Legal challenge to thwart London’s £1.2bn Shell Centre development fails

 Shell Centre: luxury homes plan in central London (Shutterstock)

A High Court attempt to overturn approval by communities secretary Eric Pickles for a £1.2bn luxury housing scheme on the banks of the Thames next to the London Eye has failed.

A judge ruled yesterday that the minister was right in the way he approved the plan for eight tower blocks clustered around the Shell Centre, the oil giant’s landmark UK headquarters.

The judgement is a victory for Braeburn Estates, a joint venture between the real estate developer Canary Wharf Group and a subsidiary of the Qatari sovereign wealth fund.

It means Braeburn’s Shell Centre development, which plans nearly 900 flats on London’s South Bank opposite the Houses of Parliament, is almost certain to go ahead.

A planning inspector had recommended the scheme proceed after a public inquiry – a decision then rubber-stamped by Pickles.

But local Lambeth resident George Turner challenged the decision and brought a High Court judicial review.

Part of his case raised the issue of affordable housing, arguing there had been a lack of transparency around the finances underpinning the development.

He said the inspector had accepted Braeburn’s claims that the scheme could not afford a higher level of affordable housing without seeing the figures which underpinned the developer’s argument.

Turner also claimed the development would harm the South Bank’s “heritage assets”, that it would reduce the amount of open space and the planning inquiry was handled in an unfair way by the inspector.

Justice Collins, the High Court judge, ruled the inspector was right not to demand the disclosure of a full viability report from Braeburn.

He said in his ruling: “It must be open to applicants for planning permission to submit confidential material in support of their applications.”

The judge added “there was no requirement for…disclosure” because not even councillors were shown the viability assessment.

The development would provide 779 luxury flats, 98 onsite affordable homes and another 70 social rent units on an estate two miles south of the site – 20% of the overall scheme.

Following the judgement, Turner said: “I started this case because it is my firm belief that important decisions on major sites which will shape the future of our city for generations to come need to be subject to the highest levels of public scrutiny.

“It is only through a fair, open, transparent and inclusive process that we will be able to achieve the development that the city desperately needs: affordable homes, places for people to work, open spaces for us to enjoy and sustainable buildings that respect and protect our culture and heritage.”

Braeburn Estates said: “We are pleased that the challenge to the Secretary of State’s decision to grant our planning application to redevelop the Shell Centre has been dismissed. We strongly believe that our redevelopment of this important site will be a catalyst for the regeneration of Waterloo, creating thousands of jobs and hundreds of homes, which in turn will benefit London and the UK.

“The planning application has been through a thorough and comprehensive process including a public inquiry and has been supported by Lambeth Council, the Mayor for London, the Planning Inspector and the Secretary of State.  The Secretary of State’s decision to grant planning permission has now also been upheld by the High Court… We are hopeful that this is the final stage in the extremely rigorous planning process around this development, and we look forward to commencing work in the near future.”

Last year an investigation by the Bureau – A Great British Housing Crisis – probed the process which determines the number of affordable homes built as part of developments.

Amid 1.4 million households on council waiting lists, the number of affordable homes are at a seven year low while housebuilders’ profits are now back to pre-crash levels.

Our investigation centred on the viability system – a process enshrined in planning law that gives housebuilders the right to reduce affordable housing numbers if they can prove building them will make a scheme uneconomic. But the figures used by housebuilders to prove their case are hardly ever made public.

As part of the investigation, we analysed two documents from advisers to Braeburn which emerged as part of a Shell centre planning inquiry .

The documents allowed us to calculate that the company could conservatively make a profit of £600m before it builds affordable homes above the 20% figure it agreed to deliver.

The developer is committed to paying £24m to Lambeth towards more affordable housing if sales values at the Shell Centre rise above £2,117 per sq ft. This would see the scheme reach the local authority’s affordable housing target.

Our wider investigation also found:

 Councils rarely employ external experts to scrutinise housebuilders’ figures contained in financial viability submissions.

Sales projections used in viability assessments are frozen at the time a scheme receives planning consent preventing the council from sharing in any benefit from rising house prices.

If land prices rise after viability sales projections are agreed, developers often keep all the profit while councils are left empty handed.

Planning experts say thousands more affordable homes could be built if councils shared in profits made by developers on the back of higher land values achieved after planning agreements are finalised.

At the time of our article last year, Braeburn did not dispute our £600m profit calculation and said in a statement: “The scheme will deliver up to 40% affordable housing units, with a minimum of 20% being provided even if the development proves to be loss-making. We have in this exceeded the requirements put on us by Lambeth Council and national planning policy.”