It is not only new homes and corporate profits that are at stake when development projects go sour, but political careers too. Claire Kober, former leader of London’s Haringey council, discovered this to her cost this month as she fell victim to political controversy over regeneration plans.
Such upheavals are powered by growing public anger over developers building high-end homes in cities desperately in need of affordable housing. The phenomenon is not confined to London but occurs in cities from San Francisco to Dublin.
Local authorities across the world face the sometimes intractable dilemma of how to draw in investment for urban regeneration while dealing with pressure from an electorate suspicious of developers.
Gerry Hughes, chief executive at GVA, a property consultancy, says there was a growing view of developers as “the antichrist”.
“This is a plethora of things playing out — it’s social injustice at play, there are parts of the country missing out and there is a growing gap between those who have and those who have not,” he says. “There’s also a whole debate around whether developments are gentrification or regeneration.”
Among developers, too, there is a growing awareness of danger to their reputations. Many now feel the risk of local opposition to residential redevelopment is so great that it deters them from acting, even in cases where a local authority backs the plans.
Angus Dodd is chief executive of Quintain, the developer behind north-west London’s 85-acre Wembley development which hopes to produce around 3,000 rental homes by 2020. He says the risks of councillors mounting a rigorous challenge to development plans has “definitely increased over the past year or so” — particularly where existing homes are to be demolished.
Mr Dodd says Quintain has not faced difficulties in Wembley as it was “building on car parks” to supply new homes. However, he observes that planning processes that appear on course can easily become “unstuck” by unexpected political objections. “I’ve realised how much of it depends on the leadership of the local authority,” he says. “You’re beholden to the individual characters of the elected leaders in these London boroughs, and because they’re elected they’re potentially transient.
“People can spend a lot of time and money based on a view from a town hall that an election or leadership challenge then changes.”
In Haringey, developer Lendlease faced a backlash from community activists over an ambitious £4bn planned development scheme to be launched with the council.
A failure to win over local people, along with a political upheaval caused by warring factions of the borough’s ruling Labour party, have left the scheme’s future uncertain. There were objections from the council’s own scrutiny committee — which said there was little evidence of similar schemes elsewhere going well — and from residents, one of whom accused the council of being “secretive”. A Liberal Democrat councillor said he did not understand exactly how the shared ownership structure worked — many of the commercial details had been redacted from official documents on grounds of commercial sensitivity.
Amid the furore, a swath of sitting Labour councillors either stood back from their posts or were deselected, while Claire Kober, former leader of the council, announced she would step down after this month’s local elections.
Jonathan Emery, managing director of property at Lendlease, does not accept this scheme is dead and added that the group “looked forward” to meeting the new cabinet and leader.
Mr Hughes, of GVA, says the case of Haringey had thrown the wrestling between local authorities, their constituents and developers into the limelight.
FTSE 250 developer Capco has also faced U-turns from a changing political guard over its £8bn, 77-acre Earl’s Court development scheme. Capco must deal with both Hammersmith & Fulham and Kensington & Chelsea councils. The scheme was initially encouraged by Hammersmith & Fulham’s then Conservative-controlled council. This council, now Labour-controlled, has changed its mind and made moves to retake control of two council estates earmarked for demolition and redevelopment.
“[Situations like the one in Earl’s Court] should set alarm bells ringing,” says Mr Hughes. “Even though you have deals in place they can be broken.”
Critics of private developers point out that they often renege on deals by using planning loopholes to argue down previously agreed amounts of social housing. Shelter, the housing charity, estimated that viability tests were used to cut 2,500 affordable homes from projects in 11 councils over one year.
In Haringey, the mood has been clear — Lendlease faced mistrust over its previous scheme in Southwark, where the Heygate Estate was demolished and rebuilt with just 25 per cent affordable housing, with 82 of the 2,500 homes offering low-cost social rents.
Developers and regeneration experts agree, though, that the message can be lost that more affordable new homes are being delivered. “Developers need people who can communicate politically,” says Mr Hughes at GVA, while Mr Dodd at Quintain says it is essential for developers to listen. “Be alive to what the local population are saying.”
As the backlash against developers in London continues, politicians have become more alert to public anger over regeneration projects.
Sadiq Khan, mayor of London, earlier this year announced plans to ballot residents on estates earmarked for demolition if they are to secure City Hall funding. Homes England, the housing regulator, warned this year that it would “not be supplicant” to the property industry — even though it needed to work with the sector.
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