Just over a year ago, Birmingham City Council (BCC) voted to award the regeneration of the Ladywood Estate to St Joseph, a subsidiary of the Berkeley group.
For many residents, the news came as a shock.
Since then, the future of the neighbourhood has remained uncertain, and the lives of residents precarious.
What does the future look like?
Over this past year, the messaging from the council and the developer has remained the same. Nothing of relevance has yet to be set in stone, they said.
However, there is a passage in the 2023 Full Business Case that is most concerning as it seems to suggest what the future of Ladywood ultimately depends on.
The 2023 Full Business Case states that the provision of affordable housing is subject to viability (Appendix 2: B4), and that such viability is “largely predicated on achieving private unit sales” (Appendix 2: C3).
What does that mean?
Let us start with the numbers.
BCC sees the regeneration of Ladywood Estate as fulfilling its obligations to deliver 51,000 new homes by 2031.
Currently, Ladywood Estate consists of the 1,979 homes of over 6000 people.
These homes consist of:
- 1266 in the Council’s ownership, of which 628 are in the seven tower blocks and include additional private leaseholders.
- 146 owned by other Registered Providers (RP).
- 567 in third-party private ownership.
Berkeley and BCC currently propose to rebuild the estate into a neighbourhood of 7,531 homes.
In its comms, BCC stated that these numbers might change in the masterplanning process. But let us see what it has been stated so far.
A regenerated Ladywood estate will include the refurbishment of the existing 628 council-owned affordable homes within the seven tower blocks and the reprovision of 146 homes currently owned by Registered Social Landlords. The rest will be replacement homes, built in place of those that will be demolished, or entirely new homes.
- 5691 new homes to be sold at market price.
- 638 council-owned affordable homes on a “like-for-like basis” to replace those lost in the demolitions. These will be built across the first three phases: 228 homes in Phase 1, 257 homes in Phase 2, and 152 homes in Phase 3.
- In addition to these, 427 new affordable homes will be built in Phase 4.
You might have noticed the adjective “affordable.”
What does it mean? The meaning of “affordable” varies, hence clarity is needed.
As a 2023 research briefing published by the House of Commons titled “What is affordable housing?” pointed out, there is a substantial difference between social housing and affordable housing. Historically, homes for social rent, or social housing, tended to be around 50-60% of market rents, while the affordability of “affordable housing” is calculated as being 80% of market value. If these new affordable homes are for sale, there is concern that house prices 20% below market value may not guarantee their actual affordability for the Ladywood community.
In their communications, BCC tends to use a somewhat different understanding of affordable housing.
Fair enough, you might say.
In their policies and communications, affordable housing includes low-cost market housing (that is, the 80% market price houses), social housing, as well as shared ownership.
A commitment to affordable housing, especially if it includes social housing, is good. However, more clarity is needed regarding the amount of social housing and “affordable housing” within the proposed provision.
According to the BCC own policies, in particular the Birmingham Development Plan, projects need to have a minimum of 35% affordable housing provision.
Possibly, according to BCC’s own estimates, quoted in the Birmingham Development Plan, 35% affordable housing provision is itself short of the housing needs in the city, roughly accounting for a total of 38%, including 4.8% shared ownership, 21.6% affordable rent and 11.4% social rent.
The total proposed provision of affordable housing for Ladywood is well below that, namely 16.08%, or 22.54% if you include the refurbishment of the existing houses in the seven towers, as they did.
One can argue that Ladywood estate has specific needs which might justify the lower percentage.
Ladywood estate does have specific housing needs, and these might require an even higher percentage of affordable housing, and more so, of social housing.
As of the 2021 Census, Ladywood Regeneration Project Area, or rather, the red line, includes a substantial percentage of households in socially rented accommodation, with social rentals ranging from 34.2% to 90.5%, and council rents between 29.4% and 81.9%.
Questions arise.
Will all current council tenants be given the option to relocate to the proposed 1,236 “affordable” housing units to be built in Phases 1, 2, and 3? If so, will the conditions of their tenure remain the same?
Even if the answer is yes, there is another crucial factor to consider: the timing.
Take Phase 1, for instance. Compulsory purchase orders (CPOs) are due to start in August 2026, with the final build to be completed in 2040. Phase 2 will follow, with CPOs starting in September 2031 and the final build to be completed in January 2044. Even if those who lose their homes in Phase 2 are relocated to Phase 1, there could still be a period of up to nine years between demolition and completion.
And what will happen to current homeowners and leaseholders? Will “affordable housing” also include provisions for them? Access to affordable homes should be an option for these homeowners and leaseholders.
Yet, even if this is the case, there won’t be enough homes for everyone. There are currently 567 homeowners in the area. Even counting the additional 427 new affordable homes to be built in Phase 4, there will potentially be 140 households left without homes. This is concerning.
The viability clause that BCC included in its 2023 Full Business Case makes it even more alarming.
Here again is what the cabinet report states: the provision of affordable housing is subject to viability (Appendix 2: B4), and that such viability is “largely predicated on achieving private unit sales” (Appendix 2: C3).
What does viability mean?
Viability goes back a long way.
Since the early 1990s, a clause in legislation called Section 106 required a legal agreement between the local authority and the developer, requiring the developer to contribute beneficial improvements to the local area as part of the development, specifically affordable housing and infrastructure.
In 2015, under the Conservative government, the provision of these beneficial improvements was made subject to financial viability.
How is viability calculated?
Viability is measured according to developer’s “required rate of return” Under the current National Planning Framework, viability is set to an expected 15-20% profit margin for the developer.
The calculation of viability at 15-20% profit margin is a story of conflict of interest.
This figure comes straight from reports and advice from major financial institutions and real estate firms.
Additionally, there is a cottage industry of consultancy firms that help developers produce viability assessments that justify a decreased amount of affordable housing provision on the basis of viability.
Viability assessments are carried out at different moments, usually at the plan-making phase.
For instance, there could be an agreement, like the one BCC would like to sign soon with Berkeley, which will include viability assessments. There might be also the case in the future for additional viability assessments at the planning application phase.
Local authorities are then supposed to assess the viability of such plans.
But here is another conflict of interest and it concerns who evaluates viability assessments.
Like many other councils across the country, BCC relies on a third party.
A FOI request revealed that this third party in Birmingham is Lambert Smith Hampton, a commercial and residential real estate consultancy, which advises both the council and investors/developers.
The problem with viability does not end here. The fact that the 2023 Full Business Case made the provision of affordable housing subject to viability is concerning because affordable housing is often “value engineered out”, as it is said in builders’ jargon,
It often happens that at completion developers argue they were unable to provide the agreed percentage of affordable housing because it undermined the viability of their involvement.
How would the BCC ensure that St Joseph will deliver the stated percentage of affordable housing?
In principle, local authorities have the ability to enforce stated agreements and tackle any breaches of planning control, and this can also include a revision of viability assessments to ensure that developers’ arguments hold.
Yet, the fact that BCC has already stated and accepted that the provision is subject to viability and that viability is “largely predicated on achieving private unit sales” (Appendix 2: C3) might suggest that BCC willingly or unwillingly does not want to be in a position to carry out enforcement action.
As the National Planning Framework states, enforcement action remains discretionary and local authorities might decide not to act in relation to suspected breaches of planning control.
In this context, the words of Clr Thompson in the Full Council meeting on Tuesday might be a positive development. They seem to show a commitment to include penalties in case the developer does not deliver, especially on affordable housing.
Would that also include social housing? And who is going to evaluate the developers’ viability assessments? These are questions that need answers.
We need substance and action, not just promises. This is important. The future of Ladywood and its 6,000 residents is at stake.
Ladywood Unite 
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