Whoever buys Westminster’s Dolphin Square, its famously low rents are bound to rise – and possibly to market levels. No wonder residents flocked to a meeting last week, to hear the worst. By Lucy Barnard
The Dolphin Square tenants’ meeting is a suitably upmarket affair. Instead of the draughty town hall of the average residents’ association, the event is ticketed, and held in the lavish Queen Elizabeth II Conference Centre by Westminster Abbey. Rather than dog-eared handouts, a full-colour information pack is handed to each resident on arrival.
The meeting is open only to residents – to the irritation of headlessee Westminster council and freeholder Friends Provident – and has been called by the Dolphin Square Trust to present its proposal to acquire the 7.5-acre (3ha) estate’s headlease, and to dismiss the rival offers made by Friends Provident and Allied Commercial.
None of the celebrities and MPs associated with the 1930s Pimlico estate have turned up. Neither William Hague, Jack Cunningham, Gavin Strang nor Alan Beith is there, and the dozen or so members of the House of Lords are also conspicuous by their absence. But at least 350 of the 1,500 residents are there to protect their right to low-cost accommodation in the heart of Westminster.
“Contrary to popular belief, the majority of tenants are not toffs living there at ridiculously low rents, they include many pensioners, many on low incomes,” says Diana Halliday, chairman of the tenants’ association.
But the well-dressed attendees do not appear typical of London’s poor. Nearly all are grey-haired and well-spoken. An elegant middle-aged lady in the back row, sporting a fine gold brooch, takes out her notebook and waits, silver Parker pen poised, for the trust’s chairman, Rodney Brooke, to begin.
Non-profit-making trust
Dolphin Square is an affordable housing anomaly. Back in 1963, Westminster council had the far-sighted idea of buying a 70-year lease on the development for £4.5m. It set up a non-profit-making trust to administer the estate and gave the trust both a loan to buy the 70-year sublease and the right to select tenants and decide their rent.
The trust has charged lower than market rents for 40 years, providing a pocket of affordable housing in central London. But the 1,250-apartment estate has become a haven for the influential and well-heeled.
Now this cosy enclave is threatened by freeholder Friends Provident’s £100m offer to Westminster council to buy the headlease and the sublease. The sale would give the council a means to end the trust’s privilege-led tenant selection procedure and raise a significant sum for investment in its housing stock, not least affordable housing.
The Dolphin Square Trust is hoping to persuade residents to vote for its own proposal. Speaking at the meeting, Brooke says: “We have offered the council an eight-figure sum for the headlease. Although this is significantly smaller than the other offers, we are hoping to offset this with other incentives, such as more key worker housing and a one-stop-shop for council services, all of which we could accommodate on-site.”
Brooke adds: “One other option for the trust would be to take the money, raise a mortgage and get another block of flats somewhere else. It’s something we’ve thought about.”
Judging from the meeting, the residents’ opinion is divided between those who back the trust’s efforts to purchase the lease and those who are suspicious of its intentions. Even if the trust’s offer is accepted, it is likely it will have to increase rents to pay for the purchase of the 33-year leasehold.
As one resident points out to the platform: “The stated aims of the trust are different from those of the residents themselves. Although trust members are also residents, they have responsibility as an industrial and providential society to benefit the wider community.”
Allied Commercial, the private property company run by financier “Black Jack” Dellal, has put in the third of the three offers to buy the council’s headlease, which runs for another 33 years until 2034. Allied is thought to have topped the Friends offer by at least another £30m, although details of the deal have yet to be revealed.
Transfer of responsibilities
But Friends Provident is confident that its proposal will win over the council and most of the tenants. Under its proposal, the trust will continue with the day-to-day management of the estate and may pursue its own rental policy for 12 months after the deal, to allow for a transfer of responsibilities.
Existing tenants, some of whom currently pay around £4,000 pa (or a mere £77 a week) for a one-bedroom apartment, would receive a rent rebate of £13,000 each over three years and their rents would then rise steadily to sums nearer to market rents, according to their length of tenure.
From September 2003 all new lettings would be at open market rents.
Studio apartments, which make up 30% of the scheme by area (over 750 homes) would be available for five years at below market rent for key workers. Friends also guarantees that no flats would be sold for five years.
Standing in the way of the council
Although Friends Provident does not wish to disclose its offer prior to talks with the residents, a source close to the company says: “The company thinks it scandalous that a small group of unelected people can stand in the way of the general interest. And Westminster council is furious that a body it set up and financed in the first place is standing in the way of the council receiving a whole lot of money which could replenish its entire housing stock.”
The company has not said whether its long-term plan is to sell off the estate, as a whole or in parts.
Other residential developers point to the benefits of upgrading the apartments and selling them on. Tony Carey, managing director of housebuilder St George, says: “I think Dolphin Square is an enlightened development. It is an early example of high-density, mixed-use accommodation which has stood the test of time. We are not thinking of buying it, but if we were, I suppose we would refurbish the flats and sell them on.”
Westminster city council says it is “determined to put a much greater emphasis on affordable housing for key workers” if it retains an involvement in the square as headlessee. “Clearly, Dolphin Square is an important concentration of key worker housing in the city, although over the years the lettings policy has departed from the original intentions,” says council leader Simon Milton.
The council is likely to decide on the offers for the headlease on 25 February, when the residents will learn their fate. At the QEII centre, the anxiety of the tenants is expressed by one old man in a tweed jacket, a resident of the square since 1976, who stands up at the meeting to fume: “Who is to blame for all this? And when can we have the security we need to plan for our futures?”
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Dolphin Square at a glance |
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An affordable housing anomaly – tenants have included the Princess Royal, Harold Wilson and Christine Keeler |
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” Dolphin Square was built by Costain between 1935 and 1937 on a 7.5-acre (3ha) riverside site at a cost of £1.5m. At the time, the 1,250-flat block was the largest in Europe ” The freehold was owned by United Kingdom Providential, a firm which merged with Friends Provident during the 1980s ” In 1963, Westminster council bought a 70-year lease on the estate for £4.5m, giving it full control of the square’s management ” Westminster council set up the Dolphin Square Trust, comprising councillors and council officers, gave it a loan to buy a 70-year sublease and the right to decide who lived on the estate and how much rent they paid. The sublease will run out three days before the headlease ” There are two kinds of tenant. Those who have lived on the square since before 1990 pay controlled “fair” rents of between £60 and £180 per week. Tenants who moved in more recently pay higher “market rents” of £300 to £1,200 per week. Residents all hold three-year leases as assured tenancies or assured shorthold tenancies. The rent roll is £7.5m pa ” The value of the building with vacant possession has been estimated at £250m |
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The three offers for the Dolphin Square leases |
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Friends Provident hopes to win over the council and the tenants with its variable rent formula |
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Friends Provident Prepared to pay close to £100m for the combined leases, as well as a £13,000 sweetener to each of the square’s residents. Says that studio apartments, which comprise 30% of the scheme (over 750 homes), would be available for five years at below market rent for key workers. Friends also guarantees that no flats would be sold for five years. The terms permit the trust to continue with the day-to-day management of the estate, and allow it to implement its rental policies for 12 months following the deal to allow for a transfer of responsibilities. From September 2003, all new tenants would be due to pay the open market rents of, typically, £220-£520 per week. Current tenants would pay an annual sum equivalent to the difference between the current rent and the market rental value as at January 2002 divided by 30.75 (the number of years between September 2003 and June 2034, the expiry date of the Dolphin Square lease). Allied Commercial Believed to have topped the Friends Provident offer by £30m, with £15,000 lump sums for the tenants, but terms have not been disclosed. The Dolphin Square Trust Has offered an eight-figure sum to the council for the headlease. Plans to continue running the block at “reasonable” rents. Has offered Westminster new tenancies as key worker housing and the option of installing a one-stop-shop for council services. |
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How rents compare against the Friends Provident deal |
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Source: Dolphin Square Trust Ltd |
