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At the second time of asking, Grosvenor has been granted planning permission for its £500M build-to-rent scheme on the site of a former biscuit factory in Bermondsey, south London.
The scheme was rejected by planning officers at Southwark Council in February last year, primarily because it did not meet council targets for affordable housing. But the project was called in by the mayor’s office, and on Friday, deputy mayor Jules Pipe approved the proposal.
Here is a rundown of what Grosvenor changed to gain approval for the scheme, and how it changed the financial metrics for the development.
The amount of affordable housing. Grosvenor’s original proposal included 27.5% affordable housing, below Southwark’s 35% target. Following the initial rejection and in consultation with the council and residents, the affordable housing quotient has been upped to 35%, which will provide 482 affordable homes. (Southwark and the Greater London Authority measure affordable housing quotas by the number of habitable rooms that are affordable, rather than the number of units.)
The type of affordable homes. In the original proposal, the affordable units in the scheme were to be offered at an average 25% discount to market rent. Now, 70% of the affordable units will be at 40% discounts, with the other 30% at social rents, i.e. offered to those on the council’s social housing waiting list. Social tenants won’t have the right to buy their units.
The size of the scheme. In order to accommodate a greater proportion of affordable housing, the scheme is getting bigger. The overall number of homes is rising from 1,342 to 1,548, all of which will be for rent. To do this, the height of buildings is going up, with the tallest of its towers rising from 28 to 35 storeys.
Other uses are shrinking. The scheme will still include 150K SF of flexible office space and a 600-pupil secondary school. But the amount of retail and leisure in the scheme has been reduced to around 37K SF.
It will be less profitable. In its viability assessment when submitting its initial proposals, Grosvenor said adhering to council affordable housing policy would reduce its internal rate of return on the project from 12% to about 10%. But the new scheme will see profits drop even further. Grosvenor Britain & Ireland Executive Director Simon Harding-Roots told Estates Gazette last year that the IRR will now actually be closer to 6.5%.
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