The UK’s two richest people have been allowed to avoid planning rules that should have required them to build 98 affordable flats for key workers and low-income workers at their new £1.2bn luxury development in London.
The Hinduja brothers, named by the Sunday Times as the wealthiest people in Britain with a £28.5bn fortune, won approval to develop the historic Old War Office near Downing Street into 85 luxury flats and a 120-room five-star Raffles hotel.
The Guardian can reveal that the OWO development – in which one four-bedroom flat has sold for more than £40m – should under planning rules contain 8,000 square metres of affordable housing – enough for 98 flats.
However, Westminster city council agreed to allow the Hindujas to develop the building with no affordable housing after their agents claimed that it would “not be economically feasible” to do so.
They were given the go-ahead despite more than 4,000 families being on the borough’s affordable housing list, many of whom have waited more than 10 years for a home. There were until recently thousands more people in the queue, but councils across the country drastically cut their waiting lists by increasing the eligibility requirements.
Under planning policies designed to help tackle the housing crisis, all new residential developments should be made up of at least 30% affordable housing.
“The applicant is providing no on-site affordable housing in this instance stating that such provision would not be practical or viable,” planning documents show.
The council’s planning policy states that if it is not possible to provide affordable housing on site, developers must provide affordable housing elsewhere in the borough or make a payment to the council’s affordable housing fund.
The documents show that the OWO development on Whitehall has a “7,870.75 sq m shortfall in affordable housing” and “the policy-compliant payment generated by the scheme is £39.6m”.
However, the Hindujas’ agent offered only a “£10m contribution” to the affordable housing fund. At the time of the application in 2017, the then Conservative-run council’s “viability consultant” said the suggested donation was “generous”.
Labour took control of Westminster council for the first time at the 2022 local elections in May. The council said it could not retrospectively change the planning ruling.
Labour councillor Geoff Barraclough, Westminster city council’s current cabinet member for planning, told the Guardian: “According to Westminster council’s own policies, the Old War Office should have provided almost 8,000 square metres of affordable housing, enough for 98 flats.
“The planning committee at that time accepted the developer’s viability assessment and its conclusion that the requirement for on-site affordable housing could not be delivered and therefore received a £10m cash-in-lieu payment.
“Looking forward, we believe it’s vital to provide affordable homes in central London for the key workers that do the vital jobs that make our city a success. We have a strong commitment to ensuring new developments comply with the council’s established planning policies.”
The council is now trying to buy back former council flats in order to increase its housing stock. The average cost of an ex-council two-bedroom flat in the borough was about £500,000. That means the £10m could buy up to 20 flats. If the developer had paid the expected £39.6m, it would have bought about 80 flats.
Freddie Poser, director of PricedOut, a campaign group calling on the government to increase the supply of affordable homes, said it was outrageous that the council had allowed the development to go ahead with no affordable housing. “It’s always disappointing when councils don’t push for an increase in the supply of affordable homes,” he said. “Decisions like this are making the housing crisis worse.
“One of the great things about London is that all sorts of people live next to each other. It’s a real shame when really large developments get away with creating exclusive areas on an iconic streets.
“It’s disappointing that developments of such a clear commercial gain are only providing such a small amount to regular Londoners. Such developments should come with significant support to Londoners struggling to pay rent in our city.”
Srichand and Gopichand Hinduja, who own a vast conglomerate of assets across the world, did not respond to requests for comment. Westminster Development Services, their company developing the site, declined to comment.
The brothers bought the OWO building – where Winston Churchill served as secretary of state for war – from the Ministry of Defence for £350m in 2014.
In promotional material for the development at the OWO – where Ian Fleming set several James Bond novels and which appeared in 007 films including Skyfall, Spectre, Licence to Kill, A View to a Kill, Octopussy, and No Time to Die – Gopichand Hinduja is quoted as saying: “The OWO is my greatest legacy to London for future generations to enjoy.”
Residents of the serviced apartments at the development, which is due to open early next year, can use an underground swimming pool, a 16-seat private cinema, gym, three workout studios, spa and treatment room and underground parking with number-plate recognition.
