Compulsory Purchases Orders (CPOs) are already a big issue in London, with many estates having already been forcibly bought. I am currently aware of 37 different estates in London that are currently fighting CPOs and it is just about to get much worse.
The current political thinking about CPOs in London
That’s because the political thinking around CPOs has shifted dramatically and swiftly during 2016. In this year’s London electoral race both Zac Goldsmith and the winning Sadiq Khan agreed that CPO’d council estates should be the land used to facilitate the building of the 50,000 new homes that were promised to be built per year in the capital.
In early 2016, the Prime Minister announced that he was about to blitz poverty by demolishing at least 100 large, run-down and difficult to manage council estates. He described these as ‘sink estates’ and to show how serious he was he pledged 149 million to it. Obviously 1.49m per estate is a paltry figure and so the government will need to rely heavily on developers’ money to pull it off.
Cameron then commissioned the silver-spooned Michael Heseltine (who ironically was a key figure in Thatcher’s original sale of council houses under the right to buy legislation) to examine how to demolish and redevelop the country’s 100 worst “sink estates” with the help of the private sector.
Heseltine says it is his dream to get rid of the ‘slums’, which is about to become a real nightmare for the legitimate tenants and owners of these properties. One thing Heseltine’s 17-person regeneration panel aims to do is speed up the process by fast-tracking developers’ applications.
Last March a body called the London Land Commission, headed by Boris Johnson, was formed to compile and publish a register of all publically owned land and property in London in preparation for this great compulsory plan.
Bizarrely a left wing think tank, the IPPR, have been embraced into this ‘social cleansing club’ and now seem to be at the forefront of current political thinking, having produced their own damaging report entitled ‘City Villages: More homes, better communities.’ Here they assert that ‘by far the largest source of publicly owned land suitable for new housing is already owned by local authorities in their existing council housing estates.’
Following this all council estates have now been classified as ‘Brownfield estates’ and are now viable targets for CPOs, social regeneration and fat profits to be made.
This job of carving London up seems to have fallen to the estate agent Savills. They also produced a 164 report with the snappy title ‘Completing London’s Streets: How the regeneration and intensification of housing estates could increase London’s supply of homes and benefit residents’. In their darkly disingenuous report, the estate agents spell out their vision of redeveloping existing council estates and the benefit it will bring to London (read: their friends, the developers); they also gleefully assert that they should be paid huge chunks of tax payers’ money to preside over it all, as the various councils don’t have the expertise.
I could go on and on but the upshot is that all council estates have now become valid and viable targets for CPOs and all politicians, potential mayors and the private sector are in agreement.
Why do councils want to issue CPOs?
The official reason is to turn run-down estates into sparkling new homes for their social tenants and leaseholders.
The real reason though is mostly about money. Firstly, they get money from the eager developer who wants to mow down the flats and build nice shiny chrome and glass luxury flats to a mostly investor market.
They get out of having to pay for and provide thousands of homes for social tenants, who in CPOs get ‘decanted’ out of the area, sometimes being shipped as far away as up north.
In their eyes the area will become more desirable to live in once it’s been socially cleansed and they can then put your council tax up.
Finally, many councils signed up to LOBO loans and they need to pay them off.
A sad pattern that is emerging from all these regeneration schemes is that they are sold initially on the amount of social housing that will be included in these developments. It soon transpires that there isn’t enough profit for developers to include the social housing element they promised after all and it’s reduced to a minuscule amount of housing.
What are the biggest dangers to you if your flat is CPOed?
The number one danger is the amount of money they will offer you for your flat compared to what it is actually worth on the open market.
The councils have a legal obligation to ensure that a flat owner is in ‘a no better or worse financial situation’ after a CPO. The reality though is different and very grim.
Councils tend to make their first offer of compensation a derisibly low offer to start with to shock flat owners and set their expectations and then over a period of many months they incrementally increase the offer whilst doing a good job of managing everyone’s expectations.
Below are some very rough figures I have been given (I have not been able to check the validity of all of them all. I have heard the same figures time and time again however so they will be pretty accurate)
- Hendon (worth £347,000), opening offer £130,000, final offer £214,000
- Heygate (worth £355,000), opening offer £114,000, final offer £164,000
- Colville (worth £270,000), opening offer £120,000, final offer £150,000
- Woodberry (worth £330,000), opening offer £130,000, final offer £158,000
Data obtained by campaigners at the Aylesbury estate under the Freedom of Information Act found Southwark council paid £147,500 for a four-bedroom, 97 sq m maisonette. The average house price in London at the time had just had hit £400,000.
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 is hugely unfair to flat owners who are not being given a fair market price for their flats and they cannot buy a like to like flat on the new development.
There is then a real human cost to receiving unfair compensation. Many leaseholders will be too old to get a mortgage and will not be given enough compensation to buy another flat in the area they have grown up in. They will be faced with either using their capital for rent until it is used up or moving hundreds of miles away to be able to buy cheaper properties.
Those young enough to get a mortgage will be in a similar positon of not being able to afford to live in the area they currently do – with their friends and extended families – and will instead be forced to move to cheaper areas. This causes real issues for families forced to break up, and it is widely documented that people in these situations are suffering from depression or mental health issues due to losing the support of their friends and families.
Of course if leaseholders are unhappy with the valuation offered they can take their case to the Upper Tribunal but the cost of valuers, solicitors and barristers is very daunting to leaseholders. Also the councils, who get all their fees paid for by the tax payer, are almost certain to appeal if they don’t get the desired decision, thus wiping out a huge portion of the compensation received by a leaseholder, win or lose.
Will buying your freehold prevent a CPO from happening?
Possibly. A council can make a CPO on any property as long as it is can be proved to be in ‘the public’s interest’. In reality though, it is generally much easier for a council to make a CPO on property they broadly own than to do it on property that is completely privately owned.
The more buildings that have the freehold purchased the harder it will become to make these sweeping CPOs.
There is also the scope for a much higher valuation for flats with a share of freehold of between 1-3% which on some high value flats will start to make a big impact on compensation.
There is a further argument that was successful and became case law in CPOs.
Transport for London v Spirerose Limited.
Spirerose successfully argued a form of “hope value” on the future development value on the freehold of the building that they owned. This adds a further layer to possible compensation if a building has been bought from the council.
Councils will not like the fact that bulk lease extensions and freehold purchases are being done on these estates as it will be driving up the compensation they will have to pay out if they try to serve a CPO.
What can you do to stop a CPO?
Anyone can submit a freedom of information request to a council to see if your block is being considered as a possible CPO target. There can be lots of rumours around the fact but it is simple to find out the truth.
If you are targeted for a CPO don’t despair! The council have to jump through a lot of hoops to get the permission required to take possession of your homes.
Organise yourself into a group with your neighbours who will be affected. The best possible chance you have is to act as a group to fight the proposal. Connect your group with those social tenants at your block who will also be looking to object; although you will both have different issues you have the same goal and it is a mistake to act separately.
Look at what other estates have done to fight CPOs, as there is a lot of information out there.
Write to MPs to let them know the human cost of CPOs.
Just recently the Aylesbury estate has won a famous victory to prevent a CPO taking place but we need to watch closely what happens next.
Some useful links
Another tower of shame (35 percent)
Heygate sell off (35 percent)
Heygate Estate Southwark Notes
©Barcode1966 – 2016