LONDON — The firm building homes at Battersea Power Station will make a £1.8 billion profit on the project despite slashing the number of affordable homes it plans to build due to a lack of commercial “viability.”
Wandsworth Council caused anger last month when it passed through an application from group developing the site — currently the biggest building project in London — to reduce the number of affordable homes it would build to 386, a reduction of 40% from its original plans.
When it made the application to reduce its affordable housing quota, the Malaysian-led consortium cited a lack of commercial “viability” in affordable housing.
It said rising costs and growing economic uncertainty which has damaged luxury house prices in central London, claiming it would achieve less than half the returns it originally intended.
However, documents records held by Wandsworth council and obtained by the Observer under the Freedom of Information Act show that the consortium expects to make a £1.8 billion profit.
The previously confidential documents, prepared by BNP Paribas for the Conservative-led council, showed that the site’s original developer, Treasury Holdings, massively overpaid for the land and sought to cut affordable housing, which is significantly less profitable than luxury real estate.
The document said the site should have provided up to 50% affordable housing if planning guidelines had been applied, but the council agreed to reduce that figure after the developer applied for a review.
Labour’s London mayor Sadiq Khan told the Observer: “If these numbers are accurate, they seem to suggest that the council have had the wool pulled over their eyes — allowing themselves to be hoodwinked into cutting affordable housing while the developer’s profits remain strong.”
Wandsworth Council had not responded to a request for comment from Business Insider at the time of publishing.