Kingston set to push ahead with £800m regeneration JV
0London Borough of Kingston is pushing ahead with a controversial estate regeneration model in a bid to build hundreds of homes.
The Royal Borough of Kingston Upon Thames has voted to set up a Limited Liability Partnership (LLP) with Countryside Homes to build an £800m development that they say is a “once in a generation opportunity”.
The partnership will redevelop the Cambridge Road Estate (CRE), a 1970s housing council housing estate that now has overcrowding, low life expectancy and poverty.
But it comes less than a year after Haringey Council halted proposals for a similar joint venture following court battles and the resignation of the council’s leader.
Protestors claimed the £4bn project to build 6,000 homes didn’t include enough social housing and objected to the involvement of developer Lendlease, the firm responsible for the Elephant and Castle scheme that ended in controversy.
Although the final numbers have not been confirmed, the outline Kingston plan would deliver 767 social rented homes and 100 shared equity units.
The project, which has so far cost £3m in fees, involves Greater London Authority funding and under rules brought in by London’s mayor, the project must now be voted on by residents to decide if it goes ahead.
If it does get the green light, then more costs will follow.
According to council documents, the statutory home loss payment for council tenants is currently £6,300 and tenants will also be reimbursed for the costs of moving.
Leaseholders and freeholders living on the estate will be offered the full market value for their homes plus 10% home loss in line with the compensation code.
The key difference from Haringey is that it is less ambitious in the number of homes to be redeveloped and is on a single site.
Haringey has now settled its battle with Lendlease and effectively scaled back its plans to a single development in Tottenham.
A Lendlease spokesperson said in the statement confirming the agreement: “While we remain disappointed not to proceed with the HDV, which was fully out of our control, we have now agreed a settlement with the council.
“This enables us to move forward and work together on the High Road West scheme, which will bring much needed new homes, jobs and community facilities for the people of Haringey.”
Kingston has attempted to tackle critical factors that led to the collapse in the Haringey JV – a lack of community involvement in decisions from the start and a lack of clarity in responsibility.
A community board will be made up of the chairs of the three existing community groups and five resident members. The council will only approve plans “on a stage by stage basis” and retain independent advisors outside the LLP governance.
The report to councillors said: “It is proposed that both parties enter into the completion agreement to regulate their responsibilities, set out the various work streams and treatment of pre-ballot costs in the period before the ballot is concluded.
“Without it, neither party has any control or certainty over the progress of the project.”
The biggest risk is a “lack of resident support for scheme proposals” that leads to the vote being lost.
The council has pledged to provide meaningful resident input. The JV will also have to be able to demonstrate viability of the scheme at every stage.
Kingston said: “The council continue to work positively and cooperatively with all residents and resident representative groups across the estate and evolve a high quality resident offer.”
The report to councillors argued tackling overcrowding and poverty justified the development: “The CRE redevelopment proposal provides a once in a generation opportunity to deliver new modern homes for our current residents as well as deliver much needed additional homes.”
How is the deal being financed?
The council will transfer the land into the LLP in a “local asset backed vehicle” arrangement.
The value of the land will be matched by Countryside with an equivalent cash facility which will be drawn down by the LLP as required. The GLA’s loan and grant funding will be drawn down in stages.
The GLA has provided a £26.6m loan to the council for the buy back of leasehold property plus a further allocation of £20m towards the construction of new council homes through the Building Council Homes for Londoners (BCHfL) grant.
If the value of the council’s land and Countryside’s cash (equity) does not equal 50% of the cost of developing the phase out, the LLP will have to inject additional money in.
The report to councillors said: “This is likely to come from general fund borrowing under the council’s prudential borrowing powers.”
The council will buy back the social rented homes from the LLP, funded by the housing revenue account.
After all the houses are sold or rented, outstanding debts will be repaid, the GLA loan will be settled and any profit split between the two parties.
The net return for the council go back into the HRA.
