Company run by Tony Pidgley has reduced its obligations in almost all London projects

The housebuilder Berkeley Group’s founder and chairman, Tony Pidgley, has earned £174m over the past decade, and is set to be paid another £48m by the company over the next five years, which will make him one of the highest paid bosses of a public company in Britain.

His pay package has attracted the anger of politicians and housing campaigners as an investigation by the Guardian and Finance Uncovered reveals that the company has reduced its affordable housing obligations in the overwhelming majority of its London developments.

While for years Berkeley has successfully persuaded planning authorities that it could not make a profit from its developments if it met affordable housing targets, it has raked in £2.9bn of profit over the past seven years.

Berkeley’s shares have soared on the back of the profits, creating a fortune for the company’s senior executives, who since 2008 have been given shares worth £610m. Pidgley himself holds an additional 4.4m shares, worth £163m. The shares have more than trebled in value over the past decade.

Although the company has restricted future bonus payouts following shareholder anger, the top six executives could still collect another £127m over the next four years. Pidgley, who has amassed a £310m fortune according to the Sunday Times rich list, is set for up to £48m.

The Liberal Democrat leader, Vince Cable, said Pidgley and other housebuilders have a duty to the nation to build more affordable housing especially if they are personally making “vast fortunes” from building expensive homes.

Berkeley Group boosts profits by 34% Read more

“Tony Pidgley is rightly regarded as a sage of the housebuilding industry, with an impressive record of calling the housing market correctly. That explains why he is well-paid,” Cable said.

“But housebuilders who are making these vast fortunes must also understand that they have a social responsibility to make sure the country has the homes we so desperately need. Shareholders must make sure that executives are not rewarded for a poor record on affordable housing, because that does not encourage them to do the right thing and make sure we have a sustainable housing market.”

Some of Berkeley’s biggest investors are expected to raise concerns about the vast pay packages at the company’s annual meeting next week.

Excluding developments where planning consents were gained by a previous owner and the student accommodation projects, in 93% of Berkeley’s 57 London developments the company told local authorities that their affordable housing targets were unviable.

In one example, Land Registry data indicates Berkeley Group sold 71 homes in its Ebury Square development in Belgravia, central London, for a total of £358m.

The company told Westminster council that as the development was refurbishing an existing building that contained 60 units, only 11 additional homes would be generated. This meant, under Westminster planning rules, that Berkeley was obliged to build only one affordable home. But instead of building it on site, Berkeley made a payment to the council of £1.6m towards low-cost housing elsewhere in the borough.

Freedom of information disclosures show that Berkeley bought the Ebury Square site – a former police section house – from the Metropolitan Police for £23.6m in 2009. The profit on this single development is thought to be in excess of £200m.

At Kew Bridge in west London, Hounslow council accepted that Berkeley could only build 20% of a 308-unit scheme as affordable – half the local authority’s affordable target.

Building those units, Berkeley stated in a planning agreement, would mean the scheme would be £24.6m in deficit. Berkeley told Hounslow that house sales would generate £132m. Berkeley did agree to make an extra payment to Hounslow capped at £8.3m in the event of the scheme performing well. Land Registry data suggest that the scheme generated close to £250m, with one apartment selling for £4.55m.

A spokesman for the company said: “Berkeley has a sustainable, successful business model that enables it to perform well throughout the economic cycle, as demonstrated by its results of recent years and creation of fantastic new communities and long term value. We are justly proud of our track record in building 10% of London’s much-needed private and affordable homes.

“Last year alone, Berkeley contributed more than £400m of subsidy for affordable housing and wider community and infrastructure projects, which has helped us be recognised as London and the south-east’s leading place-maker. Sales utilising Help to Buy are a very small part of Berkeley’s sales.”

The company’s remuneration policy was approved by 97% of shareholders on its introduction in February 2017, and includes caps that reduce potential awards to key executives by 50%.

Berkeley’s profits mark it out as the most successful builder in a sector that has reaped huge rewards in recent years. The Guardian’s research shows the top nine quoted builders collectively have amassed £16.9bn in pre-tax profits since 2010. Just last year, nine of Britain’s biggest builders’ profits topped £4.56bn.

Greg Beales, director of campaigns at the housing charity Shelter, said: “We’re in the grip of a worsening housing crisis, so it’s vital that developers build their fair share of affordable homes rather than making up endless excuses while turning over huge profits.

“Thankfully, the government’s recent changes to planning rules have made it harder for housebuilders to wriggle out of their obligations. If they’re enforced properly by councils, these reforms should increase the number of affordable homes that get built. So we’ll be watching closely to make sure developers are held to account.”

Affordable housing targets set by councils are based on local demand and supply, the costs of housing locally and local wages. The targets are usually expressed as a percentage of new housing supply.

The targets are not legally binding, and if a developer can demonstrate through a site-specific financial viability test that the target makes a development uneconomic, then the requirement can be reduced or waived. The test allows for a developer to make a gross profit margin of 20%.

• This article was amended on 3 September 2018. An earlier version described the Ebury Square site as a former police house. This has been corrected to say the site was a former police section house.

