20.9.2016 CASE STUDY Regeneration Schemes and Compulsory Purchase Orders -Research Arun M Chandran
The secretary of state has rejected a London councils bid to move residents out of an estate earmarked for demolition because
it would breach their human rights.
In August 2013, the national media got very excited about what was apparently central Londons last home on the market
for less than £100,000. A ground-floor studio flat in Brixton was being sold for £99,500. It was in such a shocking state
that even the estate agent described it as horrendous. It had just 56 years left on the lease but buyers were lining up, seeing
a bargain with lots of potential.
What went unreported, however, was that just a mile down the road, Southwark council had been snapping up even bigger
bargains by the hundred.
The Aylesbury in Camberwell is a vast estate of about 2,700 homes, two miles from the Houses of Parliament. For more than
a decade, it has been the subject of plans for a regeneration project, which is now under way. In order to move forward with
the scheme, which involves demolition of the existing buildings, the council had to buy out the residents who had previously
bought their homes from the council under the right-to-buy policy.
Right to buy allowed people to move into or stay in their area. Regeneration offers a price compelling them to move out.
Details of the amounts paid by Southwark for these homes were obtained by campaigners under the Freedom of Information
Act. In some cases, they show very low offers being made and accepted under the threat of compulsory purchase.
In September 2012, for example, Southwark council paid one leaseholder on the Aylesbury estate £75,000 for a large, 47
sq m, one-bedroom flat. In 2014, the council paid £147,500 for a four-bedroom, 97 sq m maisonette. To put this in some kind
of context, by January 2013, the average house price in London had hit £400,000.
On the neighbouring Heygate estate, Southwark council paid an average of £107,000 for a two-bedroom flat. Its purchases
on that estate started in 2004, but as late as 2011 the council was still paying £115,000 for a two-bed flat there.
Neither is it just in Southwark where councils have been forcing sales at low prices. According to Jasmin Parsons, a leaseholder
at the West Hendon estate in Barnet, some leaseholders were offered just £90,000 for a one-bed flat and £130,000 for a two-bed
maisonette when the council applied for the first in a series of compulsory purchase orders.
This offer was later increased after the leaseholders employed a surveyor to act on their behalf, but still fell far short
of the amount required to buy an equivalent home.
Of course, some leaseholders on council estates who bought their property directly from the council would have benefited
from the right-to-buy discount. Others, who had bought their property off another leaseholder, would not. But the issue is
that right to buy offered a price which allowed them to move into or stay in their area. Estate regeneration has offered a
price that compels them to move out.
Last week, however, the picture changed dramatically, when Sajid Javid, the secretary of state for communities and local
government, refused to allow the compulsory purchase of flats on the latest phase of the Aylesbury estates redevelopment,
citing concerns about the way Southwark council was dealing with leaseholders.
Leaving aside the obvious inequity, for many residents these offers are simply unrealistic. At West Hendon, 85-year-old
Adelaide Adams was forced to sell her home for £175,000. An equivalent home on the regenerated estate would be £407,000, with
service charges of over £2,000 a year. To her it was obvious that, after having spent 30 years on the estate, she was no longer
welcome.
However, it appears that the government has now had a change of heart. After it allowed Barnet to compulsory-purchase
homes at West Hendon last year and Southwark to go ahead with compulsory purchase at the Heygate and on previous phases of
the Aylesbury, it has blocked the latest compulsory purchase order at the Aylesbury.
In making her recommendation to the secretary of state to refuse the order, the inspector for the department of communities
and local government noted that, although the housing options offered by the council would allow leaseholders to remain in
the area, in order to exercise this option they would need to invest considerable personal resources in addition to any compensation
they would receive for their properties.
In this regard, she continued, the compulsory purchase order would not only deprive them of their dwelling but also their
financial security. If they chose not to pursue this option, they would inevitably need to leave the area and this would have
implications for their family life, including the lives of those dependent on them.
The inspector concluded that this situation would lead to an unjustified breach of the leaseholders human rights, which
the council could have avoided by seeking a different agreement with the leaseholders.
Sajid Javid's decision on the Aylesbury compulsory purchase order does not end the policy of estate regeneration. The
inspector and the secretary of state both accepted that the scheme would benefit the area if it were allowed to go ahead,
and the government still wants to bring forward plans to regenerate 100 estates across the UK.
But if it is allowed to stand, the ruling establishes an important point of principle, which is that while compulsory
purchase can force people out of their homes, it cannot force them out of their communities. While for many campaigners who
want to see an end to the policy, this decision does not go far enough, at the very least it promises to restore some humanity
to what has become a savage process.
The decision does not end the governments support for the controversial policy of estate regeneration, and will bring
little comfort for those who have gone through the financial brutality it often creates, but it may give some protection to
those facing eviction in the future.
In theory, people facing compulsory purchase must be given the market value of their homes. But until now, local authorities,
the government and the land tribunal have all backed an approach that has compensated leaseholders based on the average value
of homes on the estate to be demolished, not the average value of homes in the wider area. That approach comes with some very
obvious problems.
An estate facing demolition is generally the lowest-value housing in any given area, partly because councils will have
let the buildings deteriorate, seeing little point in maintaining something that is going to be knocked down. And who wants
to buy a home scheduled for demolition anyway?
Another issue facing these leaseholders is that once the council signals its intent to regenerate an estate, it kills
the market in the area. That can happen years in advance of a compulsory purchase order being made. Instead, the market value
becomes the price that leaseholders can get from a single purchaser, the council, which is also their landlord, and the body
applying for compulsory purchase.
Given the approach adopted by councils, it is obvious that the amount offered to compensate leaseholders for the loss
of their homes will rarely, if ever, be enough for them to afford a home in the area. Unless they can raise significantly
more cash to buy back into the redeveloped and more expensive estate, or to buy more expensive housing in the local area,
they will be compelled to leave. It is pay to stay for leaseholders.
To account for this, councils sometimes offer residents subject to a compulsory purchase order the chance to enter a shared
ownership scheme. Having had their property taken from them by compulsion, leaseholders are given the opportunity to buy back
part of a home on the new estate with the money they have been given, and the privilege to pay rent on the remaining share.
Southwark Council is continuing its attempts to compulsorily purchase homes from leaseholders on the estate, which it
is regenerating in partnership with Notting Hill Housing, and the three-week process began with statements of case from both
sides.
Southwark Councils previous effort to compulsorily purchase homes on the Aylesbury Estate was rejected by housing secretary
Sajid Javid.
Since then, the council has continued to demolish other areas of the estate and many leaseholders have accepted offers
from the council on their homes. The current CPO inquiry relates to only three remaining leaseholders.
Martin Whitehead, the government inspector appointed to hear evidence, said he wanted to consider the following main issues:
Whether Southwark has negotiated with leaseholders
Whether it has a clear idea of how the land is to be used
Density and infrastructure, and how they interact with the local plan
The well-being of the area
Funding and delivery
Whether any alternative scheme would work
The Equality Act
The leaseholders human rights
Whether there is a public interest for the acquisition
In their statement of case, campaign groups and Aylesbury Leaseholders Action Group argued that the council had not offered
leaseholders enough compensation for their homes.
Their lawyer noted:The effect of the affordability gap on leaseholders is evidenced by [statement writer] Anna Minton
in relation to [leaseholder] Ms Robinson, whose current offer for her property stands at £225,000, whereas a two-bedroom flat
in phase 1a has a market value of £602,000.
He argued that the council ought to offer leaseholders like-for-like replacement homes in order to respect their human
right to respect for their homes. This was council policy when the Aylesbury Area Action Plan was adopted in January 2010,
but was withdrawn in December 2010.
Melissa Murphy, representing the council, argued that there was sufficient public interest to outweigh any interference
with leaseholders human rights.
She also claimed that opposition to the CPO had been exaggerated, for agitational reasons, by campaign groups and individuals
whose principal points are not linked to the interests of the remaining leaseholders.
We are requesting the reinstatement of the like-for-like swap policy, i.e. an exchange for another council home elsewhere
in the borough, or an interest-free (inflation linked) loan to enable us to buy one of the Aylesbury estate new-builds.
We are not moving because we want to; we are moving against our will, because the Council wants to sell our estate for
redevelopment. We should therefore not be under any financial disadvantage as a consequence. We have worked hard to become
100% homeowners and will not accept being downgraded to shared ownership or anything less.
Plymouth City Council has approved an order which could see scores of residents forced from their homes in North Prospect
as the next stage of a major regeneration scheme gets under way.
Plymouth Community Homes (PCH) applied for approval from the council to make a Compulsory Purchase Order (CPO) in the
future, if necessary, as part of the fourth and final phase of its regeneration scheme.
On Tuesday evening, the application was granted - but councillors have stressed that the order will only be used as a
"last resort" and it's hoped that a negotiated settlement will be reached with house owners.
A total of 49 homeowners in North Prospect will potentially be made to leave their homes if they cannot reach a deal with
PCH.
PCH, the city's biggest social housing provider, has moved more than 600 families since 2010 and says its housing team
is "dedicated" to helping residents through the process.
Current residents said they would "fight tooth and nail" to keep their homes.
Upon hearing the news the council had approved the application, Sheila Studden, 75, who lives on Rosedown Avenue, said
that residents in the area "knew they would approve the CPO".
Residents vow to fight 'tooth and nail' to stay in homes set to be bulldozed
Sheila, who first heard of the CPO plans three years ago, said she will not be leaving without a fight and claims the
£100,000 being offered under a CPO for her three-bedroom home would not even buy her “one of the smallest houses”
on offer from PCH.
Sheila and her neighbour Theresa Burnard have even been in touch with the Prime Minister and housing minister asking for
them to help with their plight.
Sheila added:"They have got no interest in people, their only interest is in money.
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Welcome to the Aylesbury Leaseholders Action Group.
We are a group of leaseholders who have got together as a result of Southwark Council plans to compulsory purchase our
homes in order to make way for a highly inequitable regeneration scheme, which is booting us out of our homes to make way
for luxury housing that none of us can afford.
Our structurally sound and well-loved spacious homes, sit primely-located between Southwarks largest park and the new
Bakerloo line station proposed to be built on the site of the Old Kent Rd Tesco superstore. Instead of incorporating us within
the scheme, the Council is booting us out using compulsory purchase powers and offering a pittance in compensation. Unfortunately,
compulsory purchase law allows the Council to discount any uplift in property values (point gourde rule) resulting from regeneration,
allows the council to use unqualified officers to value our homes and allows them to use their own settlements with leaseholders
on the estate as evidence of market value. This means it can get away with paying as little as £75k for a large (47m2) 1-bed
flat, when equivalent ex-council properties in the area are selling for four times this amount.
The Council claims that it is offering shared ownership in the new-build Aylesbury homes.
But the shared equity deal comes with restrictive clauses in the small print, i.e. limits to succession and restrictions
on capital uplift; i.e. leaseholders share of the equity does not increase in line with the property market.
63 year old market trader Tony Beattie and his wife took up the shared equity offer after being subjected to a compulsory
purchase order in 2013. They were forced to accept the Councils paltry compensation of £140k for their 3-bed maisonette on
the Wolverton block and reinvest this as a 56% share of a 2-bed new build property on phase 1a of the redevelopment (Albany
Place). However, the small print of Mr Beatties lease says that if he dont staircase up to 100% ownership then they will only
receive their initial cash payment of £140k should they ever wish (or need) to sell the property.
Small print clause in shared equity lease.
It comes as no surprise that only 3 of over 200 leaseholders decanted in the regenerations initial phases have taken up
this appallingshared equity offer, in which the equity is anything but shared.
A very small number of leaseholders have been rehoused as tenants, but all leaseholders are required to be means-tested
in a financial assessment procedure which is not clear and transparent. This results in confusion and is leading to entirely
arbitrary decisions as to who qualifies for rehousing or shared ownership options and on what terms. Furthermore, leaseholders
are being forced to sign confidentiality agreements preventing them from discussing the terms of their rehousing offer with
anyone.
During the initial consultation on the regeneration of the estate, leaseholders were offered a like-for-like swap i.e.
the option of swapping the lease on their home on the Aylesbury for an equivalent size council-owned property elsewhere in
the borough. This guarantee was enshrined in Council policy at the time and detailed in the leaseholder handbook.
