Lewisham Council plans to make a profit from renters: Besson Street and beyond

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.

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