Council leader faces down criticism over foreign investors, says Southwark is ‘trying to do its bit’ to fix housing crisis

News Desk (27 April, 2017) Politics Housing Regeneration

Southwark leader Peter John gives his views to cross-party committee on foreign buyers, banks and council homes shortage

14975Southwark Council leader Peter John

Southwark Council leader Peter John has said his administration is “trying to do its bit” to fix London’s housing crisis by building thousands of homes.

He has also blamed the reluctance of banks to lend money to developers, without demanding that profits can be made early, as the reason why segments of large-scale housing schemes are pre-sold off-plan to investors.

Cllr John made the declaration before a committee of Labour and Lib Dem councillors, who quizzed him on his policies and expectations for the council in the coming years.

“Everyone should take pride in the fact that Southwark is building new homes for Londoners,” the local Labour leader said.

“My view is that the housing economy is pretty broken and requires change from people further up the food chain – the government – to put it right.”

Looking at the national picture, and the widening gap between supply and demand, he said 400,000 home (of which 170,000 were council homes) were built in 1969. While in 2016 the country built just 200,000, with only 1,401 council homes.

While regeneration and demolition continues to be a controversial topic, Cllr John said: “I think we’ve got to keep reminding people we’re not building enough homes in this country.

“We’re doing our bit in Southwark, and you’re damned if you do and damned if you don’t, but I would rather be a council that builds homes and tries to fix the problem.”

He added that he didn’t “have faith” in the emergence of housing associations “being the answer”, despite the last two governments pushing them as providers and landlords of new homes.

“What you have seen is that councils, as deliverers of homes, have been removed from the equation. And therefore you put all sorts of and strains on other parts of the market…

“The most [housing associations] have ever built in one year is something like 45,000 in the late 1990s.

“The government needs to think very different about how it solves this problem – how it’s going to deliver the housing we need in this country.”

Story published by Vice News that criticised council for sales of South Garden flats to foreign investors

Cllr John’s comments followed a question about highly-critical reports in the national press, that 51 out of 51 properties in the new South Gardens development (on the former Heygate Estate site) were sold to overseas investors before being marketed in the UK.

He argued that 200 other new LendLease-built flats had been sold to UK buyers, while a statement released by the council last week said hundreds of other “affordable” and shared-ownership homes will be built in Elephant and Castle.

But Cllr John also told the committee that selling properties off-plan to investors was now a “perceived” requirement, as “otherwise banks will not release the remaining finance [to developers] in order to complete the build”.

He also appeared to downplay the issue of foreign buyers taking new homes, suggesting that foreign-owned homes will still end up being put to use by London-based occupants.

A computer generated image of Elephant Park

“The issue is,” Cllr John said, “who has got money sitting in their pocket to put down a ten per cent deposit in their flat – that will not be built for three years – or even another ten per cent?

“The bigger test is: who are these homes going to be occupied by? Foreign investors may buy off-plan, and will do one of three things.

“They might live in it, but they probably won’t. They might end up trying to turn a profit on their initial deposit investment. Or they will hold on to it and rent it out, and it becomes a part of our burgeoning rented sector.

“And when it’s re-sold by them it might well go to a UK buyer who wants to move.

“Unless you have got a burning hole in your pocket, [buying off-plan] is not the thing for you.”

Continuing on the issue of overseas selling, Cllr John said he had spoken to LendLease and told them “I think this send out completely the wrong message”, as well as asked the company what can they can do to sell flats with smaller deposits “so that at least then they will have the story that it’s gone to a local, rather than a foreign, buyers”.

Gary Greenaway says:

There must be a way to attract and use British investment for British homes. It is so wrong to move so many local residents out while just letting a few back in as council tenants, and hardly any the opportunity to buy in the area they were moved from.

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