A developer wants to scrap all affordable housing in an unfinished block where apartments have sold for up to £660,000.
Bombay Development Limited has applied for permission from Southwark Council to sell six shared ownership flats in an apartment block under construction in Bermondsey at full price.
Shared ownership allows people to get on the property ladder who would otherwise struggle to get a big enough deposit to do so. People buy a share of a property and pay rent on the remaining value to a landlord.
The ‘shared ownership’ flats in the Bermondsey block have been on the market for eighteen months. But the developer has been unable to find a housing association to take them on.
A letter submitted as part of the developer’s application to Southwark Council says that Wandle Housing Association initially expressed interest in the flats in 2022, but pulled out after the Bank of England raised interest rates.
Rentplus, another housing association that approached the developer, didn’t meet the council’s requirements of a registered housing provider. Bombay Development Limited claims it doesn’t have enough cash to complete the ground floor of the building, which is set to be a shop, without selling the remaining flats.
If the developer’s application is approved, four two-bed flats and two three-bed flats designated as affordable housing in the seven-storey building on Bombay Street will now be sold at market prices.
Flats that sold in the block in the first four months of 2021 sold for between £445,000 and £660,000. But according to a viability report submitted as part of the developer’s new application, similar flats are expected to sell for at least 7.5 per cent less due to a drop in house prices in Southwark between 2021 and 2024.
A letter dated May 21 and submitted to the council as part of the application continues: “Due to worsening market conditions (interest rate rises, COVID, availability and cost of materials etc.) during the construction period, there is no available surplus to contribute towards off-site affordable housing.
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“The Southwark Plan seeks to provide 35 per cent affordable housing, but subject specifically to the project viability.
“Unfortunately, due to market conditions it is no longer financially viable to provide any affordable housing on-site.
“However, the development, once completed, will make a positive contribution to the character of the area and provide much needed market housing in a sustainable location.”
