DD2531 Elephant and Castle – T3 Residential Ltd Affordable Homes

1.1. LB Southwark is leading a 20-year, £4bn programme to deliver regeneration of Elephant and Castle, a key opportunity area in the north of the borough. The regeneration programme began in 2010 with two main developments at its heart: Elephant Park, and the new mixed-use town centre that will replace the Elephant and Castle shopping centre.

1.2. In January 2019, LB Southwark and the Mayor approved planning permission for Elephant and Castle Properties Co. Ltd to redevelop the existing Elephant and Castle shopping centre (East site) and University of the Arts London’s London College of Communication (LCC) (West site). Delancey has been appointed by Elephant and Castle Properties Co. Ltd to oversee the development of the scheme.

1.3. The 3.56-hectare scheme will deliver a mixed-use town centre; a new entrance to the Underground; a university campus for the LCC; a range of retail, office and leisure uses including a cinema; and 983 new homes of which 35 percent by habitable room are affordable homes. In July 2021 a section 73 Minor Material Amendment (MMA) application was approved by LB Southwark Planning Committee. The application has increased and reconfigured the floor space on the East site; and improved the design efficiency of some private homes to create more habitable rooms, which will be converted into affordable housing. This has increased the affordable housing offer on the East site by seven units, from 165 to 172.

1.4. The affordable offer across both East and West sites now comprises 116 homes for social rent; 161 DMR units; 57 DMR units at LLR levels; and three affordable rent units at social rent levels. The East site (Appendix 1 – shaded orange) is due to start on site in 2021 and will deliver 124 DMR units; 45 DMR units at LLR levels; and three affordable rent units at social rent levels. It is expected to complete in 2026. The West site (Appendix 1 – shaded blue) is due to start on site in 2027 and will deliver all 116 social rent homes; 37 DMR units; and 12 DMR units at LLR levels. However, the West site units are not the subject of this funding proposal.

1.5. T3 will be the grant recipient. Delancey has been appointed by T3 to progress its application for a grant with the GLA. T3 is currently progressing an application to achieve registered-provider status with the Regulator of Social Housing. The grant funding will help close the viability gap and support the delivery of the affordable units on the East site. It is proposed that the GLA allocate £9,631,750 from the 2016-23 Affordable Homes programme to support delivery of 172 units (124 DMR units; 45 DMR units at LLR levels; and three affordable rent units) on the East site. The grant agreement requires the affordable rent units to be let at, or below, London affordable rent benchmark rent levels; this allows T3 to let them at social rent levels in line with the planning consent.

1.6. In accordance with MD2282 and the Mayoral Decision-Making in the Greater London Authority framework, a Director Decision is required if the decision in respect of the Affordable Homes programme relates to a bespoke agreement, which is the case here.

2.1. Delivering this scheme will play a crucial role in realising one of the Mayor’s Opportunity Areas as identified in the London Plan. The outline permission for the scheme was granted in January 2019, to deliver 979 homes of which 35 per cent by habitable room are affordable, including 116 homes for social rent on the West site. The scheme will also deliver a new university campus for the LCC; a new entrance to the Underground; and a range of retail, office and leisure uses. A section 73 MMA has increased the overall number of units by four to deliver a total of 983 homes. The MMA also secured seven additional affordable homes through the conversion of private to affordable housing, and improved design efficiency.

2.2. The scheme is expected to create approximately 1,230 construction jobs per year for 10 years, and 2,000 jobs in the new town centre. The planning permission includes affordable housing viability reviews in the section 106 agreement, to potentially further increase the scheme’s affordable housing offer.

Affordable housing grant

2.3. Delancey, on behalf of T3, requested an affordable housing grant from the GLA to assist with the viability of the scheme. The proposed affordable housing grant allocation is £9,631,750. This will support delivery of 172 affordable housing units, as described in paragraph 1.4, above, on the East site, as well as helping to unlock the dependent development on the West site.

2.4. The units will be transferred to a registered provider of social housing (which may be T3, subject to it achieving registered-provider status) on completion. If T3 does not achieve registered-provider status and the units transfer to another organisation, T3’s grant liability will transfer to that registered provider organisation alongside the transfer of the units.

Contracting

2.5. The GLA will enter into a bespoke grant agreement with T3. The GLA grant investment of £9,631,750 is equivalent to 19 per cent of the scheme’s total costs.

2.6. T3 has completed the GLA’s investment partner qualification process and has been awarded restricted investment partner status to deliver this project.

3.1. Under section 149 of the Equality Act 2010 (the Equality Act), as a public authority, the Mayor must have ‘due regard’ to the need to eliminate unlawful discrimination, harassment and victimisation; and to advance equality of opportunity, and foster good relations, between people who share a protected characteristic and those who do not. Protected characteristics under the Equality Act comprise age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, and marriage or civil partnership status.

3.2. Delivery of additional affordable homes in London is likely to help many of those with protected equality characteristics, as many of these groups are disproportionately represented among those in need of affordable housing. This is in part because they are more likely to experience homelessness or overcrowding, or to have low incomes that make it difficult for them to afford market housing. By enabling the development of new affordable accommodation, this project is likely to advance equality of opportunity for those with protected characteristics.

3.3. The allocation of the funding in this report implements the Mayor’s policies under his London Housing Strategy (LHS). An equality impact assessment of that strategy was undertaken which found that:

“LHS policies are likely to have broadly positive benefits in relation to social and economic sustainability objectives such as improving health, reducing inequalities, increasing accessibility, and economic development.”

3.4. The Mayor’s Equality, Diversity and Inclusion Strategy was issued in May 2018. The first chapter of this document is entitled “A Great Place to Live”. Priority outcome 1.1 in the vision refers to delivering affordable, accessible and decent homes. This project will help deliver new affordable housing. This in turn helps to implement the requirements for new housing set out in the London Plan.

3.5. In order to access funding, T3 will be required to enter into a grant agreement with the GLA, which will place an obligation on T3 to have and comply with a policy covering equal opportunities designed to ensure that discrimination prohibited by the Equality Act 2010 is avoided at all times. T3 must also provide a copy of that policy and evidence of the actual implementation of that policy upon request by the GLA.

3.6. The GLA’s assessment is that this initiative will not have an adverse effect on any groups with a protected characteristic and will assist in fostering good relationships between groups.

Key risks and issues

4.1. Further risks and issues can be found in the Part 2 report.

Links to Mayoral Strategies and priorities

4.2. The London Plan 2021 provides an integrated policy framework across housing, social, economic, cultural, environmental and transport policies.

4.3. The Plan is underpinned by the concept of Good Growth – growth that is socially and economically inclusive and environmentally sustainable. The London Plan is informed by six Good Growth objectives: GG1, building strong and inclusive communities; GG2, making the best use of land; GG3, creating a healthy city; GG4, delivering the homes Londoners need; GG5, growing a good economy; and GG6, increasing efficiency and resilience.

4.4. The London Plan 2021 also identifies Elephant and Castle as one of London’s opportunity areas with significant capacity for development. Delancey’s town centre scheme responds to both the aspirations identified in the opportunity area and the Good Growth objectives, by providing jobs, homes, offices, shops, public spaces and facilities within the new town centre.

4.5. The Mayor’s LHS sets out policies and proposals determining how to deliver good growth priority GG4, delivering the homes Londoners need. This includes building homes for Londoners; and delivering genuinely affordable homes, as well as high-quality homes and inclusive neighbourhoods. The affordable housing grant allocation of £9,631,750 is expected to support delivery of 172 units (124 DMR units; 45 DMR units at LLR levels; and three affordable rent units at social rent levels) on the East site, a new London Underground entrance and a new town centre; and to help unlock the dependent development on the West site.

Consultations and impact assessments

4.6. Officers have consulted with LB Southwark, GLA Planning and the Regulator of Social Housing throughout the development of the proposals.

4.7. Delancey completed an Environmental Impact Assessment (EIA) as part of the original planning application in 2018. An updated EIA has been submitted as part of the MMA S73 application.

Declarations of interest

4.8. There are no conflicts of interest to declare for the officers involved in the drafting or clearance of this Decision form.

5.1 The Decision is seeking approval for GLA to allocate affordable housing grant totalling £9,631,750 to T3 Residential Ltd (T3) to support delivery of 172 affordable units. T3 is currently seeking registered-provider status with the Regulator of Social Housing. The grant would be funded from the 2016-23 Affordable Homes programme.

6.1. The provision of financial assistance (including grant funding) to part fund the delivery of affordable housing is permissible under sections 30(1) and 34 of the Greater London Authority Act 1999 (the GLA Act), if the GLA considers that doing this will further one or more of the GLA’s principal purposes of: promoting economic and social development in Greater London; and improving the environment in Greater London. The foregoing sections of this report indicate that it is open to the Director to take the view that the provision of this grant to T3 will promote economic and social development in Greater London.

6.2. In determining whether or how to exercise the power conferred by section 30(1) of the GLA Act, the GLA must:

• have regard to the effect that these decisions will have on the health of persons in Greater London; health inequalities between persons living in Greater London; the achievement of sustainable development in the United Kingdom; and climate change and its consequences (sections 30(3-5) of the GLA Act)
• pay due regard to the principle that there should be equality of opportunity for all people (section 33 of the GLA Act)
• have due regard to the Public Sector Equality Duty, namely: the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010; and to advance equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sex, sexual orientation, religion or belief, pregnancy and maternity, and gender reassignment) and persons who do not share it, and foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010).

6.3. In this respect, regard should be had to section 3 above.

6.4. In addition to the above, where the GLA is proposing to use the power conferred in section 30(1) of the GLA Act, the GLA must consider consulting in accordance with section 32 of the GLA Act. This is addressed at paragraph 4.6, above.

6.5. Officers must ensure that all necessary and appropriate steps are taken, and a suitable funding agreement entered into with T3, to formalise the provision of the grant funding, including requirements regarding subsidy control compliance, before committing to the same.

6.6. Further comments in respect of the terms of the proposed grant agreement are set out in Part 2 of this report.

Appendix 1: site plan