North London Council Scraps $7bn Lendlease Venture

Newly-elected councillors in Haringey, north London, have voted to halt a controversial £4 billion (A$7 billion) joint venture with Australian property developer Lendlease, instead opting for a council-owned company to provide affordable homes.

The Haringey Development Vehicle (HDV), which outlaid 6,400 homes over 20 years and the redeveloped the Northumberland Park and Broadwater Farm estates has now been blocked due to public anger and council intervention.

Lendlease was announced as the preferred partner for the HDV back in March 2017. The Australian developer has spent about £4 million (A$7m) on work related to the project to date, according to council documents.

Phase one of the regeneration scheme drew negative attention after it was revealed it would have involved the demolition of 1,300 homes across the borough’s social housing estates, drawing accusations of "social cleansing" from the public.

Public sentiment – that ordinary Londoners were being “pushed out" by "rich foreign investors” wanting luxury flats, caused controversy for the developer.

The scheme which was publicly criticised by Labour leader Jeremy Corbyn for its lack of community involvement forced locals to elect a new political leadership in Haringey to help scupper the HDV.

Related: Lendlease Wins $7bn London Euston Project

The HDV projected 20,000 new jobs for the local area and a potential £275m (A$485 million) profit for Haringey Council.

The rejuvenation scheme also planned for 40 per cent of the proposed 6,400 new homes to be below market value as well as a new library, school, health centre and town centre offices and shops.

Lendlease, which had written to the council to warn that it would have “no choice but to seek to protect Lendlease’s interests” if the borough’s politicians “reversed” its appointment.

“We are extremely disappointed the Council has voted not to proceed with the HDV without even offering us the opportunity to discuss face to face, undoing four hears of planning in just a matter of weeks,” Lendlease chief executive officer international operations and Europe Dan Labbad said.

“At the end of the day, it’s the residents of Haringey who will suffer most from this decision, given that 10,000 families remain in desperate need of a home.”

Council leaders said they were now committed to keeping public land in public ownership.

“We are committed to building new affordable homes over the next four years - including the delivery of 1,000 new council homes - and we start from the principle the council should be delivering those homes itself,”

“We are obviously concerned at the threat of protracted legal action by Lendlease,” Haringey Council leader Joseph Ejiofor said.

The council’s decision to scrap the project will result in Haringey having to pay Lendlease approximately £500,000 (A$881,000).

The authority has already spent close to £2.5 million (A$4.2m) on costs relating to setting up the HDV, including nearly £1.6 million (A$2.8m) on legal advice.

Lendlease has spent about £4 million (A$7m) on work related to the project, according to council documents.

Despite being $7 billion in the red, Lendlease has more than $20 billion in its European project pipeline.

The property giant and US group Starwood recently partnered on the £3.5 billion ($6.1bn) Silvertown Quays brownfield development in east London.

Lendlease also recently beat out international rivals to secure the £4 billion (A$7bn) contract to develop Euston rail station.

Lendlease is looking to extend its residential for rent capabilities in London after launching a $2.6 billion partnership with the Canadian Pension Plan Investment Board.