Will British Land and Southwark keep their promises at Canada Water?

H ow can we rebuild trust with the public when we can’t even keep a promise? British Land’s Canada Water masterplan has been called in by Mayor of London Sadiq Khan after a council report found just 3% of its 3,700 homes will be delivered as affordable housing.

 

That’s a devastating cut given the original planning submission, approved in May 2020, promised to deliver 2,815 homes with 35% designated as affordable, provided as 25% social and 10% intermediate rent.

There were over 120 public consultations and local outreach events for the Canada Water project – reaching over 5,000 people. Consider all those hours of community engagement – door knocking and cups of tea and fine words promising affordable homes for local people.  

 

Southwark’s website still carries its message of hope: “In the first phase of development, British Land committed to build: 35% affordable housing; a new council-run leisure centre. We also have an option to buy all of the social rented units built. These will be made available to local people as council homes.”

 

 

All that community feedback was distilled and captured in a Canada Water Social Regeneration Charter approved by Southwark’s cabinet that set out values and priorities for the project. Among them? The promise of affordable homes delivered from phase 1.

 

But the Charter was never binding. In a foreword written by Councillor Leo Pollak, Social Regeneration, Great Estates and New Council Homes, it reads: “The Canada Water masterplan will be delivered over 15-20 years. Inevitably economic conditions, technology, the policy environment, partners, resources and priorities will change over this period. It is essential therefore that both the Charter and Place Action Plan retain flexibility to respond to these dynamics.”

 

Indeed, economic conditions have changed. The latest report by BNP Paribas, commissioned by Southwark, agrees with an earlier appraisal by Quod that 3% is the maximum proportion of affordable homes that can be built to deliver against the target profit margin of 16% agreed by British Land and Southwark council.

 

This level of profit, given the risk, is not considered unreasonable by the experts that I spoke to (who declined to be named), but they recommend a mechanism to claw back the promised social housing and affordable units should market conditions change and metrics are met.

 

 

These agreements have been used before to reassess viability at the end of the project. Viability checks can happen at any stage of the project – even after-the-fact.

 

As the Social Regeneration Charter asserts, by the time Canada Water completes in 10-15 years, viability may have shifted again and market conditions could change considerably by 2036 (everyone hopes so). A fair reassessment based on an agreed appraisal could force British Land to make some of the flats affordable at a later date.

 

The agreement would need to be carefully crafted to agree metrics and a baseline profit on cost – one that reflects all costs so that the result is fair and doesn’t incentivise the developer to overspend to prevent a clawback.

 

Providing additional funding towards the provision of social housing could be worthwhile too. An assessment by BNP Paribas Real Estate found that Canada Water could increase its proportion of affordable housing to 5.46% with a public subsidy of £40m and Great London Authority grant of £39m. 

 

But even at 5 per cent affordable, the figure is too far from the promise to the public. We must ensure the people of Southwark were not lied to and won’t be cheated out of the future they were promised – a future that included affordable and social homes.

 

British Land’s proposed amendments attracted more than 1,100 objections on Southwark Council’s planning portal. Opposition councillors in Southwark have described the revised proposals as "insulting" and "a slap in the face for local people".

 

 

Khan’s decision to call in the application came after planning consultant DP9 wrote a letter on behalf of British Land asking the Mayor to take over the determination of the project from Southwark due to “protracted discussions” with the council.

 

The Mayor now has a decision to make – in the rush to approve homes, any homes, he needs to consider a future economy in which Canada Water turns out to be much more profitable than currently predicted.  

 

After all, things change: For its half-year results, British Land posted higher earnings and profits after landing a “disproportionate” number of top leases. The real estate investment trust reported an underlying profit of £155m, up 8%. Chief executive Simon Carter cited the widespread return to the office, stronger demand, increased values and a constrained supply as reasons for its strong growth.

 

In 2022, British Land sold 50% of its stake in Canada Water to Australian Super for £290m – its interest in the project, before the sale, was valued at £580m.

 

 

In the Canada Water Social Regeneration Charter, the engagement identified a strong sense of belonging in the existing community – notably greater than in other neighbourhoods. The people they consulted were keen to build on this – to ensure that Canada Water was a place for everyone; a development that would reduce social inequalities and diminish ‘us and them’ divisions.

 

So much in the early realisation of Canada Water showed promise – investing in local people and their inclusion – including its partnership with Global Generation. But this dramatic slash in the provision of affordable housing could change everything.

 

Building it out with a handful of affordable homes is certain to beg the question: These parks, the leisure centre, those new public spaces, that housing – who are they really for?