Who paid for that 'independent' report? Surveying the Housing Crisis - Part 2
tony at cultureshop.org.uk
Tue Feb 16 21:32:30 GMT 2016
Surveying the Housing Crisis - Part 2
Marking the homework How developers pay for
independent checks on their affordable housing deals
George Turner London13 Feb. 2016
email: turnergeo at gmail.com
In this article we reveal how the 'independent'
advice received by councils on their affordable
housing deals is often paid for by developers
seeking to reduce their affordable housing obligations.
After my last article on how surveyors appear to
be deliberately manipulating valuations in order
to reduce the affordable housing obligations on
their clients, a number of people commented that
those figures are supposed to be checked by the
council. Surely, if the developer is trying to
game the system, it should be picked up on by the
council who can reject their application; and if
developers get away with it is that not the fault of the council?
In this post I reveal how developers pay the
council's surveyors directly to check their
figures, calling into question how independent that advice really is.
The merry go-round
When a developer submits a financial viability
assessment, the council officers have to report
to the decision makers whether they agree or not
with its conclusions. That advice is fundamental
to the decision about whether or not to accept a
development because decision makers are often not
allowed to see the underlying evidence.
One problem is that councils simply don't have
the expertise to do the work required to come to
a decision themselves. In the case of the Heygate
Estate, Southwark Council didn't even have the
software to open the viability assessment provided to them by Lend Lease.
To make up for this they hire consultants to
review the information submitted by a developer.
Often these consultants will be from the very
same firms that will be submitting viability
assessments arguing for reductions in affordable housing in other schemes.
For example, BNP Paribas, which is a very big
player in the market for advising local
authorities, was the viability consultant on
Knight Dragon's now famous (and successful)
attempt to cull affordable housing from the Greenwich Peninsula.
That is sadly the reality of the world of many
professional services. Accountancy, law and other
markets are often dominated by a few big players.
There are a few smaller firms that solely work
for the public sector, but they are rare.
Who pays the piper?
The advice councils receive needs to be paid for,
and councils have had their budgets slashed. They
often seek to recoup the extra expense of dealing
with large developments from the developer, but
how that payment is dealt with should be of some concern.
Though a freedom of information request I have
found that 'independent' consultants working for
the council are often asked to invoice the
developer directly for their services. In Lambeth
it even appears that the developer may have a
right to veto who the council chose to provide them with advice.
The revelation comes from an FOI I made on the
Shell Centre redevelopment. I asked for
correspondence between the authority and their
consultants on the viability issue. In this case
BNP were providing advice to the council.
Contained in the bundle of emails is an exchange
between an officer of the council and BNP
Paribas. The officer is asking why Gardiner and
Teobald, who had been sub contracted by BNP to
review the costs of the development submitted by
the developers, had not yet started work. The
response, from Duncan Henderson, then of BNP Paribas, is included below:
In other words, we aren't paid by you, and so a
request from you to start work ain't worth much.
Earlier in the correspondence, there is a
suggestion that not only do surveyors providing
independent advice to the council get paid
directly by the applicant, the applicant also has
an opportunity to object to the council's choice
of advisor. In another email from Lambeth to BNP Paribas is the following:
After seeing this I spoke to a few contacts in
the industry. They confirmed that the practice of
getting the advisers to invoice the developer
directly was common, although not universal.
Sometimes the developer paid the local council
who then paid the consultant (surely a much
better system). However, they also said that it
was extremely rare, if it happened at all, to
allow the developer to have any say in who the
council chooses to provide advice.
I also put it to Dr Anthony Lee, Senior Director
of Development Consulting at BNP Paribas that to
the public, the fact that the council's advisor
invoiced the developer directly for their work
could give rise to the impression that the advice
was not truly independent. He replied as follows:
I disagree in the strongest terms with your
suggestion that the public
.might draw the
conclusion that [we] are not truly independent
assessor merely because of an administrative matter of who pays an invoice.
Applicants pay planning fees to planning
authorities and often fund the entire cost of a
planning officer to deal solely with their
application; does that compromise the
independence of the planning officer? The answer
is clearly no; the officer assesses the
application against the Councils Local Plan and
the national framework. We are doing the same.
When we are commissioned by a planning authority,
they are our client and we do the best we
possibly can (within the guidelines set out in
their Local Plan, the London Plan, the NPPF and
NPPG) to identify opportunities for increasing
affordable housing levels on individual schemes.
Who physically pays our invoice is irrelevant to
me and the other members of my team, all of whom
are members of the RICS and owe a professional
duty of care to their instructing client (which is the planning authority).
Lambeth declined to comment for this article.
So lets just recap how this system works on the
basis of what we have learned over the last three articles on OurCity.London.
The viability test distributes billions of pounds
of value between private developers and the public.
The process is usually conducted entirely in
secret. Not even the people who have to take a
decision on whether or not to approve an
application are able to see the evidence on which
they are supposed to adjudicate.
It appears that the evidence they are given may
not present a true picture of the profitability of the development.
To mitigate this councils rely on the advice of
professionals to test the evidence.
Often these professionals are also paid, sometimes directly, by the developer.
The same professionals working for the council
are also in the market for employment with private developers.
Now to be clear, I am not accusing any individual
of not trying their best when advising a council
on a planning application. But this is obviously
not the system that the public would design by
choice to look after their interests.
#viability, #BNP Paribas, #Shell, #Heygate, #Greenwich, #Surveyors, #Lambeth
Byline journalists depend upon reader
contributions. If you like the article you just
read, please make a pledge to the writer, so that
they can keep on doing their valuable work. If
you have any questions about any of our
journalists, or about Byline - the world's
leading crowdfunded journalism site by traffic -
please contact us at info at byline.com
+44 (0)7786 952037
Twitter: @TonyGosling http://twitter.com/tonygosling
uk-911-truth+subscribe at googlegroups.com
"Capitalism is institutionalised bribery."
"The maintenance of secrets acts like a psychic
poison which alienates the possessor from the community" Carl Jung
Fear not therefore: for there is nothing covered
that shall not be revealed; and nothing hid that
shall not be made known. What I tell you in
darkness, that speak ye in the light and what ye
hear in the ear, that preach ye upon the housetops. Matthew 10:26-27
Die Pride and Envie; Flesh, take the poor's advice.
Covetousnesse be gon: Come, Truth and Love arise.
Patience take the Crown; throw Anger out of dores:
Cast out Hypocrisie and Lust, which follows whores:
Then England sit in rest; Thy sorrows will have end;
Thy Sons will live in peace, and each will be a friend.
-------------- next part --------------
An HTML attachment was scrubbed...
More information about the Diggers350