A share of the profits from part of a controversial redevelopment scheme in Elephant and Castle will help pay for the whole of a new public leisure centre in the area, according to figures released by Southwark Council.
The Labour-run borough agreed with developer Lendlease to forego the delivery of any affordable housing on the site of the 37-storey One The Elephant building and instead receive a portion of the proceeds from the sale of the market homes there in an arrangement known as “overage”.
Southwark says that these, added to the money it received from the sale of the land to Lendlease and the developer’s original Section 106 financial contribution to the council, will now definitely result in the full £20m price tag for the leisure centre being paid and also generate a further £2m, which will be added to funds for building new council homes nearby.
The Castle Leisure Centre is located by the foot of the tower and was opened last April on the site of an older one which had become partly disused. Mark Williams, the council’s cabinet member for regeneration and new homes, says that agreeing the profit share with Lendlease was thought “the best way to ensure local people benefitted from the development”, when it was given planning permission in 2012.
Subsequent sales of the building’s residential units, with one-bedroom flats on sale for around £600,000, are said to have exceeded the council’s best hopes. Southwark is also hailing the outcome as vindicating its use of this approach to regeneration finance, which has faced close scrutiny and sustained criticism from local housing campaigners and others.
Williams says the One The Elephant agreement is “based on the same principles” as the larger one it has made with Lendlease over the redevelopment of the nearby Heygate estate, whose demolition has become a cause celebre, in part because the planning consent required little replacement social housing on the same site.
The One The Elephant scheme illustrates the kinds trade-offs, often complex and contentious, that are integral to deals between private developers and London local authorities, with larger profits, sometimes generated by constructing tall buildings containing very expensive flats, enabling greater sums to accrue for public amenities, street improvements and affordable housing of various kinds within the borough concerned.