Developers going flat-out with new blocks for East Croydon

Housing in Croydon which hard-working Croydon tax-payers can afford to buy looks like becoming ever more an unattainable chimera, as the government’s Help to Buy scheme pushes property prices even further out of the reach of buyers who rely on real disposable incomes.

Croydon College, which is submitting plans to build flats and a hotel on part of its site

Croydon College, bottom left, which is submitting plans to build 161 student flats and a hotel on part of its site

Today the Royal Institution of Chartered Surveyors has blown the whistle on how the government’s scheme has left “soaring” demand outstripping the supply of homes for sale.

“What the housing market really needs is help to supply, not help to buy,” Graeme Leach, the chief economist to the Institute of Directors, that well-known nest of Marxists based on Pall Mall, said today.

Croydon may well yet be getting some supply though, in various office conversions and the numerous towers built in the town centre.

The government scheme, announced by Chancellor Gideon Osborne in his Budget earlier this year, looks a lot like “Help to Get Re-elected”, as increased asset prices are expected to boost the wealth among hopefully grateful Conservative voters in south-east England.

“This is a drug that politicians could get hooked on and it will be very difficult to get them off it,” Leach said in an interview with The Independent.

The Bank of England is so worried about the housing bubble being created by the government’s scheme – artificially driving up the asking price of homes, especially in London and the south-east – that it is looking at re-setting the maximum house price in the scheme to £300,000, half the level at which Gideon and his millionaire mates on the government front bench originally set as the limit.

The house price inflation is causing many families to have to choose between paying the rent and eating, according to the chairman of a food charity interviewed on last night’s BBC Panorama.

Chris Mould, of the Trussell Trust, which runs 400 food banks nationwide, said: “Many of them are choosing between paying the rent and eating, or they’re choosing between paying the mortgage or having a reposession order.”

That’s if they are in homes that are available to them to buy or rent.

Many “apartments” – or as real south Londoners call them, flats – that are being developed in Croydon are being deliberately marketed at overseas buy-to-let investors. At least one notoriously long-delayed tower block is being sold exclusively in the Far East (some suggest that is because anyone who is able to view the site wouldn’t want to buy there), with an undertaking that the block, when completed, will have no troublesome tenants on “affordable” or social housing schemes – surely a version of the “Kosovo-style social cleansing” which London Mayor Boris Johnson once promised “emphatically” to oppose.

Never off the drawing board: designers' drawings of the "landmark" Chroma office block planned for East Croydon. Now the owners want to build flats on the site

Never off the drawing board: designers’ drawings of the “landmark” Chroma office block planned for East Croydon. Now the owners want to build flats on the site

Not for the first time, Mayor Boris has talked a good game, but failed to deliver on his London-wide promises, and so the supply of homes for working people in Croydon remains severely limited.

Even estate agents, not known for wanting to “talk-down the market” are beginning to notice the glaring flaws in the government’s inflationary housing policies. Yesterday Savills warned that businesses could be forced out of London because their workforces cannot afford accommodation.

More than half of housing demand in London comes from households earning less than £50,000 year, according to Savills, but developers are focusing on high-end prime properties that cost more than £2 million to buy or £5,000 a month to rent, with many ending up in the hands of overseas investors.

“Builders’ focus on wealthier, equity rich and credit-worthy buyers since the credit crunch means that a disproportionate amount of stock is being delivered at what we call ‘new prime’ levels,” said Savills. As opposed to “sub-prime”, the too-cheap mortgages which got us into the global economic meltdown in the first place.

Nevertheless, Croydon Conservatives will be keen to take credit for two schemes that are coming in front of the council’s strategic planning committee on Thursday that will put 461 new flats on two sites on George Street, right by East Croydon station, in four towers ranging from 37 storeys tall to 15.

Demand for housing in Croydon is clearly out-stripping the demand for office space, as demonstrated by the owners of the long-vacant site opposite the Allianz offices, who are  now looking at a 300-unit housing development (providing fewer than 30 car parking spaces). The site had always been ear-marked for office development.

Croydon College is back with a proposal at the eastern end of its site for a hotel and 161 housing units. Croydon’s Tory-run council rejected a previous scheme intended to provide student flats, apparently fearful that this could bring into Fairfield ward and Croydon Central a large number of young and not necessarily natural Conservative voters who might threaten the balance of power come an election.

Affordable social housing rates for the sites have not yet been agreed.

The Conservative-controlled council aims for 40 per cent affordable housing on two-bed flat developments – a percentage rate that Croydon Central’s Tory MP Gavin Barwell was quick to mock when Sarah Jones, his Labour rival at the next election, suggested it ought to be the proportion used for the 400 flats to be put in place above the Hammersfield shopping centre development. Barwell decried the benchmark as not being commercially viable for the developers and their profits.

Gavin Barwell: MP for the Whitgift Foundation

Gavin Barwell: MP for the Whitgift Foundation

Of course in all of this, Barwell was careful not to mention his position within the Whitgift Foundation, which owns the freehold for the £1 billion Hammersfield development area.

Too high a target for affordable homes (the council concedes a 20 per cent rate on units at three-bedrooms and above) could deter developers, and so the council may find the prospect of 461 flats too attractive a boost to the local retail economy that they might not insist on their usual 40 per cent rate.

Pressure on public infrastructure, such as schools and doctors’ surgeries, is a concern with so much prospective development.

Other local housing proposals include the already fast-tracked 348 flats at Delta Point, the 400 flats at the Whitgift Centre, the council’s own property speculation at Queen’s Gardens of 400, the 46 residences in what were once offices at St Anne’s House, 202 flats at the soon to be demolished Post Office buildings at East Croydon station, 161 units on the Croydon Gateway site and maybe even the stratospheric 793 units that were proposed by Menta when they got planning permission two years ago.

That’s 2,411 new flats in total. And you thought it was a tight squeeze getting on the 7.42 to London Bridge in the morning already…

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1 Response to Developers going flat-out with new blocks for East Croydon

  1. Croydon Council is in hock to property developers.

    1. Commercially: the blighted Croydon Urban Renewal Vehicle (CURV) puts Council Tax-payers’ money in play. The council’s financial whizz-kids (in their view) are gambling that commercial property prices in central Croydon can be engineered to remain at pre-crash levels even though the demand for back offices has long-since fallen through the floor. Hence all the spiv-boy schemes to build high-rise apartments that are priced beyond the pockets of Croydon people but might find a market internationally with those looking for a secure investment for sometimes ill-gotten gains.

    2. Politically: bankers and property developers are among the regular contributors to the Tory party nationally and any fall in the value of their investments would presumably reflect in their continuing contributions.

    David Cameron is aware that the London property market is overheating, but it doesn’t suit his political purposes to acknowledge it at the moment, so he talks about national values in a market that is and always has been entirely regional.

    He is fond of quoting house price increases in Manchester, which bear no relationship to those in Greater London and the South-east.

    The bubble will burst eventually, but the cash-strapped Tories are hoping it won’t happen before the next General Election: when it does, they calculate it will be foreign apartment owners who take a bath.

    In the meantime expect skyscraper Croydon to grow like Topsy.

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