Southwark joins British Land in deal for 3,000 new homes at Canada Water
0Southwark Council has signed a development agreement with property company British Land for the Canada Water area, giving it a flexible 20% stake in the land.
The agreement will see a complex series of land transactions creating a new joint head lease for the site, which will underpin the delivery of a mixed-use scheme including 3,000 new homes.
The deal will allow the council to recover income from development to support its capital programme.
A report approved by the council’s cabinet earlier this month said: “The council will have the option, as each plot comes forward, for development to either invest in that plot, to maintain our ownership, sell out our interest, or to retain our land interest and not invest in that plot.
“This arrangement is detailed in the report, the key consideration is that this approach will give the council the opportunity to benefit from the increase in rents and capital receipts as the development is built out over the next 15 years.”
The development agreement will see British Land granting the council a 500-year lease of its freehold land.
From this lease, and the freehold on its own land in the area, the council will create an overarching head lease for the whole site.
It will receive 20% of the rent from a shopping and leisure centre under the head lease.
Once individual plots are identified for development, these will become the subject of a new lease arrangement.
Either party will have flexibility to sell their stakes in each plot or the entire scheme.
Commenting on the agreement, Chris Shepherd, director at regeneration finance consultancy 31ten, said: “One thing that I do like, and quite innovative, is the ability of each of the partners to buy in and out of the schemes.
“This will allow the council to support and gain from those aspects of the development it is most interested in — be they social or financial related — and cash out of those that do not meet its objectives or current affordability profile.”
The agreement with British Land will guarantee 35% of the housing in the first phase, with 70% of those at social rents.
The council will have the first option to purchase the social rented homes and let them as council homes, at council rents, on council tenancies.
Both parties have until 31 May to sign the agreement, following which British Land will have 28 days to submit an outline planning application for the site.
