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Exclusive: The Housing Associations Building Luxury Flats Over Social Homes

Many of the country's swanky, aspirational new apartments are built by charities that are supposed to provide housing for the less well off.

by Andy Jones
20 August 2019, 8:30am

The website of the NOMA development in Westminster says it is for “successful professionals seeking a cosmopolitan lifestyle… and international buyers looking for a perfect pied-a-terre.” The development has its own aspirational promotional video, complete with drone footage pointing out London landmarks and music that make it seem like a montage from The Apprentice. A one-bed unit can be bought for £430,000, or a 3-bed for just over £1 million.

This kind of development is all too familiar in London, a city with an acute housing crisis that has become a playground for the rich in recent years. However, NOMA is not built by any old profit-hungry developer, but by Clarion, the nation’s biggest housing association, which owns 125,000 homes across the country. NOMA seems a long way from the original brief of the not-for-profit organisation to build social and affordable homes for UK residents.

Analysis from VICE shows that housing associations – tasked with building the nation’s social housing – are being forced to gamble in order to build the 90,000 new social rent homes per year needed each year. In England, Britain’s social landlords have been scurrying around to plug the gaps after years of austerity since 2010, when then Chancellor George Osborne cut social rent funding to zero.

That means they have had little choice but to build luxury housing. The idea is that the profits can then be used to build the social rent or affordable housing that is desperately needed. The result is a sort of housing Robin Hood – “sell to the rich, build for the poor.”

However, this high-risk strategy does not always result in genuinely affordable homes later on.

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Screenshot from the NOMA promotional video

For all its various high-end investments – plus £200 million of public funding since 2017 – Clarion created just 31 social rent homes in 2017/18 and some 1,038 “affordable” sale homes, which cost up to 80 per cent market rate.

Some of these “affordable” homes are in fact eye-wateringly expensive. At the Landau – "an exclusive, new development of spacious and elegant apartments in a peaceful yet prime location in sophisticated Fulham", according to the promotional blurb – Clarion built 107 units, 18 of which were discounted from market sale.

Land Registry searches up to May 2019 show that from 76 sales online, only eight units appear to have been sold for less than £1 million. The most expensive went for £3.4 million.

This is not only happening in expensive London postcodes. In the Midlands, Clarion built a new development in the Birmingham suburb of Harborne. A two-bed home cost £335,000 through Help To Buy, while in the same postcode the average two bed costs £205,000.

Clarion is far from the only housing association to be pursuing this strategy. Housing charity A2Dominion, which owns 37,000 homes, has built 327 flats in Shoreditch, east London as part of its City Wharf development that won an Evening Standard award at a glossy ceremony at the Dorchester Hotel in 2017. The flats come with a wine fridge as standard, naturally, but are also built with also "have taken inspiration from the site’s industrial heritage", according to the developer. The prices were less in tune with working class heritage – the flats built by A2Dominion were aimed at people working at nearby Tech City and cost from £500,000 up to £1 million.

The company has also built penthouses in Southwark for £1.1 million and properties in Vauxhall at the Keybridge development that will be sold from £705,000 to £2.4 million. According to Keybridge's promotional website, buyers can chose between kitchens that represent “an eclectic take on industrial cool", are "inspired by the utilitarian feel of warehouse living”, or are "contemporary and full of quiet luxury".

The "Robin Hood" pay-off has been small. During the year up to April 2018, A2Dominion built just 54 homes for social rent and 101 homes for shared ownership sale.

Across England, dozens of housing associations – left with limited funding during the last decade of austerity – have ceased building any social rent homes at all.

In Liverpool, Riverside built 747 homes for sale in the year up to April 2018 but none were for social rent. In the North East, Gentoo didn’t build any social rent homes in the tax year 2017/18. In the same period, Coastline of Cornwall, the North East’s Karbon and Norfolk-based Saffron Housing also built no social rent homes.

To be fair, not all of these are building luxury penthouses. Allister Young, chief executive of Coastline, presented the stark choice faced in Cornwall: “While we would much rather build 100 social rent homes than 100 affordable rent homes, that is not the choice we we’re faced with now. The choice we face is more like whether to build say, 25 social rent homes or 100 affordable rent homes.”

Network Housing in London also built zero social rent homes during 2018 (though have added 28 more since), and its chief executive Helen Evans paints a similarly bleak picture: “We still have to find £200,000 funding per new home built. The cost of new affordable homes has increased by 42 per cent in the South East in less than ten years. We have a development pipeline of 3,000 homes – to convert all of these homes to social rent would require half a billion pounds. We just don’t have the funds to do that.”

The losers in all this are those on modest incomes who have been priced out of the neighbourhoods they grew up in, eroding the communities that make cities what they are, says Dan Wilson Craw, the director of Generation Rent, a campaign group which lobbies for more affordable housing.

“New homes are needed but what’s actually been built in the past decade has utterly failed to help the people who are hurting the most from the housing crisis,” he says.

“Social housing providers have been swept up in the wider speculation in the property market. Having overbid for land, they have had to build luxury flats to get their money back. But because of the recent oversupply at the top end of the market, prices have dropped and they have no profits to plough back into social housing – except for a smattering of supposedly affordable homes that only richer households can access. This is what happens when the government leaves the market to its own devices.”

These housing associations are still meeting their charitable purpose. The Charities Commission which oversees elements of many social housing associations says they have only seen fit to intervene in one housing charity this year, Expectations UK of Birmingham, for poor financial governance and failure to file company accounts.

A Clarion spokesperson said: “Clarion Housing Group is the largest social landlord in the country and we are a registered charitable society. We build housing for private sale in order to raise revenue to invest in the delivery of much needed affordable housing. For the financial year 2018/9, we started work on 2,663 homes, 85 percent of which were affordable.”

But when countries like New Zealand and Switzerland are banning foreign investors turning much needed homes into empty holiday homes it seems perverse that housing charities like Clarion, tasked with building much needed social rent and genuinely affordable homes, are advertising homes as bolt holes for the rich.

According to Wilson Craw, “The government should also use the tax system to force empty 'pied-à-terres' onto the market to reduce wider pressure on rents,” rather than create a system where housing associations feel the need to build luxury penthouses.

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Tagged:
HOUSING CRISIS
investigation
luxury housing