Public Subsidies for Private Profit: The Colville Estate Regeneration

The two towers of Hoxton Press are the third phase in the regeneration of Hackney’s Colville estate. Completed last year on the estate’s prime location directly opposite Shoreditch Park, they have received numerous awards and garnered rave reviews. ‘A model for estate redevelopment’, claimed the Architects’ Journal. ‘Some of the best council housing ever built’, declared the Observer. ‘Exemplary’ concluded the Financial Times. Developed by Anthology, the 198 properties on sale for between £730,000 and £2.45 million have supposedly been built to help fund the affordable housing elsewhere on the scheme. We’ve heard this tale of cross-subsidisation before, as it’s been used to justify the demolition of hundreds of council estates across London and their replacement with so-called ‘affordable housing’ and properties for market sale. And we’re familiar with how this worked out in such cautionary tales as the Heygate estate, where 950 homes for social rent were lost to the redevelopment by property developers Lendlease. So how will the story end in this ‘model’ regeneration scheme?

According to the Greater London Authority planning report, the 1950s Colville estate originally contained 438 flats, of which 338 were homes for social rent when their ‘regeneration’ was initiated in 2009. Hackney council’s masterplan, drawn up by Karakusevic Carson Architects, is to demolish the entire estate and replace it with 925 dwellings. Of these 476 will be for market sale; 111 are designated as ‘intermediate’, which means for shared ownership or shared equity; and 338 are earmarked for social rent, a mere 36 per cent of the total. The finished scheme, therefore, will bring a net gain of 0 homes for the housing tenure type most in demand in London, and particularly in Hackney, where 12,100 households are currently on the housing waiting list and 2,700 people are homeless and living in temporary accommodation.

As a result of the scheme, the 85 leaseholders and 7 freeholders on the Colville estate will lose their properties, which are being acquired by Compulsory Purchase Orders. As is standard practice in estate regeneration schemes, leaseholders have been given the Right to Return to one of the 111 intermediate properties; but as is also standard practice they have received inadequate compensation from Hackney council in order to do so, with one leaseholder offered £230,000 for her 2-bedroom home, another £245,000 for her 3-bedroom home, another £180,000 for his 2-bedroom home, another £250,000 for her 2-bedroom home, and another £200,000 for his 4-bedroom home. In comparison, properties on phase 2 of the scheme, Branch Place, also designed by Karakusevic Carson, are currently on sale for between £530,000 and £830,000. And while, for example, the 25 per cent of the £715,000 required for shared ownership of a 2-bedroom property is covered by the £230,000 compensation offered to this leaseholder, former leaseholders have to find 2.5 per cent of the value of the unpurchased shares in rent, which in this case means an additional £1,010 per month. Alternatively, taking up the council’s shared equity deal would relieve leaseholders of this rent, but this would require them to invest all the council’s compensation in the new property. And in both deals, until they own 100 per cent of the property – the price of which will increase with that of the property –they’ll only be an assured tenant, though one with responsibility for 100 per cent of the service charges and maintenance costs.

I asked Anthology, who have a 250-year lease on the land, to supply me with the figures on their Section 106 agreements with the council and other contributions to the Community Interest Levy, but they didn’t get back to me. So it’s not clear to what extent, if at all, the affordable housing provision on the new development is being cross-subsidised by a private developer building market-sale luxury properties on council land. But the regeneration of the Colville estate is undoubtedly being subsidised with public money, as it is co-funded by Hackney council’s Housing Revenue Account, the Homes and Communities Agency’s Shared Ownership and Affordable Homes Programme, and the Greater London Authority’s Affordable Homes Programme. I asked both Hackney council and the GLA for the figures on the extent of this public subsidy, but again, neither got back to me. So without access to information that is withheld from the websites of both the council and the GLA, we can’t say how many millions of pounds of public money has been allocated to this scheme – money that could and should have been used to refurbish the council’s existing stock and build additional council homes for social rent. But what we can say is that this money has not added one such home to Hackney’s housing stock, and that it is instead being used to force existing homeowners out of their community, with only 2 of the 28 leaseholders whose homes were demolished between 2009 and 2015 returning to the estate.

Worse still than this public subsidy of private property is that, during a crisis of housing affordability in the capital, and with 18 council estates being demolished across the borough, Hackney council has handed over public land to private developers explicitly in order to realise its latent value by building 476 homes for market sale at the highest possible price. For properties up to £600,000 these will at best be purchased by households earning up to £90,000/year and therefore qualifying for Help to Buy – a further public subsidy of private property that, since it was launched in 2013, has handed over £10 billion in 5-year interest-free equity loans; but most will go to Buy to Let landlords. The Anthology marketing suite revealed that almost all the Hoxton Press apartments were purchased off-plan before they were built, and half by non-domicile investors, while this week the rest were put on sale by estate agents Knight Frank in Hong Kong. This shouldn’t be surprising. Anthology, which has acquired six sites in London, is a subsidiary of Oaktree Capital Management, a US-based company and the largest investor in distressed securities in the world, and is known for buying the debt of countries in financial crisis.

Finally, there’s the question of what’s being built to rehouse the council tenants evicted from their homes. Phase 1 of the scheme began in 2010 with the demolition of Bridport House, which was replaced the following year by 8- and 5-storey blocks of 41 homes, all for social rent. These provided accommodation for some of the tenants decanted from their homes in phases 2 and 3 of the scheme – though the majority were rehoused in temporary accommodation elsewhere in the borough. However, the award-winning Bridport House has been plagued with problems since it was completed, with tiles falling off the roof, cracks opening in the brick cladding and flooding. Built over a large Victorian sewer, the new block had to be erected without concrete foundations; and the lightweight, quick-to-assemble, cross-laminated timber construction was then rushed through in order to qualify for a slice of HCA funding. Celebrated as the first council housing to be built in Hackney in forty years, Bridport house will be under scaffolding throughout 2019 as engineers try to figure out how to fix its numerous problems. A hurried 8 weeks to design by Karkusevic-Carson and 10 weeks to construct by Wilmott Dixon, it’s taken Hackney council 7 long years to respond to tenants’ calls to address its problems. These figures don’t add up to an ‘exemplary’ estate regeneration – except for journalists who, out of a lack of integrity or because of sheer idleness, are nothing more than mouthpieces for the press releases of architects, developers and councils.

(Since publishing this article, the Hackney Gazette has reported that fire wardens have been placed on 24-hour watch in Bridport House after engineers reported that the cladding insulation may not meet building regulations on fire safety and be a danger to residents.)

So what was the justification for demolishing the 438 homes on the Colville estate and replacing them with million-pound properties for investors, unaffordable homes for leaseholders and slum housing for tenants? According to Hackney council, the original council homes were ‘costly to repair and difficult to heat’. Since their website contains neither the viability assessment of the costs of refurbishment nor an impact assessment of the savings on residents’ heating bills versus the increase in their rent and service charges, and certainly no explanation of why those service charges haven’t been spent on the maintenance and repair of their homes, it’s impossible to know the veracity of this claim, which like the tale of cross-subsidisation is used to justify the demolition and privatisation of council estates across London. Our own studies, however, which are available to the scrutiny of the public, have demonstrated that the cost of refurbishing the existing homes up to the Decent Homes Standard plus and increasing the housing capacity on estates by 50 per cent, including increasing the number of homes for social rent, is far less – indeed many times less – than the cost of demolishing and redeveloping them, which as we have also shown requires at least 50 per cent of the new builds to be for market sale, exactly as Hackney council has planned on the Colville estate.

Undeterred by this fabricated excuse, the architects for the redevelopment, Karakusevic Carson, obediently chipped in with their by-now standard mantra that ‘the estate was poorly planned and inward-looking with illegible block entrances and street patterns.’ In its place, Karakusevic Carson is building what has become the standardised model for estate redevelopment: enclosed courtyards surrounded by mid-rise mansion blocks separated by newly-created streets. However much London’s architects like to claim this so-called ‘New London Vernacular’ as their own vision,  which the architectural press has reduced to its formal characteristics of freckled brick facades, street-level entrances to individual homes and approximations to the proportions of Georgian terraced housing and squares, the real motivations for this housing typology are revealed by Create Streets, which keeps up a relentless propaganda campaign denigrating modernist estates and promoting street-fronted residential development on its Twitter account. Concealed behind a debate around architectural form, aesthetic taste and the values of place making used to justify the demolition of post-war estates, the real object of the Create Streets model is the public land it wishes to free up for private development.

Create Streets was launched in 2013 by the neo-liberal Conservative think-tank Policy Exchange. Set up in 2002 by, among others, Michael Gove, who went on to become the Secretary of State for the Environment, Food and Rural Affairs, Policy Exchange is rated one of the three least transparent UK think-tanks with regard to where its funding comes from. In 2012 Policy Exchange published a report titled Ending Expensive Social Tenancies, which recommended accelerating the sale of high-value social housing in London, using the receipts to build affordable housing, and moving previous tenants to the periphery of the capital. To back up its argument the report asserted – but produced no proof – that ‘the majority of social tenants are either totally or largely reliant on benefits.’ As a measure of the political influence Policy Exchange exerts, four years later this recommendation on the sale of high-value social housing became legislation enshrined in UK law under chapter 3, part 4 of the Housing and Planning Act 2016. Then, in its 2013 report titled Create Streets: Not just multi-storey estates, they went on to recommend that all the high-rise estates built in London between 1950s and early 1980s (although presumably not the Barbican estate) be demolished and replaced with mid-rise blocks built on London’s so-called ‘traditional’ street plan. To this end they estimated that 360,000 council homes should be demolished.

The Create Streets model was taken up and promoted by Savills real estate firm, which is advising Hackney council and just about every other local authority in London on its estate regeneration programme, including the Greater London Authority. In January 2016 Savills submitted its own research report to the Cabinet Office, Completing London’s Streets: How the regeneration and intensification of housing estates could increase London’s supply of homes and benefit residents, in which it recommended demolishing the council homes of 136,500 London households and redeveloping the land according to what they call the ‘Complete Streets’ model. As one would expect of this nexus of private developers, estate agents, right-wing think-tanks, housing professionals and council officers jockeying to see who can demolish the highest number of council homes, the Create Streets model is designed to realise the latent value of council land by demolishing the estates built on it, increasing the housing capacity two or three times over, and building market-sale properties for the highest possible value in their place.

Comparing the plan of the Create Streets model in the Savills report with Karakusevic Carson’s masterplan for the Colville estate shows exactly who and what is driving this architectural vision of a New London Vernacular. But what is mentioned neither by Create Streets nor by any of the architectural practices that have unquestioningly adopted its model is the loss of public amenities on estate regeneration schemes. Far from being ‘poorly planned and inward looking’, as Karakusevic Carson claims, the open plan of the Colville estate provides numerous publicly-accessible green spaces between the L-shaped blocks and open squares. And despite being fenced off by the council, on what’s left of the estate these are still being used as communal allotments, public gardens, sports courts and children’s play areas.

In contrast, once enclosed in Karakusevic Carson’s private courtyards, where they will only be accessible to residents of the individual blocks, these public spaces will all be lost. How many children will play on their gated lawns, surrounded by CCTV cameras and signs prohibiting ball games? How many residents will bathe in the light of London’s low sun when they are overshadowed by 4-8-storey mansion blocks on every side? How many of the council tenants that return to the estate will find a place in which to meet, sit and chat with each other on the newly created, car-lined streets dividing their homes? How many former patrons of the estate’s demolished shopping parade will be able to afford the prices in the new corporate outlets to which councils invariably give the new commercial contracts? How will the kids who once played on the estate’s demolished sports courts afford the charges in the new Britannia Leisure Centre that, together with a further 400 properties for market sale, is being developed to the immediate south of the estate? And why is this erasure of public amenities and their replacement with private spaces and private facilities being subsidised with public funding on public land?

But the social consequences of the Create Streets model of housing privation is not the only thing that’s wrong with this estate regeneration. What every article on this scheme has failed to report is that, across phases 1-3, 260 properties for market sale, 34 properties for shared ownership or equity, and only 154 homes for social rent have been completed. The remaining 184 social rented homes promised to tenants are yet to be built over phases 4-7, which Hackney council estimates won’t be completed until 2028. How many of those will turn out to be some form of the increased ‘affordable’ rent and shared ownership properties being subsidised by the London Mayor, or, following future viability assessments citing a fall in house prices post-Brexit, further properties for market sale?

In 2018 Hackney council set up a Housing Property Company that allows it to rent out properties for market rent and London Living Rent, the London Mayor’s new Rent to Buy scheme. But it also has the potential to act as a future developer of properties for market sale, as councils across London are already doing with equivalent wholly-owned companies. As Hackney council continues to withhold maintenance on the remaining 200 or so homes on the Colville estate, encourages residents on secure tenancies to accept rehousing elsewhere, and makes leaseholders ‘one-off’ offers to sell up and move away, how many homes for social rent or even shared ownership will Hackney be obliged to build over the next decade? And will those they do be as badly designed and built as Bridport House?

Time will tell. But what we can say now is that the tale of the Colville estate regeneration will not end well for former or future residents, either socially or financially; that it is most definitely not a ‘model’ of estate redevelopment that benefits anyone other than developers, builders, architects, estate agents, landlords and investors; and that, far from showing how luxury housing is cross-subsidising the homes Londoners need, it demonstrates, once again, that London’s estate regeneration programme is a vehicle for turning public land, public housing and public funding into private profit.

Simon Elmer
Architects for Social Housing

Postscript. The Colville estate is just one of the 195 London estates that have recently undergone, are currently undergoing, or are threatened with regeneration by Labour councils. Labour’s housing policy isn’t merely a set of principles (privatisation of housing provision, marketisation of public services, financialisation of the property market, and social cleansing of communities) at the heart of the political philosophy of the Labour Party; or even just the practices of the Labour councils that implement these principles (through demolishing council estates, selling off council homes, transferring their stock to housing associations, handing over land to private developers, and setting up private development companies to build properties for market sale). Labour housing policy is also a practice of propaganda. As an example of which, below are some screen grabs from Twitter of Hackney Labour Mayor Philip Glanville, Labour MP for Hackney South and Shoreditch Meg Hillier, Hackney Labour councillors Sharon Patrick, Feryal Clark and Steve Race, Hackney Labour council itself, and the Hoxton and Shoreditch branch of the Labour Party, all unreservedly promoting the demolition and redevelopment of the Colville estate over the past 8 years. It’s against the lies about its estate regeneration programme propagated by the Labour Party that this article is written.

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