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Southwark Gets Tough on Affordable Housing Pledges

Following litigation brought in the High Court, Chancery Division, the London Borough of Southwark has secured the return of 17 designated affordable housing units to affordable housing use.

The 17 flats formed part of the Jam Factory development in Bermondsey, and one other development. The section 106 agreements governing the developments required the flats to be used as affordable housing. However, the defendants alleged that a complex scheme of interconnected transactions had freed the flats from this obligation, enabling the current owners to let them out at market rents.

Southwark brought proceedings challenging the scheme as a sham and/or an ineffective avoidance scheme.

A successful mediation has led to settlement.

The London Borough of Southwark released the following press statement:
"The council has made a huge commitment to its residents to deliver large numbers of affordable homes over the coming years, but we can only be successful if the planning conditions we place upon the properties are complied with. When we discovered that affordable units in the development at the Jam Factory and one other site were not in affordable housing use we took immediate action to get the properties back into affordable housing use. Following settlement of a complex High Court claim we are pleased to confirm that we have agreed terms with the current owners which will result in 17 flats going back into affordable housing use. The flats will now be offered as shared ownership or intermediate rented housing to households in need of affordable housing in Southwark. The settlement was achieved at no overall cost to the public purse."

For press coverage of the case, see The Sunday Times.

Matt Hutchings QC represented the London Borough of Southwark.