Red Door Ventures’ £120m acquisition of the Collective in Old Oak, NW10, has been thrown into doubt by political changes at Newham Council.
Red Door is Newham Council’s arms-length PRS company, which has bought several sites around London and been operational for a number of years.
However, the Labour Party’s deselection of Newham mayor Sir Robin Wales as its candidate in the May local elections, and his replacement by Rokhsana Fiaz – backed by the party’s left-wing Momentum group – has thrown the scheme’s future into doubt.
Fiaz has been critical of uneven development across Newham, and has said that should she be elected her priority will be housing, and an “ambitious programme of genuinely affordable housing, with an initial target of 1,000 over four years”.
The Collective deal had been due to complete imminently after Red Door had been in a period of exclusivity having fended off competition at the end of last year. But this will not now be possible before the May elections.
A source said the vendors were “strategically reviewing their position”, as the period of exclusivity had expired and the site could go to the next-highest bidder as no formal exchange had been made. Technically the deal could still complete after the election should the council wish for Red Door to continue its strategy of buying sites outside the borough, but the current position is unclear.
The deal is not the first in London to be disrupted by changes in the Labour Party: the Haringey Development Vehicle between the council and Lendlease has also been paused until after the election and looks highly unlikely to continue.
Red Door announced a buying spree last year, including sites outside its home borough. Alongside four sites in Newham, it had held discussions to buy sites on the Commercial Road in Tower Hamlets, E1, and Zenith House in Haringey, N15.
A number of entities listed at Companies House connected to Red Door indicate other locations, including Willesden, are under consideration, but they do not yet hold assets.
The Collective in Old Oak is the first large scale co-living scheme to be sold in the UK and has been seen as a litmus test for interest in the sector.
It was put up for sale in May through JLL and Savills with a price tag of £100m. The price for the 546-bedroom, 323-flat scheme reflected a yield of 4% and 5% depending on the proportion of student occupiers, who pay lower rents.
Its hybrid position between the student and PRS markets, which are attracting billions of pounds in investment, means it drew interest from a variety of institutional investors, despite the London Plan giving it a large affordable housing payment status.
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