The estate agent Savills acts as an instrument for the corporate takeover of London’s council housing stock. Its major shareholders are City and international investment companies. Other shareholders are international corporations, combining banking, investment and insurance businesses. Most of its board of directors either currently serve on the boards of or were drawn from the directorships of companies including: Goldman Sachs (Asia); HSBC Holdings; Sky plc; Dresdner Kleinwort; Citigroup; and the London-based hedge fund Rubicon Fund Management. Trevor Rayne reports.
As surplus funds have poured into property ownership around the world so Savills’ profits have risen; profits are up 141% from 2011 to 2015 and total shareholder return is up 170% over the same period. Profits in 2015 rose 21% on 2014’s figure to £121.4m. In 2015, 56% of Savills’ profits were made outside the UK, (Savills Annual Report 2015) and in the same year Savills won the UK Property Industry Superbrand of the Year award for the eighth consecutive year and the award for Best Real Estate Agency in China and Vietnam.
Eyes on the prize: ‘city villages’ and ‘brownfield land’
Introducing an Institute of Public Policy Research report, City Villages, in March 2015, former Labour Cabinet minister Lord Adonis proposed knocking down council housing and building ‘mixed communities’ that would function as ‘city villages’. ‘The scale of council-owned land is vast and greatly under-appreciated. There are particularly large concentrations of council-owned land in inner London, and this is some of the highest-priced land in the world.’ Lord Adonis reckoned that London councils own on average 25% to 30% of the land in their boroughs; Southwark Council owns 43% of the land it governs and Islington Council about a third. This land is worth a potential fortune and is the prize Savills and multinational finance are after.
In his introduction, Lord Adonis foresees a doubling of the density of housing in any given area, and ‘new forms of partnership between the public, private and voluntary sectors’. Adonis lumps council estates with ‘brownfield land [that] needs to be mobilised for housing more ambitiously’. Of the proposed city villages Adonis writes, ‘Diversity of tenure promotes diversity of residents and helps build successful, socially mixed communities. It also makes it possible to build large developments faster.’ City Villages is a marketing strategy to promote privatisation of council land and estates, population removal or social cleansing and low-cost construction with increased housing revenues.
Savills’ contribution to the report noted that council estates in Britain house two million people but ‘occupy land that could, theoretically, supply homes for many more people’. London council estates ‘represent valuable reservoirs of increasingly scarce land in a global city’, Savills said, adding that ‘The failures of social housing estates in the UK have been particularly well documented…’ Other contributors to the City Villages report included Peter John, Labour leader of Southwark Council; Steve Bullock, Labour leader of Lewisham Council; Jules Pipe, former Labour Mayor of Hackney and now Deputy Mayor of London for Planning, Regeneration and Skills.
Savills’ model for the future of London’s council estates was submitted to the Cabinet Office on 7 January 2016. Savills claims that its approach could result in several hundred thousand new homes on ‘brownfield sites’. The government and local authorities in London are taking up Savills’ proposals as policy.
Southwark Council
In 2014 Southwark Council commissioned Savills to undertake an ‘Asset Performance Evaluation’. Savills examined 50,000 properties in the borough and valued them both financially and socially. It calculated council properties’ ‘net present value’, arrived at by calculating how much money would need to be spent on them over the next 30 years in repairs and maintenance costs, compared to the amount of income the council could expect to receive through rent and service charges. 4,167 homes, 11.5% of the stock, were estimated to be worth less than nothing. Nearly 10,000 properties were given ‘marginal value’ estimations. Southwark News produced a list of 52 estates and properties which Savills deemed ‘below average’ in terms of their ‘net profit value’ and also ‘below average’ in terms of ‘social sustainability’, (Southwark News 23 July 2015).
Southwark Council leader Peter John described council estates as ‘symbols of inner city neglect, with crime, unemployment and antisocial behaviour the only things that flourish there’. Southwark Labour Council, in partnership with Savills, has sold off 7,639 council homes in the past ten years. It has demolished the Heygate council estate, near the Elephant and Castle, with a net loss of 1,000 social rented homes; in its place a newly built private one-bedroom apartment has sold for £569,000 and a two bedroom flat fetched £801,000: the profits to be made excite property developers’ appetites for more council estates.
While Savills was conducting its survey, one of Southwark Council’s Interim Development Delivery Managers, responsible for managing a team delivering a building programme of 1,500 new council homes joined Savills. While still with Southwark Council she worked as a senior consultant for Savills.
Lambeth council
In March 2016, Lambeth Council appointed Savills to give it advice on how to register two new companies under Homes for Lambeth as a private developer intending to build, own and manage properties ‘for council rent, intermediate rent and private rent’. By establishing the companies Lambeth can get additional funds from central government. In a move similar to that used in Southwark, Savills appointed the vice-chair of Lambeth Leasehold Council to be an associate director, responsible for project management of the Lambeth council contract.
Currently, Lambeth plans to demolish and redevelop six council estates. One of these is Cressingham Gardens Estate, close to a large park and with good access to the City, Gatwick Airport and St Pancras International. The estate was built in the early 1970s and was submitted to be given listed status as an important architectural model. The submission was rejected. Lambeth Council’s plan is to replace 306 houses with 464 apartments, mostly one and two-bedroom flats; 274 apartments would be for sale. If the new flats sold for an average of £500,000 each that is £137m revenue.
Cressingham Gardens residents have campaigned to stop the destruction of their estate. In October 2016 they won a court order preventing Lambeth from demolishing the estate until the conclusion of a legal challenge. A judicial review has been held and will deliver its judgment in December.
Greenwich council
In October 2016 Greenwich Council informed council tenants that it had appointed a firm of surveyors, Savills, to undertake a stock condition survey on their behalf. The council explains that it has appointed Savills because they have carried out stock condition surveys for many other local authorities and are industry specialists in this area of work. The Savills survey resembles that produced for Southwark, including ‘performance modelling’, ‘investment planning’, ‘procurement’ and ‘30 year investment information’.
Behind Savills and its like, stand enormous concentrations of wealth and power to which Labour councils have made themselves subordinate. It will take organised and determined resistance to reverse the march of the bulldozers and property magnates.
(This is an edited version of a more detailed article that was published on the RCG website http://tinyurl.com/jmyxchw)
Fight Racism! Fight Imperialism! 254 December 2016/January 2017
