Robert Evans, of King’s Cross Central Limited Partnership, has led planning work at King’s Cross
Published: 17 July, 2015
by ROBERT EVANS
ARTICLES and letters in the New Journal in recent weeks have alleged Argent and its partners within the King’s Cross Central Limited Partnership (KCCLP) have been “trying to cut” affordable housing at King’s Cross and reneging on previous promises.
The reality is very different.
KCCLP is more than honouring its past commitments and is now investing significantly more money into affordable housing than contemplated within the original 2006 planning (section 106) agreement.
That agreement provided for up to 750 affordable homes at King’s Cross, comprising 500 social rented homes and 250 “intermediate” tenure homes.
We have already built or are building homes that represent 450 of the 750 “baseline” figure. That left 300 still to come, including 148 social rented homes, 64 of them family homes of three or four bedrooms.
The other 152 were intermediate tenure homes. The intermediate homes planned included 40 small key worker studios, 16 shared ownership and 96 “homebuy” homes – where the developer provides an interest-free loan of up to 30 per cent of the purchase price, which is repaid later as a proportion of the future sale value.
The delivery of social rented homes has always been dependent on public sector grants, alongside a subsidy from KCCLP in the form of land and infrastructure.
The 2006 agreement committed KCCLP to deliver social rented, key-worker and shared-ownership homes, provided KCCLP could recoup minimum prices when we transferred homes to affordable housing providers.
Those minimum prices were set in 2006, at levels considered affordable to providers in the context of normal government grant funding levels. They also provided a guaranteed minimum contribution towards our development costs.
For the 450 homes already delivered and underway, our affordable housing partner One Housing Group (OHG) secured grants which they topped up with their own funds, to buy the homes from KCCLP. Unfortunately today this level of grant funding is no longer available and this means that we need to adjust the affordable housing provision.
The 2006 agreement included a mechanism, known as a “cascade” mechanism, to cope with a scenario in which minimum prices can no longer be achieved.
The first stage considered adjustments to the mix of homes we could provide.
The main changes would be to provide fewer family homes, less socially rented homes generally and more intermediate tenure housing.
But KCCLP have worked with Camden Council to avoid this scenario and in particular the second stage of the cascade, which results in a fixed formula. We did not want to cut by half the last phase of socially-rented homes from 148 to 74 homes. The formula would also have seen family social-rented homes go down from 64 to 28 – a cut of 58 per cent.
Instead, we have worked with Camden Council to find an alternative and the result is a larger number social-rented homes.
The Deed of Variation, drawn up after detailed discussions, means we will provide a further 127 socially-rented homes with all 64 family homes included in this mix.
We have also worked with the council to tackle affordability.
We have replaced some shared ownership products which are becoming increasingly expensive in places such as King’s Cross, plus some very small key-worker studios, with new homes that will be available at sub-market, discounted rents.
We are working with a provider called Pocket Living who will provide 60, innovative one-person homes.
The outcome means we will deliver a further 187 new affordable homes – 127 socially-rented, and 60 “Pocket” homes – to add to the 450 we have already built or are constructing.
KCCLP is taking the financial risk on all this, with no minimum price.
The government has just cut social housing rents in the Budget by one per cent for the next four years. This further reduces the value of social-rented homes.
A two-bed social rented home, at the old section 106 price, would have been around £200,000. That’s the minimum figure we would have received from the housing provider.
Today, we will get perhaps 60 per cent of that figure. Development costs, however, have climbed significantly faster than anticipated by the section 106.
Our costs for that same two-bed home – not including the huge infrastructure we have to put in place – are now more than £300,000.
KCCLP is more than honouring its commitments. It is public sector funding that has disappeared.
We have worked with Camden to protect its housing priorities and deliver a better outcome than provided for in the 2006 legal agreement.
• Robert Evans joined Argent in 2001 and has led the planning work at King’s Cross. He is a Fellow of the Royal Institution of Chartered Surveyors and a KCCLP board member.