£4m blow for council after developer pulls out of estate scheme
30 April 2009
CREDIT crunched Islington Council is set to lose £4million after a private company pulled out of a flagship regeneration scheme.
Developer John Laing and housing association One Housing Group had been planning to build 164 new flats on the rundown Six Acres Estate.
The development, which was set to include 65 council houses and 82 luxury apartments, was to transform the estate off Durham Road, Finsbury Park.
And Islington Council was to be paid £8.4million for the land. It had already spent £3.6million on getting the site ready – work that included demolishing the estate’s six-storey Churnfield block.
But developer John Laing, which had not signed any contract, has now pulled out. And although the work will still go ahead, One Housing Group is only set to pay £4million for the land. This was agreed at a meeting of the council’s Liberal Democrat executive last Thursday – to the disappointment of the opposition Labour group.
Phil Kelly, Labour councillor for Finsbury Park ward, said: “They were going to pay £8million up front for the land. Now One Housing Group is gong to pay £4million. And the payment is going to be spread over three years – with most coming in the third year. It’s clearly a £4million loss to the council. That money could have been spent on improving other housing.”
Councillor Kelly said the council should at least bill John Laing for the adverts it has put up at the site.
But John Gilbert, the Lib-Dems’ executive councillor for finance, said the council would end up spending more on legal fees than it would ever be able to recoup. He added: “It’s a shame that the council is getting £4million less but it’s a reflection of what is happening in the wider economy. But we are hoping work will start within months.