FromTheMurkyDepths

Housing and Development in London

Greenwich borough

Greenwich Council spend £46.5 million buying homes off the open market

Figures in a council report reveal that Greenwich Council have recently spent £46.5 million buying 120 homes off the open market. This works out at an average of £387,500 per home.

The homes were purchased to alleviate problems of homelessness and a lack of council properties. Given councils are obliged to house people deemed in need in expensive private lettings or bed and breakfasts on temporary basis there is a need in expanding housing stock.

Mistaken priorities?

But is this the most cost-effective way to house people? Buying these homes does nothing to increase the overall numbers of housing stock in the borough. 120 homes is a sizeable number and such an intervention will probably help push up prices in local areas which in turn makes affordability worse for many residents.

Central government restrictions

Central government policies stretching back at least 30 years, under all parties, have made it near impossible to build new homes by enacting very strict borrowing caps on local authorities. This means numbers built have been in the low tens each year.

Add in right-to-buy (which is being extended yet again) and housing shortages increase to the detriment of those seeking secure housing with all taxpayers having to fork out large sums to private landlords to compensate for the shortfall in public housing.

Yet alternatives do exist in expanding social housing numbers, and Greenwich Council have been very slow to utilise them.

I’ve previously covered how Greenwich Council have enacted a policy of buying homes off the market using Right to Buy income which is the least cost-effective means of widening housing stock according to their own calculations.

The alternative the council listed was partnering with Housing Associations at a third of the cost per additional home or building outright at two-thirds of the cost.

The unused option

But another outlet exists, and this is one Greenwich Council have failed to exploit nor mention in previous council reports. Given the cap on local authorities building homes outright, some local authorities have established an arms-length company to develop housing which can bypass caps. All profits from these companies can then be re-invested in housing.

Red Door Ventures’ block on Newham Council land approved this month

Over the Thames in Newham, to give one example, the council created Red Door Ventures. This has flown out of the blocks with numerous high density housing plans. Just last week a another round of schemes, totalling many hundreds of homes, was approved.

Newham have been extremely pro-active in a number of areas related to housing. They were one of the first to enact a comprehensive landlord registry process. This has revealed that up to half of all landlords have failed to declare which could be costing £200 million in revenue, and that’s just in one borough.

Greenwich Council in comparison have been very lethargic, both in building new homes and regulating private lettings. They did establish Meridian Housing back in 2010, which is an arms-length company, yet its record over seven years has been almost non-existent.

When Greenwich Council have built homes over the past few years they have made bizarre decisions such as building bungalows in a spot 20 seconds walk from a Zone 2 DLR station – Elverson Road. Given the severe housing need it’s a gross underutilisation of land.

Borrowing caps may have prevented more units so a transfer/sale to Meridian Homes would have made more sense.

Image courtesy google. Low rise new builds on left with Zone 2 station to right

Meridian Housing has belatedly started plans to build on other sites but it’s all very small-scale stuff. Mostly two or three story housing. Nothing on the scale or ambition of Red Door Housing.

If Meridian Housing had been in full swing five years ago we wouldn’t now have the situation of vast sums buying homes off the market at very high cost.

And even with those mistakes now coming home to roost, very slow processes in the council continue.

Greenwich Council own a number of sites that can be utilised by Meridian Housing to build. Garage sites are one such element. Yet the council havn’t even agreed to consult on these sites having postponed the decision at least a dozen times over more than two years:

Just last month they decided to replace garages in Greenwich with a like-for-like replacement. Most other councils would build much-needed homes instead, and if garages were absolutely essential for local disabled residents and/or parents they could be included below new homes.

Policies could be enacted so that new residents couldn’t park below. Disabled people wouldn’t be housed in the new-builds.

When the Greenwich Councillor in charge of housing was asked about the lack of consultation on garage sites they claimed consultation was underway. Really? That contradicts their own Forward Plan and I havn’t seen any listed on their consultation portal nor publicised on Twitter or the website.

Given the severe housing shortage these long delays are having a huge impact on many residents.

Abbey Wood – a prime example?

One such garage site is beside Abbey Wood station. It’s located by the western end of Crossrail platforms. This is a possible goldmine. I’ve written before how this could accommodate a second station entrance for Crossrail which would cut a sizeable walk to the station for some in deprived areas such as Abbey Wood estate and Plumstead.

Meridian could build mid to high-density housing on site, using income from a number of market sales to subside low cost housing and fund a station entrance to benefit other local areas.

And it goes further than garage sites. Greenwich Council recently agreed to sell Riverside House in Woolwich. Would it not be more cost-effective to sell to Meridian Housing to convert to residential or demolish and build a high-rise? It appears so when £46.5 million is being spent acquiring homes off the market which  provides no net increase in new homes in the borough.

It’s time for Greenwich Council to take advice from other London council that have led the way. They don’t have to go far. Many more homes could have been built given the amount spent on market purchases.

Central Government continues to enact extremely restrictive and hugely expensive policies and local authorities are heavily restrained but Greenwich Council are still doing far less than what is possible with councillors lining up to blame others when failing to push departments to assist with the housing crises.

How long will they rightfully continue to blame external restrictions but then overlook the council’s own powers and push departments for improvement to alleviate a huge and growing problem?

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9 Comments

  1. Johnny

    Lots of questions raised given the possibility of conflict of interest. Where are these homes? Who were they bought off? What council staff/councillors are home owners and could such a measure help them in some way? Are some home new builds off developers? If so what developers benefit?

    Surely this should all be in the open? A quick look through and I can’t see those details anywhere.

    It does however seem a massive spend. Given many property experts say London prices have peaked and a downturn is very possible (already underway in central London) how sensible is this in the long term aside from not being the most cost effective even at this moment?

  2. Tired but still standing

    I cant get my head around this. Couldn’t they have built at least twice as many for that cost? Maybe even more if they were using land they owned…..

    • fromthemurkydepths

      If they did their own figures suggest it would cost £223,000 per new home versus £387,500 buying off the market. It doesn’t state whether that is on land they already own. Partnering with Housing Associations would cost £107,000 per unit for a 1/3 share of a home.

      However building outright is not easy due to caps imposed by central government. To get around that it’s either partnering with a Housing Association (which requires collaboration) or Meridian Homes, which is the most cost-effective and easiest route. Trouble is, in seven years they havn’t set up the structures to adequately do this on any great level, unlike councils such as Newham and Hackney.

      Hence we see the least cost-effective route now being used. Not only the most expensive but the one that provides no net housing additions on a wider level.

    • fromthemurkydepths

      Forgot to add – they could probably get that £223k figure down for new builds if they built modular housing, as Lewisham are now doing.

      • Tired but still standing

        So to sum up: we have a woefully inefficient use of council (public?) money providing the worst outcome for the most money due to an unexplained reluctance to follow other tried and tested routes?

        • fromthemurkydepths

          Yep – there has been reticence to use this strategy despite other options being very limited. To give another example – Barking and Dagenham Council had built 620 homes using arms-length companies by the end of 2016 and have plans for 50,000 over the next 20 years. Greenwich are nowhere near such levels and ambition despite tentative steps on small-scale sites.

  3. GWEST

    Good point Murky, fully agree that it should be possible to do some large scale building by the council itself with these sort of sums.

    Although, I do know a couple of weblogs who would immediately be crying out about how terrible and disruptive all these new-builds would be, especially if a part of those housings would god-forbid actually end up on the market. (yours is the best balanced in this repect i.m.o.)

  4. J

    Perhaps you’re right GWEST and they are putting NIMBY attitudes before the desperate need for housebuilding. If so as it’s leaving many homeless in emergency accomodation and other people in short term AST private lettings.

    Only those in a nice mortgaged home or those in secure public rentals would do so. Does that account for council leaders?

    This money could have been used far more effectively and the poor, as well as all taxpayers, are paying the price.

  5. Will

    I’ve seen Newham’s Red Door Venture plans first hand. One tower proposal is not great architecturally but yes, they are far more advanced in planning and crucially building more homes than Royal Greenwich Council. Croydon also are more ambitious, to give one more example of a Labour council.

    Maybe the leadership are too worried about a backlash and so play it very safe with houses or bungalows which is far from what is needed in many areas.

    They may see having certain properties for sale in any Meridian Homes venture at market sale as being a betrayal but right now there is no alternative. It’s bite the bullet and use that income to cross-subsidise or build very little. It’s pretty poor if the latter option is what they are going for. And it makes no sense if so, as they are BUYING homes at high market value.

    They need to be far more bold and use these tools to provide housing as soon as possible. Otherwise it results in waiting many years for a possible policy change whilst residents suffer.

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