't used in unethical and socially destructive ways and I'd be content to see a slightly smaller return if that was the price to be paid. Sadly, the way that capitalism is currently organised, my opinion isn't sought.

sjac wrote:
If the approval process could be streamlined, I'd expect that there would be an noticeable reduction in these subsequent viability adjustments.
Not if, as I believe, the subsequent viability adjustment is part of the plan from the outset. Anyway I wouldn't like to see these developments being subject to even less scrutiny than now.

sjac wrote:
Sandgrown Dave wrote:
Offhand I can't think of any examples in Southwark of luxury developments and new housing for ordinary folk springing up alongside each other, the latter financed by the former. Can you? Happy to be proved wrong.
The One Tower Bridge development is the obvious example.
Ah, you got me there. I should have framed my question more carefully. Whilst it's in Southwark, the social housing at One Tower Bridge is City of London, not Southwark Council. Any others?

sjac wrote:
"ordinary folk" include the hundreds of thousands of City workers who make a very good wage compared to the national average (and can maybe squeeze to afford a small flat in SE1), but are far from rich. This is a very big part of the SE1 community - let's not ignore their needs.
Agreed, for me a major part of SE1's appeal is that there is (despite everything) quite a mixture here. However I honestly don't think there's much danger of the needs of the fairly prosperous being ignored.
Friday 27 May 2016 3.42pm
"Developers" and "eke" don't sit well in the same sentence, do they?

City workers are not scraping around to make a living either, I would suggest. I guess they would once have lived in trendier parts of town, but have been priced out by the oligarchs and crims so have taken a fancy to SE1. Would have looked down their noses at it years ago.
I got sick of hearing "Southwark? Where is that?" Replaced now with " Wow you must be rich to live there"

By "ordinary folk/people" we mean those who earn the average wage doing work that needs doing, and need a place to live.
That's all.
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