The site awaiting development
The site awaiting development

Lewisham Council has finally unveiled its plan to re-develop a large empty plot of land at Besson Street, New Cross Gate, within what is sometimes known as the Kender Triangle. The plans are an interesting departure for the council, who instead of building new council housing, plans to build a Private Rented Sector (PRS) scheme of 250 units on the site – see a summary of the scheme here. There will also be a doctors surgery and other community facilities. But 65% of the scheme will be let at market rents. More on that in a moment.

I am not necessarily averse to a council PRS scheme rather than council housing, given the times we live in. Lewisham is building around 500 new council homes at present, but their future is unclear. They will of course be subject to the right to buy, plus rent changes and other meddling from central government. At the moment that meddling, which includes HA Right To Buy, the funding of that through forced sale of high value homes, Pay To Stay and other proposals, seems aimed at eliminated most social housing within at least zones 1 and 2 of London and probably beyond. So I can understand Lewisham choosing to build homes that will not be subject to the political pressure on social housing.

But the devil is in the detail. The council intends to partner with a private company to deliver the scheme. The initial reason given to me by a council officer was that the council doesn’t have the expertise to run a PRS scheme. This struck me as odd, since the council can clearly run rental schemes, and could hire in any extra expertise they needed for a slightly higher-end scheme. But disregarding this slightly odd reason, the private company will also supposedly invest money in the development, so this is a way of attracting capital to the project. What that also means, naturally, is that the company will expect to make a profit. We do not know how much yet, and it’s not clear if or when we ever will: at present financial calculations are taking place under the cover of ‘commercial confidentiality’.

But we can guess that the profit will not be small. Firstly let’s say that 35% of the scheme will be what Lewisham refers to as a “Living Rent” product. The details of this are unclear, but it will offer sub-market rents and be aimed at people who don’t earn a lot but who for various reasons can’t get on the council’s waiting list. No-one at all will be taken from the council’s 9000-strong waiting list, except possibly by accident. So no provision is made here for all those families currently living in poor conditions in bed and breakfasts across the borough. I have been unable to ascertain whether this was a purely financial decision, or whether deliberately taking people off the housing list would make the scheme technically a social housing provider, and therefore subject to central government meddling/destruction. I suspect the former, since Lewisham hasn’t said it is doing it for the latter reason.

But more impressively, from the point of view of a private company, an astonishing 65% of the 250 housing units will be let at market rates initially, though rent increases will be capped at inflation. Now with 65% of the scheme let at market rent, it seems clear that it won’t be long before significant amounts of money will be made from the site. The money will not only be made by the private company partner however. The profit will also be made by Lewisham. A council official admitted as much to me, and told me that their profits from the scheme will be put into local services. Which sounds nice, but suggests some odd priorities. Given the scale and extent of the housing crisis across London, is it really appropriate for Lewisham to be making money from their residents on housing schemes? Bear in mind that this Besson Street site has been owned by the council for decades and previously had council housing on it. This is effectively ‘free’ land to the council as developer, and yet what they see fit to do with that is not provide as much cheap housing as possible, but actually make a profit from it. While I know their budgets have been drastically cut, I would question whether this is really the right place to make up their shortfalls.

It seems to me that Besson Street should be a non-profit scheme, that at this point in London’s history it is not appropriate for the council to be profiting from their own residents on housing schemes. The best way to lock in a non-profit ethos would be to make the scheme a Community Land Trust or a rental housing co-operative run by its own residents. The scheme could be self-financing (as most social housing was) over the long term, perhaps being cost-neutral over 25-40 years. But instead of providing Lewisham residents with cheap housing controlled by themselves, the council is instead offering a scheme that makes a half-hearted concession towards lower income renters, while also apparently making Lewisham and their partner plenty of profit.

It gets worse. This is described by the council as a pilot scheme. If it goes well they will develop yet more PRS schemes along these lines, presumably all profit-making enterprises. As for whether the council ‘needs’ the capital investment from a private company: that is an interesting question. Like a lot of public-private partnerships, this is actually a way of borrowing money off the books – the guaranteed profits for the company take the place of interest payments. As has been shown time and time again, it is an incredibly expensive way of borrowing, far more expensive than just, y’know, borrowing. The residents of the Besson Street development will have to pay for this very expensive money in their rents.

I will be interested to hear the reactions of local community groups and residents to this scheme over the coming months. I suspect the reaction of many of them will be similar to mine: with the housing crisis in London reaching near-apocalyptic levels, is it really too much to ask that Lewisham provides non-profit housing developments, at Besson Street and elsewhere?

Edit: Since this article was written local residents have carried out a consultation – see the outcome here.