Mayor announces deal for 44-storey Elephant and Castle tower

The scheme will be delivered by GLA's appointed developer Mace and housing provider Essential Living with institutional backing from M3 Capital Partners. According to the Mayor, it is the UK's first large-scale institutionally backed residential rental scheme.

The completed tower will comprise 462 new flats, of which 206 will be held for long-term private rent, 188 will be affordable, 159 will be for shared ownership and 29 will be rental units. The site will also have a new theatre space for the Southwark Playhouse, a cafe, shops and marketing space.

Johnson said in a statement that the deal represents a "major step forward" in his work seeking to encourage institutional investors, such as pension funds and insurance companies, to invest in residential construction and take development risk in order to increase and accelerate the number of homes being built. He said it was hoped that the deal would encourage other institutions to invest in developments across the capital.

The scheme forms part of the on-going regeneration of the Elephant and Castle opportunity area, which also includes a major redevelopment of the Heygate Estate.

“Housing, like roads and railways, are a vital part of the capital’s infrastructure," said Johnson. "We need to build more homes in London if we want to secure the capital’s economic future and the importance of institutional investors in making this happen cannot be ignored."  

"This ‘holy grail’ of investment in the riskier pre-development stage is a hugely important milestone but it is just the beginning. I want to entice other institutional investors to come forward and invest in quality homes for Londoners, boosting the economy and creating thousands of new jobs,” he said.

"This fantastic development will help deliver the Mayor’s vision for future living in London, a completely new type of rental offer in the London market, and we are proud to play our part," said Mace chief operation officer for investment David Grover.

"Mace will be sharing its experiences and expertise from creating high-rise residential schemes in both the UK and Middle East to make sure that the Newington Butts scheme is realised in style and recognised as a pioneering development," he added. 

Essential Living chief executive Darryl Flay said that the Mayor should be commended for "leading the way in creating a new, truly professional rental market where tenants are treated like customers with great amenities, longer leases and a home actually designed for renting".

“With a quarter of Londoners now renting mainly from amateur landlords, it is vital that we create a branded sector that can deliver real quality for the first time. Because we manage the homes we build for rent, it enables us to take a long term approach to development, which differs hugely from traditional housebuilding," Flay said.

Work on the site is expected to start early next year and to complete in 2017.