It is billed as “London’s most prestigious residential development” and prospective super-rich buyers are offered the chance to be “neighbours to the new Duke and Duchess of Sussex” in Kensington Palace.

The developers have also ensured that residents won’t have to share walls with anyone on a modest wage as they made a not-uncommon agreement with Westminster city council and the mayor of London that the half-a-billion pound development overlooking Kensington Gardens should not include a single affordable flat despite the “housing crisis” gripping the capital.

The City bankers behind the Park Modern development – which is being built on the site of one London’s few remaining hostels – hope to bring in £450m selling all of the 57 apartments in the block to the super-rich. The cheapest 1,000 sq ft apartment at the back is being marketed for sale at £2m. At the top of the nine-storey block, a double-height five bedroom penthouse is offered for £30m.

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The developer Fenton Whelan was initially going to contribute just £1.3m to Westminster council’s affordable housing fund in lieu of including any affordable units in the luxurious development, which will include a residents’ spa, swimming pool and private restaurant offering 24-hour room delivery.

Architect renderings of the development show a brown nine-storey block on the junction of Bayswater Road and Queensway. The pictures were widely distributed to the media by the developer Fenton Whelan, as well as being included in the planning application document published on Westminster city council’s website.

Computer generated images of the nine-storey building, which local residents have dubbed the “bulbous blockhouse”, loom over a row of mews houses dating back to the 1870s which featured in the 1977 movie Valentino starring Rudolf Nureyev.

The images show the building standing considerably higher than other buildings neighbouring it on Bayswater. The architect-created images show almost every apartment will feature a balcony overlooking the park, including wrap-around balconies on the three multimillion pound penthouses. The plans show renderings of a three-level basement, featuring a “pool, gym and personal fitness, steam, sauna, jacuzzi and treatment room”.

Nicky Hessenberg, a local resident, said it was outrageous that no space in the development was being made available for key workers who are struggling to find anywhere to live in the borough.

Facebook Twitter Pinterest A rendered image taken from planning applications for the Park Modern development. Photograph: City of Westminster

“Our beloved Bayswater is being gentrified and for no good reason,” she said. “Less and less space is available to anyone without very much money as gentrification spreads through the boroughs of central and suburbs of London, so as a result it becomes less and less diverse – what a depressing thought. Our beloved London becomes a collection of sterile and deserted boroughs where only the rich can afford to be.”

Some 3,950 households are currently on Westminster council’s affordable housing waiting list.

The council’s planning policy at the time approval was granted, in 2016, shows that the payment that avoids including affordable housing in the development should have totalled £25.6m. However, the developer submitted a “viability report” claiming that “it is not viable to provide on-site affordable housing and that the offer of £8.5m as a payment in lieu of affordable housing is the maximum reasonable amount the scheme can viably afford”. The affordable housing contribution was later raised to £11m. The council does not allow residents to read viability reports, although this is not unusual.

The developer will pay a further £7.3m for “public realm improvements”. Fenton Whelan said £2.6m of this will go towards the building of new “Royal Gates” entrance to Kensington Gardens. “The new Royal Gates will be cast iron gates of exceptional quality and British craftsmanship, with Royal regalia and crown detailing, finished with gold gilding,” the developer said in marketing this week.

Members of the public were not allowed to speak at the planning meeting. This restriction is not connected to the developer – the council is one of three in the country that does not allow the public to address planning committees.

Westminster council said its new leader, Nickie Aiken, had launched “a major overhaul of the planning process to ensure it is transparent and seen to be transparent”. “A review of planning is under way at Westminster at the moment and further changes, including allowing the public the direct right of address at meetings, are proposed,” a council spokesman said.

The controversial plans were referred to Sadiq Khan, the mayor of London. He approved the scheme in July 2016 soon after he took office following a campaign centred on the urgent need to address London’s “housing crisis”.

A spokesperson for the mayor said: “When Westminster council approved the scheme, the developer offered £8.5m towards affordable housing. It was referred to the mayor in July 2016, just weeks after Sadiq took office, at which point his new stronger policies on affordable housing had not yet been published.

“Although the scheme had to be considered under the previous mayor’s London Plan policies, Sadiq’s team were able to negotiate with the developer and get their contribution increased to £11m.”

Months after approving the scheme, Khan launched an offensive on property developers for including few affordable homes and said all large developments should include a minimum of 35% affordable homes. “London is in the midst of a housing crisis, with thousands of Londoners priced out of a city they call home,” he said. “I have been clear that fixing the housing crisis will be a marathon and not a sprint, but I am determined to lead from the front and get on with building genuinely affordable homes for Londoners to rent and buy.”

Westminster councillor Paul Dimoldenberg, who speaks for Labour on business, said: “Sadly, as council we have a long history of taking the money rather than demanding that applicants follow the council’s own policies and provide affordable housing onsite. This happening all over the borough, from Soho to Bayswater.

“Westminster is becoming a place that only the very rich can afford and that’s something that will undermine community life within the city. We fought a battle on this one, but we lost.”

Facebook Twitter Pinterest The building site along Bayswater Road, London. Photograph: Martin Godwin/the Guardian

James Van Den Heule, who set up Fenton Whelan with fellow banker Sanjay Sharma, said he would have no hesitation in taking legal action against the Guardian when a reporter asked him about the affordable housing provision in a prearranged interview. A spokesman for Van Den Heule said: “James does not want to co-operate or be quoted in any article … If you quote or misquote James in any manner in your article we will have no hesitation in considering taking legal action against both you personally and the Guardian.”

He later added: “The Park Modern project will spearhead the regeneration of Queensway into Bayswater Village, a regeneration scheme which is championed by Westminster city council. The development will make a total public contribution of £18.3m which will be used to deliver £11m of affordable housing as well as a series of important public realm improvements.”

The spokesman also pointed out: “Fenton Whelan has not made money on the project to date, the project will not realise profits until the private sale units are sold, so it would be a total misrepresentation to suggest to readers that the developer has already made vast sums of money on this project, whilst the local community has not. Again, the project will not make money for the developer until the sales campaign starts and units are actually sold. Without projects like this, and developers like Fenton Whelan, significant pieces of London would not benefit from regeneration.”