Public Subsidies for Private Profit: The Colville Estate Regeneration

Anthology, Hoxton Press

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: Not just multi-storey estates, 2013

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.

Savills, Completing London's Streets

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

Cut vine on the Colville estate

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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4 thoughts on “Public Subsidies for Private Profit: The Colville Estate Regeneration

  1. Even before I read this, I could see the truth yelling from the title. It could not be better illustrated by that old Thatcherite hacker, Sir Edward Lister, 19 years cutting the public services of Wandsworth workers to death. He is now in reverse mode, desperately trying to save the British Capitalist State from meltdown. Yes, as the boss at Homes England, he is facing the other way, submerged in his new ideology of privatised Keynesianism. The big State cannot find enough money to throw at the small State and its social housing functionaries. The best one party state in the world of Tory-Labour-Liberal, cannot patch up the broken market. So rather than patching it up they are opting for propppppping it up. No longer will it be enough for councils to say their hands are tied, or that it is the wicked Tories making all the cuts. The profiteers of austerity, are once again exposing themselves as the same profiteers of finance. In October 2018 the Tories followed Labours revolutionary demand in Aug to lift the borrowing cap on Councils Housing Revenue Account. So the Treasury’s coffers are open for us all to ‘spend, spend, spend.’ Our social cleansers in Cambridge are so confident, that they are openly declaring that social cleansing expropriation can be carried out without the help of the open market. No sale needed. Cross subsidy hangs like a corpse from the living dead zombies of finance capital.

    So not only are individual capitalist investors recycling their money into the collateralised gold-mines of public land and social and council housing estates, the private banks now have some competition on their hands. 95% of working class Romsey (Cambridge railway workers housing) has been privatised. The reds that are left are all in bed with their mortgage advisers and their money-magician friends, pumping up the reinvented ideology of the old “home-owning democracy,” as “low-cost-home-ownership.” As the affordable racket is exposed they drill down to conjure up new housing commodities to sell to workers. The Treasury through the Public Works Loan Board is stepping forward to restart its next round of low interest loans and provide a bit of competition to the housing money market. On top of this, off-the-shelf grants are being replaced by, mid to long term subsidies about to be rolled out to Councils and Housing Associations through other State departments, on the pretext of building more council and social housing.

    It is nothing of the sort. All this money will find its way into the pockets of the private property developers, the private financiers their vast army of consultants, surveyors, accountants, architects, hedge fund managers, bankers, private equity and treasury advisers and finally into the pockets of private individuals being brainwashed in a new round of sustained rhetoric about “low-cost-home-ownership” which in actual fact is the only sustainable dystopia that is holding back the complete collapse of 21st century imperialism.

    Had it not been for the five year long street campaign by Focus East 15 mothers and researchers at Debt Resistance UK, the whole rotten business of workers housing expropriation and social cleansing via the Council-banker-bailiff route to destitution, would have remained suppressed. The task for Big State, and its puppet Little States is to stay in bed with their private monopoly bankers and financiers. It is for them to now find social cleansers and expropriators with a human face and a humanitarian purpose. It seems Newham has found one, while Haringey and Cambridge City Council are undergoing a purge.

    We have a continuing and deepening fight for basic democratic rights.

    Montreal Square tenants who have been fighting to save their homes every week since February 2018, and on the streets every week since 12th May 2018, were boosted with ASH’s 3 hour presentation back in late October 2018. We received a wake up call to put the costs and material reality to the forefront of our campaign. At the end of the consultation on 17th Jan 2019, after persistent demands to see these costs, the Board of Cambridge Housing Society, failed to provide this vital information. This is a flagrant breach of the Sedley criteria on consultation (1985), and one case law after another has repeated the obligation that social providers and councils are under law. They must provide full access to accurate and up-to-date information, giving “sufficient reasons for intelligent consideration & response” without pre-determined or pre-conceived biases.

    A list of costs were presented by the Social Landlords of Cambridge Housing Society, to the Tenants on the 4th of Feb, after the consultation was closed! Too late for intelligent consideration & response by the tenants. A positive Net Present Value (NPV) figure was quoted to blind us with science, but vital assumptions about the discount rate, the cash flow amounts and time periods were all missing. And as Professors Costas Lapavitsas and Ben Fine both imply, without these figures you can make the numbers come up with what you want. A positive NPV figure means the redevelopment is a good investment. Thats what the social landlords wanted, and that’s what they got using their multi-national advisers (Price Waterhouse Coopers) sitting on their board to conjure up. The Financial Conduct Authority, The Social Housing Regulator and the Serious Fraud Office Squad must all be looking the other way.

    For a long time now tenants at Montreal Square have known that it is all about money. A film in November 2018, of the St Pancreas Rent Strike in 1960 showed tenants carrying a massive banner which read, “Hey Diddle Diddle its All a Big Fiddle”. Then in 1960, consultations were banned while police beat, brutalised and dragged tenants to police cells. Now our social landlords behave like property speculators while they beat tenants up with Weapons of Mass Consultation. We must continue to resist. Demand the facts. Martin Luther King and the Civil Rights Campaigners said, “Give Us the Ballot.” We say “First Give Us the Facts, then Give Us the Ballot.”

  2. I am a leaseholder on Colville Estate. I am unable to understand why the money offered to me by Hackney Council for my 3-bedroomed flat falls far short of the sum required to buy a 1-bedroomed new build flat on the estate.

  3. Reply to one of ASH’s leaseholder comments on ASH blog page re Colville in Hackney.

    Amanda,

    It may not help you when I say It is a full on capitalist rip off.

    You could search for some straightforward “economic” explanation, but I can find none. This 374 page report by the States Law Commission, references the so called “market” 259 times on 127 pages. And then just as we are trying to understand what the big wigs are covering up about the market, we are drowned out with the word “compensation” which appears on 302 pages. http://www.lawcom.gov.uk/app/uploads/2015/03/cp165_Towards_a_Compulsory_Purchase_Code_Consultation1.pdf

    So its anyone guess on which page you would like to stop and read at random. As you read it is not clear, but it is to me, that the law is used to protect people who own big and small freehold property from the people who produce it.

    In this case the land is not produced by anyone, it is given by nature. It is only under capitalism that it gains a fictitious value which allows the landowner to buy and sell something that has not been made or produced by anyone. In this sense, it is like the paper titles to housing products that are traded on the financial markets. The owner of the title to a property, or a title to land, or a title to interest on loans, can trade the future returns and profits made by producers, by simply exchanging bits of paper at whatever price someone is prepared to pay. But buried under all this fictitious capital is a claim that the owner to the title has, however distant, to the labour of the workers who are actually producing real products rather than paper titles of ownership.

    As workers, Leaseholders are on the receiving end of this, first, exploited at work and second swindled out of their money wages at home. We could not expect a straightforward explanation of this from the Law Commission.

    The entire legal profession is drawn almost exclusively from one class, how could we possibly expect them to explain this theft in plain english.

    No better explanation from our old labour politicians. Anthony Crossland, in his book Socialism Now, wrote, “the law has been the means by which the weak obtained redress against the strong.” His argument was that the law is neutral, precisely at a time in the 1970’s when the mainstream Labour Party was suppressing and treating the homes of Clay Cross workers with utter contempt. Workers know from the whole history of struggle that the law is not neutral. The Luddites were executed. The Chartists were persecuted. The Shrewsbury building workers were imprisoned. The Chagos Islanders were ethnically and socially cleansed. The Zimbabweans were swindled at Lancaster House.

    So whilst leaseholders are individuals at the bottom of the property ladder, whole nations like Deigo Garcia and Zimbabwe were dispossessed of their common land, and remain at the bottom of the imperialist property ladder, until resistance liberates them.

    But just to finish here, page 12 and 13 of the Law Commission report, tracks back to 1919 amidst revolutionary turmoil in Britain when the rulers were desperate to use housing as a means to stop the Bolshevik “virus” from spreading from the workers Soviets in Russia. Imagine, a workers state in 1919, having banned speculation in land, witnessing the capitalist State in Britain making overtures to the British workers about land. One of these under the Scott Committee, “…no landowner can, having regard to the fact that he holds his property subject to the right of the State to expropriate his interest for public purposes, be entitled to a higher price when in the public interest such expropriation takes place, than the fair market value apart from compensation for injurious affection…”

    So, leaseholders as the scapegoated individual property owners must be subject to a broken “fair market value” in the public interests of the community as a whole. Today, Councils and Housing Associations acting like those individual landowners, use the public interests in reverse; expropriate individual leaseholders, take a cut, and then pass on the land value uplift, (speculation loot) to higher value individual private property owners, further up the predatory property food chain.

    Much more to say. but shall stop here.

    Aylesbury Leaseholders Action Group got organised. It may have taken them years, much determination, mental torment, and isolation. You can take the legal and political campaign to the streets, not wavering from the question of the costs and financial impacts, cover ups and profiteering so well set out by ASH. The public will support you.

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