King's Cross: the dark side

This post would have been on the web site of the King’s Cross Railway Lands Group but that group wound itself up a couple of years ago (and its web site is archived at the BL) so the post appears here for convenience. M.E. 19 April 2015

Thanks to William McClennan, a vigilant journalist on the (exemplary) Camden New Journal, we learned that Argent had sought to reduce the number of social housing and “Intermediate” units which had been agreed in their S106 Agreement of 2006. This variation in the contract was sought because the reduction in government grants for social housing now meant that the ‘viability’ of the scheme would, allegedly, be undermined. His article appeared on 9 April:’s-cross-social-homes-developer-bids-build-more-luxury-flats

A number of those people who had been involved in the decades of earlier struggles to secure more social housing got in touch with each other and decided to put together a protest in the hope of persuading Camden to take a tougher line or persuading Argent to honour their original commitments. When we looked at the original agreement and the Camden officers’ report on the proposed reduction in numbers it appeared that Camden were, at least superficially, powerless to resist the change because of the intricacies of the original agreement. KXC s106 Variation LBC Officers’ report

So we wrote to the CNJ as follows:

 Argent proposal to reduce their social/affordable housing commitment at King’s Cross

 The Editor, CNJ, 14 April 2015

If Camden Council agree Argent’s attempt to reduce the number of affordable homes on King’s Cross Central it will be a terrible betrayal of the King’s Cross community and of the 29,000 households on Camden’s housing waiting list.

 The people signing this letter are just a few of those who took part in the long struggle a decade ago which led to the compromises in the Planning Gain (Section 106) Agreement Camden signed with Argent and its development partners. The agreed numbers of social-rented and other “affordable” homes in the plan added up to just 40%, a great disappointment to local people who had fought for the 50% target set by Camden and by the Mayor’s London Plan.

 We were told then that these numbers were the best the Council could negotiate without sacrificing other community benefits which it wanted from the development.

 Roger Madelin, the Chief Executive of Argent, defended the deal by saying the development had to be economically robust enough to stay viable through more than one property cycle and they were expecting some good and bad periods.

 When the new coalition government took office in 2010 it decided developers could re-negotiate Section 106 agreements if the financial crisis had undermined their viability. But London property values are now well above their pre-crash levels (35% on average for housing). For example, flats on the site advertised for sale this year include a one-bed flat for £985,000 and two-bed flat for £1,335,500. Their scheme is now internationally acclaimed as a commercial triumph, with Google as the jewel in their crown.

 We understand from the Camden officers’ report that Argent could, if their request to reduce their social housing obligations is denied, fall back on a legal device in the original Agreement which would enable them to deliver even less, simply because of the change in the government grant regime. To change the agreement Argent would need to secure Camden’s consent and to do that they would need to present an up-to-date viability assessment and satisfy Camden’s own experts and councillors that their scheme’s viability really is at risk if they honour their obligations. In the light of recent Information Tribunal decisions such ‘viability’ analyses should be in the public domain. As citizens and voters we want to see the sums.

As recently as autumn 2014, Argent’s Robert Evans introduced a report by the Centre for London saying proudly: “Argent makes places for people… Our current largest project is the redevelopment of King’s Cross, where we are delivering 2,000 new homes; 40% of the residential is classed as affordable in tenure.…” 

 It is difficult to see what has altered since then.

 Yours sincerely,

Cllr Sian Berry (in a personal capacity)

Ex-Cllr Paul Braithwaite (HS2 campaign)

Andrew Bosi (Cally Rail Group)

Michael Edwards (KXRLG)

Marian Larragy (KXRLG)

Una Sapietis (KXRLG)

Diana Shelley (Cally Rail Group)

Del Brenner (Regent’s Network, KXRLG)

Richard Lee (KXRLG)

Angela Inglis (KXRLG, CAAC)

This is our letter as it appeared in the CNJ on 16th April’s-cross-central-will-developer-betray-people

Councillor Sian Berry wrote this up on her blog, and added a picture of us

Council responds: meanwhile, on 15 April, Councillor Phil Jones responded to an email from Marian Larragy as follows:

Dear Marian

… I wanted to come back as promised to clarify some further points.

You ask what approach I am taking to this regrettable situation: it is to maximise the largest possible number of genuinely affordable homes delivered on the site, in line with the objectives of the council’s Labour group. I do believe that, taking into account the circumstances and the legal realities, the proposal that has been negotiated and set out in the report is the best that can be made of a bad situation. The key point is that by failing to act we would have ended up with just 74 social rented units, but instead there will be 127 delivered. Obviously this is not as good as the 148 envisaged in 2006 and it is a matter of deep regret that we and the households of Camden in housing need are suffering this loss. But sacrificing some of the intermediate Homebuy and shared ownership units that would have been far out of the financial reach of ordinary Camden people seems like the right strategy to protect as many of the social rented units as possible.

You understandably question why this is happening given that the market has undoubtedly risen enormously since 2006 and therefore this can be assumed to increase the profits obtained by Argent from the private housing. Other costs, such as construction costs have also risen significantly in this time, but the point still stands. Unfortunately, this assessment of the wider viability has no impact on the S106 and the council’s negotiating position. The S106 states that the affordable housing as envisaged only has to be delivered if the relevant affordable housing price is reached. This is the price to be paid by a registered provider to take on the affordable housing units. Due to the massive reductions in government subsidy available for social housing there is no housing association able to pay the required sum of £35.4 million. Whereas for Phase 1 at King’s Cross £160k per unit was paid by the GLA, this is now down to £30k per unit. This is the cause of the inability of housing associations to shoulder the cost.

The consequence of this situation is that the ‘cascade’ mechanism would have been triggered as enshrined in the S106, and this could in turn have led to just 74 social units being delivered as described in the report. There is a clear process which is outlined within the S106 in relation to the cascade mechanism and we cannot look at the overall viability including sales prices nor build costs as part of this. Due to when the agreement was signed several years ago, there is also no claw back/overage agreement to obtain greater affordable housing contributions when market changes inflate profits, which is what Camden council adds to S106 agreements in 2015.

I have questioned council officers about what would happen if we simply reiterated demands for the full S106 to be delivered in light of the desperate need for housing in the borough. I was advised again that the affordable housing price and the cascade mechanism are enshrined within the S106. If Argent can’t deliver the full amount of affordable, then the cascade takes effect. So if the council now refused to sign the Deed of Variation, this cascade would be triggered and deliver less of a contribution towards affordable housing than would be achieved pursuant to the Deed of Variation as negotiated. So Argent would be implementing the S106 by delivering the 74 units – i.e. they would not ‘in breach’ of the S106 by exercising this option, and there would be no basis for the council to go to court to seek an injunction to force them to provide more.

I can assure you that I fully appreciate and share the massive concern that exists over the weak position of communities vis a vis developers, and how this is leading to unacceptably low proportions of affordable housing being delivered on many sites in London. This needs a range of new policies at national level to address and my colleagues and I are pushing for them every chance we get. In defence of Argent, it’s clear that they have sought to engage with the council in a reasonable way and haven’t tried to force down the social rented units to what was possible under the S106. Instead we have a situation where despite catastrophic cuts in government support for social housing the sizeable majority of the genuinely affordable units have been saved and we have lost a load of units that weren’t actually affordable anyway. Taking into account all the facts, I think the council’s pragmatic approach to maximising the number of homes that will actually help people on our growing waiting list is the right one.

Best wishes

Councillor Phil Jones

This story is not over.

Author: Editors


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