Verney Rd - yet another Old Kent Rd development
Jun 16, 2019 12:00 am
Third large application in a month goes to committee -
The application for a mixed-use development at 6-12 Verney Rd, just off the Old Kent Rd, behind PC World, is due to be considered by Southwark’s planning committee this Monday (18 June). The proposal is for 3 blocks, the tallest of 17 storeys, comprising 338 residential units, office and workspace and associated open, green and amenity spaces. The application is recommended for approval.
The application follows Malt St, approved less than two weeks ago, Southernwood Retail Park, Cantium Retail Park and Ruby Triangle and is the latest of the big developments being rushed through planning committee, in advance of the adoption of the Old Kent Rd Area Action Plan (AAAP.
Verney Rd shares several characteristics with the other Old Kent Rd developments, although somewhat smaller. All have 35% affordable housing, in an approximate 70:30 social rent:intermediate housing split, compliant with the local plan (Ruby Triangle and Malt St have 40% affordable housing). All, though, are technically non-viable, according to their viability assessments, so should be unable, in theory, to meet this affordable housing requirement.
Developer’s estimate of profit shortfall for Verney Rd scheme.
This contradiction is reducing the consideration of viability into something of a ritual. The developer (in this case CB Acquisition London Ltd,
(correspondance address, Cayman Islands)) says that the scheme will only make about half the profit needed to support the affordable housing required and the Council’s appraiser broadly agrees, with some caveats. Then, after ‘stand-back analysis’ or ‘sensitivity testing’ (and with the Bakerloo Line Extension (BLE) very much in mind) the developer graciously agrees to deliver the affordable housing, regardless.
Extract from developer’s viability assessment
This is different to what has been happening at the Elephant and Castle, where every major development used viability to refuse to deliver policy compliant affordable housing, so it must count as progress - but maybe not as much progress as it first appears.
Homes and jobs
Verney Rd is designated in the Mayor’s planning policy as a Strategic Industrial Location. Southwark Council and the Mayor have agreed to the release of such land for mixed use development, including housing, before the Old Kent Rd AAP has been adopted, much to the anger of the many Old Kent Rd businesses.
Such developments, where the industrial land is lost, should provide 50% affordable housing, according the Mayor’s draft New London Plan. This was the case for Ruby Triangle and Malt St, as well as Verney Rd. The draft NLP is not yet adopted, so developers are getting in quick, before it takes full force.
Second, while CB Acquisition Ltd are offering 35% affordable housing, they want any improvement in viability to ‘be used to bridge the current viability “gap” rather than for further planning obligations’ (ie affordable housing). This pre-empts the use of a late review mechanism, designed to capture any uplift in profits for affordable housing when the development is complete. (Malt St was passed without a late stage review mechanism, though both Ruby Triangle and Cantium Retail Park have them).
Denser and denser
On top of this Verney Rd is a very dense development - 1180 habitable rooms per hectare - way above the London Plan range of 200-700 habitable rooms per hectare (hrh) for an Urban Density Zone. But even Verney Rd is not as dense as Ruby Triangle (2713 hrh) and Cantium and Southernwood Retail Parks (2353 hrh and 2522 hrh respectively), rendering the London Plan policy a dead letter, as far as the Old Kent Rd is concerned. Together the developments will deliver over 4,600 homes, with a gross development value above £2bn, with the potential for a big impact on profitability from any marginal improvements in the viability figures.
All the Old Kent Rd developers have shown a marked reluctance to take advantage of the grant funding available from the Mayor - only Ruby Triangle and Malt St have done so and then only for 5% of the affordable housing. As the Southernwood Retail Park developer explains it, grant funding would have ‘a significant negative impact on the viability of the scheme’.
More or less affordable housing?
So, the picture that emerges is that of a pact being struck - developers will deliver the affordable housing that the local plan requires, but not much more, regardless of the true profitability of the developments and of any ‘strategic’ target of 50% affordable housing, set by the Mayor. On the other hand, should, say, problems occur with the BLE, reducing the prices that can be charged for new homes, it is not hard to envisage developers returning to Southwark, reminding them that they always said their schemes were technically unviable, and looking for a reduction in the affordable housing.
Indeed, this eventuality is even envisaged in the proposed small print of the planning consent.
Paragraph 256 of the planning committee report.
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Delays and Delancey
Jun 15, 2019 12:00 am
Delancey looks to escape blame for its own faults -
In the face of a judicial review of their planning approval for the shopping centre demolition and redevelopment (now scheduled for 17 and 18 August), centre owners and developer Delancey showed a touching concern for the welfare of the traders, making noises about how the ‘timeline for starting on site will be pushed back’, affecting the traders’ hopes for ‘stability and certainty’.
Delancey has not previously been in any hurry to settle the centre’s future, other than entirely on its own terms. This is amply demonstrated by the snail’s pace progress of their planning application. It is a story of constant deferment, caused by Delancey’s refusal to meet the minimum requirements of the Council’s own local plan.
Delancey are culpable in 3 areas - the affordable retail offer, the relocation of the traders and the affordable housing offer.
No affordable retail
The application was lodged on the 28 October 2016 but did not include any affordable retail units, contrary to Southwark’s 10% requirement. Instead Delancey submitted a Retail Assessment which said ‘The Proposals do not include 10% affordable retail for the reasons outlined later. This would be unviable and inappropriate given the intention to create a strong retail/leisure anchor at the heart of the town centre’ (4.63).
By Dec 2017 the affordable retail offer had inched up to the equivalent of 5.3% (para 88), including an in-lieu payment. The application was scheduled for a planning meeting on 18 Dec 2017, when Delancey, no doubt fearing a refusal, despite a recommendation to approve (para 1) asked for a deferral ‘to allow time for further negotiations in relation to the affordable retail proposal’ (para 2) . A fully policy compliant offer was not made until Jan 2018 - 15 months after the application was first made.
No relocation strategy
The relocation of shopping centre traders was even further down the list of Delancey’s priorities. A draft strategy, put together without any input from traders, appeared in August 2017, nearly a year after the planning application. The strategy did not include anywhere for the traders to move to during the building of the new development. This would have to wait another 5 months, until February 2018, when the Castle Square temporary facility for traders was proposed.The planning application for this wholly inadequate temporary space was made in June 2018, with approval in January 2019.
No social rented housing
Alongside this, similar delays plagued the affordable housing offer, which Delancey only slowly and reluctantly improved because of fierce campaigning opposition. It took Delancey over 2 years (Oct 2016 - Dec 2018) to progress from their initial offer to the final, approved proposal, while still falling short of the social rented housing requirement.
There was a complete absence of social rented housing, or quantities for any kind of affordable housing in the initial offer. Delancey would only say that 35% affordable housing would be between 15% and 80% market rent, with a ‘blended percentage’ of 57% (Para 6.3). This turned out to include a only a meagre 33 ‘social rent equivalents’, out of 979 total units. This went up to 74 units in February 2018, with 95 London Living Rent units and 161 affordable rent at 80% market rent. Five months later, in June 2018, the social rent was increased to 116 units, (with the promise that they would be ‘proper’ social rent), but the London Living Rent was reduced to 53 units to compensate, with 161 units remaining at 80% market rent (income thresholds of £80,000-£90,000 pa). This was too much for Mayor Sadiq Kahn who insisted on a top threshold of £60,000 pa.
Delancey’s foot-dragging caused the application to be deferred three times (18 Dec 2017, 16 Jan 2018, 30 Jan 2018), while the planning committee, under intense pressure from campaigners, wrestled improvements into Delancey’s scheme, until final approval on 3 July 2018.
This entailed 4 versions of an expanding officer’s report, which recapped the reasons for each successive delay and recounted the improvements wrenched from a reluctant Delancey. Each version recommended approval, on the basis that the deal offered, including affordable retail, trader relocation and the ‘maximum reasonable amount of affordable housing’ was the best that could be got, only for the next version to demonstrate that this was not the case.
The delays did not end with the planning committee approval. Planning approval was also needed for the Castle Square temporary facility, as a condition of the shopping centre development approval. While the proposal was made in February 2018, Delancey came forward with this application at the end of June and it went to committee on 7 Jan 2019. The final decision notice for the shopping centre application was then published on 10 Jan 2019, nearly a full year on and there hasn’t been any progress since then.
Castle Square showing no sign of works commencing on the temporary boxpark
Where the fault lies…
It might be argued that through this whole tortuous saga that Delancey ‘listening’ and responding to the community’s concerns. An alternative explanation is that it is a well-rehearsed developer tactic- offer as little as you can get away with, and then make only those improvements you are forced to concede. Delaying the delivery of the hard-one 116 social rented units for at least 9 years employs the same delaying tactic.
To sum up, we have little doubt that had Delancey presented the improved scheme that it presented to the planning committee on 3 July 2019 at the very first scheduled planning committee meeting, back on 18 December 2017, it would have been approved and any legal challenge long resolved. Delancey could then have saved the crocodile tears it is currently shedding on behalf of the traders.
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