Why housing is so expensive in Lambeth

In Lambeth, we just got a sports facility as clean and lovely as the Virgin Active up the road, thanks to some unusually innovative thinking from the council. When developers came knocking, asking to turn old council offices into flats, the folks at Lambeth said that would be fine – as long as they funded a new library and pool.


Because you
don\’t have to pay just for converting the flats, but also for the public pool and leisure centre.

16 thoughts on “Why housing is so expensive in Lambeth”

  1. So Much For Subtlety

    When is this sort of thing going to fall foul of some of Britain’s dumber legislation on bribery? They provided an indirect benefit to the elected council members in exchange for planning permission. If this was Rio Tinto and they wanted to open a mine in PNG, I would suggest they consult a lawyer before they build someone a swimming pool.

  2. It does rather smack of third-world governance. In places like Norway, Canada, the US, etc. the government provides infrastructure which everyone gets to use and pays for with taxes. In basket-cases like Russia and Nigeria, the government provides fuck all and the oil companies have to provide what the government is unable or unwilling to. And then 10 years later, self-righteous locals and foreigners alike start complaining that the governments are “too close” to the oil companies and that they have been on the receiving end of bribes, etc. Is this a model the UK wants to follow?

  3. SMfS: it wasn’t a benefit to the council members, it was a benefit to the townsfolk.

    Wider point: yes, of course it’s wrong to have the Nigerian model where Shell pay for roads and schools. But it’s also clearly reasonable for the local community to get the benefit of the windfall when it gives some folk planning permission for a thing.

    What would be the best way of sorting this one out without creating perverse incentives? I asked the spirit of Milton Friedman, and he said something that sounded like “hand bamboo fax”.

  4. The honest way would be for the council to simply sell planning permission for cash, rather than negotiating leisure facilities or new roads. How exactly does that discussion take place? “We’ll have one lane of swimming pool per floor of your proposed new building”?

    The existing system is bad in many ways, not least because there is so little transparency. As a developer or investor you don’t know up front how much planning permission you can get, nor how much it will cost you. If the council were to publish a clear price list for planning permission, then we’d see more development take place because developers could invest with certainty.

    LVT would be great but the planning system is a separate issue. I expect we’d still have some town planners even with LVT; especially for large developments.

  5. So Much for Subtlety

    john b – “it wasn’t a benefit to the council members, it was a benefit to the townsfolk.”

    So …. you think none of them mentioned it on their re-election bumf? Of course it is a benefit to the council members. Indirectly. It gets them re-elected to the gravy train that is local government. They can use it. If someone did this in a village in the Third World, and the local council members’ families so much as paddled in the shallow end, they could be facing some tough questions. Luckily almost no one is prosecuted for this in the UK but it does look like a violation of the law.

    “But it’s also clearly reasonable for the local community to get the benefit of the windfall when it gives some folk planning permission for a thing.”

    Then there should be an open and transparent process. Laws. Taxes. This is just the thing that the Bribery Act was designed to prevent – payment on behalf of members of the council got the developers an unfair advantage not open to other people. The payment perverted the normal planning process. Now the law is designed to catch bribery and not extortion, which is what this was, but I would not be boasting about it if I were them.

  6. Andrew: we’d still have developers with LVT, but it would defeat all of the other problems. No perverse incentives, just sensible incentives.

  7. I can’t speak for Lambeth on this one, but it is usual in these Council deals for the land to be transferred to the developer at a really low price – even for £1 where the Council wants rid off it. Particularly where the land involved is crap and needs a bit of money spent (maybe shifting some toxic waste etc) and the pressure is on the build some houses and the Council doesnt want to spend its own dosh.

    In return for the cheap price, the Council then will ask for something to built in return – eg a library, leisure centre etc.These are often called ‘Roanne’ deals, after a court case involving that town in France.

  8. It’s not a ‘windfall’; the money must come from somewhere. It is forcing flat buyers to subsidise Bryony’s swimming. No wonder she looks annoyingly smug.
    And if the closest non-subsidised private leisure facility is crowded out and closes? Then this is forcing flat buyers to provide money to allow local government to put a private firm out of business through unfair competition. Maybe that should be illegal; it’s certainly immoral.

  9. Housing being expensive in Lambeth could be something to do with Lambeth being within two miles of central London and the City.

  10. Is this really any different from the law which requires developers to build a percentage of “affordable” housing in return for the planning permission ?

  11. For once, Tim, I have to disagree. If the council insists on shifting costs to the developer, it has precious little effect on the sale price or value of the converted flats. Surely it just decreases the value of the land or property being converted or the profits of the developers?

    However, that does not make it a good thing, necessarily. It may make the conversions uneconomic. I like the idea of selling the development rights depending on their value, and reducing taxes elsewhere.

  12. “Because you don’t have to pay just for converting the flats, but also for the public pool and leisure centre.”

    Well, that’s certainly not increasing demand, so are we saying it reduces supply?

  13. Of course it reduces supply – in marginal cases, it’s not worth the developer building the project if they have to pay to build the other tat too.

    We had this locally recently – old victorian hotel got flattened rather than turned into posh flats because the council were so greedy in their demands for affordable housing going up on the same site, there was no margins left for the developers. We have had a large pile of rubble in the centre of town for a year or so instead, and it seems unlikely to get built on any time soon…

  14. why public pools or leisure centres?
    Which not only will encourage idlers but will become encrusted with restrictive regulation.

  15. @macthekinfe: “Is this really any different from the law which requires developers to build a percentage of “affordable” housing in return for the planning permission ?”

    No.

    It’s equally bad.

  16. Scarcity is the only thing determining the cost of property in Lambeth.

    How the “surplus value” is allocated is another matter, people prefer cash if given the choice.

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