London Council does Deal with Donald Trump’s preferred Developer for Housing Scheme

Protesters outside Wood Green Civic Centre where Haringey Council's Cabinet approved the development 

Haringey Council’s Cabinet committee in north London has confirmed that a £2 billion redevelopment housing scheme in the borough, will be carried out in partnership with the Australian building company Lend Lease. The company is the preferred construction management services company of the Trump Organisation, owned by US President Donald Trump. Lend Lease was given $200 million to redevelop The Old Post Office, in New York City, into what will be one of the newest additions to the rapidly growing Trump Hotel Collection.

The deal with the Labour run council will be 50% owned by the council and 50% owned and 100% managed by the property developer, and there is no guaranteed right of return for tenants or owners. The joint venture is known as the Haringey Development Vehicle. A final decision by the council is expected in the summer.

All of these estates in Tottenham are at risk of demolition:

Love Lane, Northumberland Park, Broadwater Farm, Somerset Close, Lido Square, Moira Close, Brookside House, Turner Avenue, Park Grove, Tredegar Road, Tunnel Gardens, Leabank and Lemsford, Reynardson Court, Imperial Wharf, Sky City and Page High.

The construction company has a chequered history, to say the least. They have admitted to a huge fraud scheme in New York, in which it overbilled clients for more than a decade and has agreed to pay $56 million in fines and restitution to avoid criminal charges. The company also admitted that it evaded government rules to hire a specified percentage of firms owned by minorities and women.

On the Old Post Office hotel development, the US Labor Department are investigating claims that that Lend Lease paid less than the minimum wage to workers on the project. “It’s yet another example of Donald Trump’s relentless hypocrisy and gross mistreatment of workers,” said Josh Goldstein, a spokesman for the AFL-CIO union federation.

Another investigation by the Labor Department is looking into similar claims where a sub-contractor employed by the Trump organisation did not pay the minimum wage to workers on another hotel construction project in Washington DC. Many of the workers have admitted to being illegal immigrants, mainly from Mexico.  

On top of this an electrical contractor is suing Donald Trump's Organisation for $2 million, court documents show. The contractor, Freestate Electrical, alleges that Trump's company hasn't paid its bills for work it did on the hotel project last year.

In Australia, Lend Lease has been fined $200,000 in relation to the death of a rail worker and serious injuries suffered by four others near Maitland. The total amount of fines issued by the Industrial Court in relation to the incident is now $660,000 as well as prosecution and court costs in the thousands of dollars.

Meanwhile, closer to home in London, the £1.5 billion regeneration of the Heygate council estate in Southwark which was undertaken by Lend Lease, the council’s documents show the council only got £55m from the 22-acre site, knowing that it has already spent £43.5m on the project so far, and is expected to spend £6.6m more before the final demolition. As a comparison, the neighbouring Oakmayne/Tribeca Square development site, which is only 1.5 acre, got sold in 2011 for £40m.

Lend Lease is estimated to have made a £194m profit before any overage profit is shared with Southwark Council, whilst only 45 out of 1,000 secure tenants ever returned to the new homes which had been promised.

A report by Southwark council officers said Lend Lease baulked at providing social units as this would require a second lobby and lift shaft to separate the two types of residents, adding: “not doing so would have significant implications on the valuations of the private rental properties.”

The company also worked on the London 2012 Olympic Park. It is not known how much profit they made from the Olympics, but its profits rose by 28 per cent in 2012 - when it was built – though we know that the project cost the taxpayer £275m in total.

Haringey Council should stop pursuing this venture and choose the 100% council-owned vehicle option. This will ensure the council has 100% control of public property and land, as well as enabling the council to retain profits.

Gordon Peters of Haringey Green Party, who has launched a legal challenge against the council, said: 

“It’s what has been called social cleansing - and that is exactly what it increasingly is going to be, if not stopped.”

You can contribute towards the £4,000 cost of the Judicial Review of Haringey Council's decision here:

https://www.justgiving.com/crowdfunding/HaringeyDevelopmentVehicle?utm_id=2&utm_term=vzDRxdMN4

To Solve the Housing Crisis Local Authorities Must be Allowed to Build Homes for Rent

The release of the government’s white paper on housing last week, has been fairly well received, in as much as it at least acknowledges the depth of the problem and proposes an increase in building homes specifically for rent. These new rental properties will be either privately owned or owned by housing associations, not by local authorities, who have been barred from building homes since the 1980s.

Where councils have been given new powers they relate to planning permission for building homes and to restrict what has become known as ‘landbanking’ by developers. This means it will be easier for councils to force developers to build on their land in the shorter term, rather than waiting until house prices rise to a level where the developer makes large profits, by restricting supply.

In England as a whole, the union the GMB found, households have been increasing by an average of 218,316 per year since 2010 and over the same period the net additional dwellings have only increased by 148,993 per year. In London in the last six years new homes have only been 41.8% of the number of new households formed in the same period.

These new powers will help to alleviate some of the supply side problems and it will encourage the development of new private rental housing with longer, more secure tenancies, backed by institutional investors. (Unlike individual buy-to-let landlords, pension funds are unlikely to refuse to replace a broken boiler, say, on the grounds that they can’t afford it.) It’ll also ban letting agent fees. And it’ll introduce banning orders, to force the worst landlords and agents out of the market.

Presumably some of these new rental homes will be priced at ‘affordable rents’, but this term is misleading. Affordable rents are defined as at 80% of the market rate, which for many people, especially in London, are way out of the reach.

Even Grant Shapps the Tory ex housing minister was scathing. “Housing ministers over the years have come out with documents or bills, and the truth is none of them are going to make much difference,” he said. “And I don’t suppose this will make that much difference either.”

The glaring omission in the white paper is the complete absence of repealing the restrictions on local authorities building of new council housing and the continuation of ‘the right to buy’ whereby councils are forced into selling off what is left of their housing stock to tenants. Almost half of former council houses and flats in Wandsworth in south London, are now owned by private landlords, often very wealthy individuals.

Why does the government not allow councils to build new homes, when it would be the quickest way to resolve the crisis? Remember too, that interest rates on borrowing are at a historic low, which makes it a cheap option, and these homes would become an income stream for cash strapped councils, for maybe 200 years. Secure tenancies, faster availability and more income for councils, what is not to like?

Well, the government’s ideology will not allow them to take up this approach. It would buck the trend of the last 30 odd years, the so called ‘property owning democracy’ introduced by Margaret Thatcher. But as we see, this applies mainly to selling off public housing to private landlords, not the tenants in the long run, and has led us directly to the crisis in housing we have today.

When the market has failed so spectacularly as it has with housing, what we do not need is more market. It only makes sense viewed through the prism of neo-liberal ideology, when plain common sense tells us it is all nonsense.

Expect things to carry on pretty as much as normal, with increasing numbers of people being priced out of housing in some areas, as the gentrification of former council estates carries on, in an exercise in class cleansing of London and some of our other bigger cities.

Where all of the essential low paid workers will live, is anyone's guess?