Cressingham Gardens homeowners, and any others undergoing a Lambeth council regeneration, would be well-advised to study a report which exposes the shocking property undervaluations and broken promises suffered by homeowners on Myatts Field North, who have faced the demolition of their homes.
Lambeth council continues to applaud the scheme, now rebranded ‘Oval Quarter’, but the research uncovers a different story which might help inform Cressingham residents as they weigh up the council’s offer to them.
For example, the March 2015 draft Cressingham offer (1) makes the claim that the primary motivation behind the regeneration is to “deliver more affordable housing”. (Note previous blog: affordable homes did not feature at all when the regeneration was launched in 2012. Back then, it was all about raising cash for the repairs they hadn’t done.)
In deciding to redevelop Cressingham under the new “affordable homes” banner, the council has not made any effort to ask about the financial circumstances of those already living on the estate. It has no grasp of how many existing residents are likely to be able to afford the new higher value properties – this is applicable to both homeowners and tenants. This glaring omission rather undermines the “more affordable housing” claim, and suggests that the motivation is not about helping ease the housing crisis at all. The evidence indicates the opposite is true: the council is in fact imposing a value gap (value difference between current homes and the proposed new homes) on homeowners so that it can increase its revenue from building and renting out the new higher value homes.
The actual deal for replacement homes (many of which will be smaller and with less amenity, but more expensive) is insulting to the majority of homeowners, when you look at the genuinely affordable and spacious homes they have now. The draft offer document claims that there are “options” available to resolve this value gap for people who want to stay, but again, the evidence suggests they are tenuous to say the least. True, there is the major hurdle of a buy-out bill of at least £30m to see the back of existing homeowners. But once this is overcome the potential for releasing land value with the replacement homes would be a very attractive prize for the council and thus there is an incentive for the council to make the transition difficult.
Fifteen out of 58 homeowners on Myatts Field North (MFN) ran into difficulties with their Private Finance Initiative (PFI), as outlined in the report: “Grounding accumulation by dispossession in everyday life”, by Stuart Hodkinson and Chris Essen, published in the International Journal of Law in the Built Environment (2, continued at 3):
Note in particular: “Yet, the actual lived experiences of many home owners contrast sharply with the official promises.”
By comparison with Cressingham, on paper the Myatts residents had a much better offer, because the council agreed not to impose a value gap on them, and therefore their ownership would not be diminished. Yet, the following passage demonstrates even in the face of this apparently fantastic deal, many of the homeowners who wanted to stay were prevented from seizing the alluringly described “options and opportunities”. The forces behind this set up outlined in the research are particularly disturbing. Compare the above Myatts residents’ real life experience of the promised financial support and advice, to that being offered to Cressingham residents (4):
That’s before we’ve even begun to thrash out the “market value” of the homes being lost to the bulldozer. Again, here’s what Cressingham residents are being told of how the values are decided:
As we understand it, the council long ago decided the ball-park, based on the value span of properties by square metreage within a mile radius of Cressingham. The council has then taken the very bottom value around and then deducted yet more value from that – to reflect estate disrepair. Does this suggest a fair and respectful attitude to residents, that the council would seek to exploit its own neglect of the estate in order to impose an artificially low value on the homes? Similarly, according to the excerpt above, homeowners are expecting to be written to, to be notified of the value ascribed. The language used does not encourage the resident reading it, to consider the figure might be open to negotiation. Homeowners are clearly vulnerable to being ripped off.
See below the Myatts report (6) showing how their offers were approached, leading to, for example, owners of one-bed flats being paid an average of £114k, when nearby they were going for an average of £237,230 (2012). One homeowner was even told to register as homeless after accepting one such low offer:
Finally, the report puts the experience of the Myatts residents all into a legal context:
On Cressingham Gardens, residents have been told categorically that Lambeth council has shunned the now discredited PFI model in favour of setting up a Special Purpose Vehicle (SPV). This new company, which Lambeth claims it would fully own, would be used to raise funds to build the new properties.
This sounds innocuous enough and even sensible. However, there’s a reason why councils up and down the UK are increasingly seriously considering this housing model and it is not as unlike a PFI as it sounds: They see it as an opportunity to generate more cash for the council and to distance the local authority from responsibility for tenants, releasing them to the mercy of the private sector. Don’t forget that the council has admitted that when necessary it could “leverage in private equity” (December 2014 Cabinet Report).
As one shrewd observer noted:
“The SPV is absolutely symptomatic of what seems like a reasonable technocratic solution, which is actually a Trojan horse for the ending of council housing. It masks a political agenda.”
The homeowners, many of whom are former tenants who exercised the ‘Right to Buy’, are viewed as obstacles in Lambeth’s bid to side-step its statutory responsibilities. On Cressingham Gardens, 93 homes (around 30 per cent) are privately-owned, which presents all sorts of financial, legal and administrative headaches that the local authority could well do without. As such, in the council’s glossary of shafting residents, homeowners and eventually tenants too, can be found listed under “collateral damage”.
Read the full report on Myatts here: