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How Ministry Of Sound's Battle With Boris Is Screwing Over A London Housing Estate

A super club, dodgy developers, the Mayor, and one big mess for the locals.
December 16, 2013, 2:41am

What do you get when you mix one of the biggest club brands in the world, a new block of flats and the Mayor of London? One big cluster-fuck for the locals.

In a few days, Boris Johnson is going to make a final ruling about a property development that could lead to the closure of one of London's last super clubs, Ministry of Sound. For the last four years, there's been a legal wrangle between the club and Oakmayne Properties. Oakmayne are a pretty big player in the London property market. Having been involved in over forty development projects in the City, they describe themselves as a "niche residential developer concentrating in Central London and in London regeneration areas, bringing sophistication, style and flair to modern property development."

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The argument between the two is a fairly straightforward one: Oakmayne want to build a new forty-story block of flats across the road from the club. Ministry of Sound are convinced anyone who's willing to spend a few hundred grand on a new flat might not be best pleased about the noise created by one of London's largest clubs operating on their doorstep, and so noise complaints could lead to the club's closure.

It seemed like whole issue had been put to bed back in 2011, when Southwark council rejected the planning application from Oakmayne. Unfortunately for them, Oakmayne then found out that Ministry had donated a fairly hefty chunk of cash to the Liberal Democrats; £21,000 at local level, and £57,300 at national level. Although not unusual for businesses to make political donations it didn't look great that this came out after the decision, with three Liberal Democrat politicians on the committee voting against the proposal. Oakmayne weren't best pleased about this, hinting that it pointed towards Ministry of Sound trying to sway the decision-making process. They raised the issue with the Mayor of London's office and, apparently not convinced with the decision made by Southwark Council, Boris Johnson decided to take the unusual step of taking over the decision making process.

Whether this is a good or a bad thing for MOS remains to be seen, but history wouldn't appear to be on their side. There have been four instances of Boris making these types of interventions in the City before, and each time he's sided with the developers. A full explanation of why Johnson felt the need to take on the decision has never been given, beyond a vague comment that there was "sound planning reasons for him to take over the application and scrutinise it in more detail".

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It is no secret London has a housing crisis, and a pretty damn serious one at that. London is growing at a rate that's unsustainable. The latest census states that at least 40,000 new houses need to be built each year to keep up with population growth, but less than half of that number were built between 2010/2011. London does need new housing, but the stress is on affordable housing. Not every property development should necessarily get the green light if it doesn't engage with this issue, and this is something Southwark Council acknowledged when they rejected the Oakmayne proposal in 2011.

Now, I'm not a property developer, but you'd think that it might be a good idea to influence the appeal by making new plans that had some additional, affordable housing. Oakmayne, apparently, think differently. Since Boris Johnson took over the decision making process, they made new plans to reduce the number of affordable homes from 82 to 64, out of 335 flats. More money for them, and a big middle finger to Southwark Council for rejecting their plans in the first place.

For a man who's just announced "greed is good", it would be interesting to get Boris Johnson's views on the way Oakmayne conduct their business.  To put it bluntly, they're pretty shady. Like many large businesses, it turns out they really don't like taxes. In fact they don't like taxes so much, they'll even give you a hand avoiding paying taxes if you buy a property off them. In 2012, Ministry of Sound sent a secret shopper around luxury properties that had been bought and developed by Oakmayne. The mystery shopper filmed himself discussing the process of buying the properties and the film was given to The Guardian, who published a pretty comprehensive summary of the issue.

To explain it in slightly reductive terms; each property was bought by Oakmayne using companies registered in the Isle of Man.  When someone wants to buy the property, they buy the company instead. This allows them to own the house as it's part of the company's assets, but the registered owner doesn't have to be changed. This way, the buyer can avoid paying stamp duty. These properties were being sold for upwards of £15 million, so the buyer ends up dodging a big chunk of tax. Oakmayne benefit because in providing a way for buyer to avoid paying an extra million or so in tax, the buyer may be more inclined to buy the property at a higher asking price. It's worth noting that this is completely within the law, but no one's calling Oakmayne criminals. They are are legit, tax evading, greedy wankers. But greed is good, apparently.

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In comparison, Ministry of Sound come across pretty well in the midst of all of this. They employ over 200 members of staff, attract over 300,000 visitors a year, and contribute around £10 million in tax each year too (granted they also helped launch Examples career, but everyone makes mistakes). Their links to the Liberal Democrats have been portrayed as too close for comfort but large businesses routinely donate money to political parties, and Ministry of Sound's links to the party began long before the property dispute. Club founder James Palumbo has always been a dedicated supporter of the party, even lending the clubs offices to the Liberal Democrat 2011 mayoral campaign. In the past year he has donated over £65,000 to the Liberal Democrats, whilst also being awarded a peerage. The sums he has donated are not out of the ordinary for multi-millionaire businessmen, but it does leaves a bad taste that the quickest way to a peerage seems to regularly involve large donations. I suppose that's a debate for another day, though.

The real tragedy throughout this whole sorry affair is the complete lack of any mention of the Heygate estate. Based just around the corner from the Ministry of Sound the estate used to be home to over one thousand people, but they've all been cleared out.  Some residents moved willingly, but many were forced out by compulsory purchase orders and evictions. It's been an incredibly shitty move by Southwark Council and from a business point of view, it also involves incompetence on an unprecedented scale. Southwark Council sold the entire twenty-two acre-space the Heygate encompasses to a company called Lend Lease for £50 million, and it has since cost Southwark approximately £60 million to organise evicting the residents.

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The profit that Lend Lease is predicted to make on the deal? Approximately £190 million.

Let's just recap that in all it's shambolic glory. Southwark Council sold twenty-two acres of some of the most expensive real estate in the world, managed to lose upwards of £10 million in the deal, and forced hundreds of people out of their homes. This has to go down as one of the worst real estate deals in London's recent history.

The Heygate estate

To be frank, I wouldn't be writing this if the Oakmayne development was going some way to providing new, affordable homes for residents, but that's not the case. Those evicted were given compensation: £90,000 for one bedroom properties, to £190,000 for four bedroom properties. That may seem like a decent enough sum as cash, but the new properties being built in their place are already being advertised at £300,000+ for a one bedroom flat, and many of the properties in the Oakmayne development will be priced similarly. The chances of most of the residents being able to afford any of the new properties in the area are beyond slim. The term "re-generation" is becoming exactly that: one generation of residents being forced out of an area in favour of a completely new, richer one.

It's just one more depressing chapter in London's recent history of the housing crisis. Everything seems to be taking a back-seat in favour of corporate behemoths bulldozing their way to profits. Sure, Ministry of Sound isn't often considered a beacon of forward thinking music these days, but its history is unparalleled by any other club still operating in the capital. I'm sure regular visitors of clubs like Plastic People, Corsica Studios and Dance Tunnel rarely give a thought to what's happening at Ministry of Sound, but it's worth taking note. Ministry of Sound is a world-wide brand helmed by a multi-millionaire businessman who has a seat in the House of Lords, yet for all their influence and deep pockets they've faced a lot of trouble trying to challenge Oakmayne. What's happening to Ministry of Sound could happen to any club or live venue in London, and most wouldn't have the clout to do anything about it.

Boris Johnson's decision is due in a matter of days, having already postponed it after a meeting on the 17th November.  Ministry of Sound have said they are dedicated to trying to find a mutually agreeable solution with the developer. Who knows what's that going to entail, but if the choice is between a new block of flats or the closing of an artifact of London's nightlife, I know which I would prefer.

Follow Patrick on Twitter: @patrickcarnegy