Two estates that form part of the Earls Court redevelopment could fall back under council control, according to a letter sent out by Hammersmith & Fulham council.
A letter from councillor Stephen Cowan said: “CapCo’s latest proposal is to develop a new masterplan for the Earls Court scheme. If that gets planning permission, we would see the two estates return to council control.
“There are many steps before we finalise this agreement, but I wanted to let you know as soon as possible about what’s happening.”
The letter does not expand on what this means for the scheme.
The most likely explanation is the new masterplan, which has been mooted to increase affordable housing numbers, will essentially include a one-for-one reprovision or refurbishment of the estates, which will then be returned to the council for management and ownership.
However, negotiations are still ongoing and it is not known what the final plans will look like.
Previous plans by CapCo have been viewed poorly by residents because they do not replace the estate homes on a one-for-one basis.
CapCo currently has master planning for a 7,500-home scheme which includes the redevelopment of the West Kensington and Gibbs Green housing estates.
It has been in consultation with the Greater London Authority to submit a new plan that would increase the number of homes to 10,000 and which is likely to include a considerably larger proportion of affordable, which currently accounts for 1,600 of the 7,500 flats, or 21%.
CapCo has released a statement saying it remains in discussions with Hammersmith & Fulham to bring forward an enhanced masterplan for the Earls Court Opportunity Area.
It said: “An enhanced masterplan would seek to deliver an increased number of homes across all tenures throughout the wider Earls Court Opportunity Area, and could involve LBHF taking the lead on future plans for the West Kensington and Gibbs Green estates.
“In the event that an enhanced masterplan does not progress or agreement is not reached, the conditional land sale agreement – a binding agreement in relation to the estates – will remain in place.”
The council’s letter described the previous arrangement as “a poor deal for residents”.
It says that in August 2012, the approved Earls Court scheme was worth £12.05bn, which would value each flat at £1.6m.
The letter goes on to say: “A few months later, at a cabinet meeting on 3 September 2012, it was agreed that CapCo could buy the 21 acres that made up those estates for just £110m, with a weak and insufficient provision for replacement affordable homes.”
CapCo shares were down 0.9% in early trading, and an analyst note from Jefferies’ Mike Prew was titled Welcome to Stalingrad.
If the 77-acre site could lose of one-fifth of its area this would impact on its book value.
Prew said: “CAPC’s masterplan is at risk of needing revisions and diluting the massing of the 10m sq ft development, which would mean lower land values in a falling market.
“There is intense pricing competition from the South Bank of the Thames, where 20 competing developers are discounting forward sales (Barratt cut the asking price of £1m-plus London units by 5-10% a year ago), with a glut of stock looking for a clearing price.”
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