Developers Devouring London

London is now in the grip of the big developers and foreign investors. Having previously been ruled by the banks, the skyline of London is now ruled by the big corporate and international developers, leaving many property market pundits wondering whether the Banking Crash is to be replaced with the Property Developer’s crash.

As tighter controls take effect on the UK mortgage market, developers are increasingly looking towards the wealth of investors from the Middle East, China and Russia.  Not only in London (with its high land values and overly size developments) but across the country as a whole, local authorities are seeking to cash in on the increasing investment by relaxing planning policies such as affordable housing quotas, height limits and looking more towards the interests of the property developers, paying scant regard to the interests of local residents. Indeed many of the new developments come at the expense of those residents who are classed as the most vulnerable in our societies with whole council estates being demolished to make way for luxury flats, council land which would previously have been kept for social housing is being sold off to the highest bidding developer.

Cynical public relation campaigns are run in collaboration with the property developers, for example, when building the Olympic village and Park spin walls that the area was being “regenerated”, however the end result was that even developments termed “affordable housing” are now out of the reach of the low to middle earning residents of London.   Whole communities bustling and vibrant with life, that evolved over generations, which defined the character of whole areas of London have been bulldozed through to make way for gated communities, luxury high-rises bought as investments rather than homes by foreign investors with no connection to the area and no intention of ever living there. It is now common for property investors in far-flung cities such as Hong Kong, Moscow and Kuala Lumpur to buy up whole developments of residential apartments before they have even been advertised to local residents.

Corporate giants such as Lend Lease, Ballymore, Argent, CapCo , Land Securities and Berkeley are taking over the development of large areas of London, examples range from the much lauded developments along the Thames from Vauxhall through to Battersea Power Station known as “Nine Elms” , the redevelopment of Kings Cross and Victoria.  Into this rich mix, is added the International Developers financed by the sovereign wealth funds, national pension funds and oil revenues. Most notably amongst this group are the Qataris (who refinanced the Schard and snapped up the Olympic village) and the Malaysian and Chinese (who bought up Battersea Power Station, and the Royal Docks.

So what has happened to our renowned Planning Laws designed to protect us all from such wanton out-of-control developments? Paradoxically it may be our Planning Laws, or rather how these laws are exercised and managed, that are largely at the root of the issue and acting as a catalyst for what such development. This is particularly true of the regime governing the Section 106 Agreements  which form part of the Planning Consents under the Town and Country Planning Act 1990.  Councils use the provisions under Section 106 of the Town and Country Planning Acts to obtain funds from the developers for various infrastructure requirements  as a condition for the granting of the Planning Consent for the development.  The definition of these “infrastructure requirements” has become more and more elastic over the past decade, whereas they originally were designed to cover the expense of additional roads, schools and common facilities such as community centres and play areas which would be required due to the addition increase in the population of the area caused by development cash-strapped Local Authorities are increasingly using them to plug gaps in their revenues which have been brought about by government cuts.  The more elaborate the developments and the wealthier the developer and  investors behind them, the more greater the funding that can be extracted by the Local Authorities from the developers.  The higher sums secured by the Local Authorities often come at the cost of affordable housing with the Local Authority is using this requirement as a bargaining chip.  

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