When Treasurer Scott Morrison visited London last week, he suggested Australia could learn off the Brits when it came to housing affordability.

Key points: Redevelopment deal struck between Lend Lease and Southwark council has reduced affordable housing

Redevelopment deal struck between Lend Lease and Southwark council has reduced affordable housing Some residents of old estate have had to move out of London due to costs

Some residents of old estate have had to move out of London due to costs Councillor says development is good for the area and good for jobs

He toured a new housing redevelopment based on a partnership between Australian company Lend Lease and the Labour-controlled Southwark council.

Mr Morrison described the project as "exciting" and suggested it be replicated back home.

"To see it lived out here on the streets of London, gosh I'd love to see it lived out on the streets of Australia," he said.

But the housing project has proved controversial in the United Kingdom. The multi-billion-dollar redevelopment of the old Heygate Estate has led to protests and so far delivered less affordable housing than was previously on the site.

Jerry Flynn, who grew up on the Heygate Estate, agitated against the redevelopment and runs a blog that exposes some of the secrets behind the deal.

He says housing affordability in the area has declined since the demolition and that working class people have been driven out of the neighbourhood.

"Yeah, Australia does have something to learn from this redevelopment. Don't do it this way!" he says.

"There was 1,200 council homes there, that's social rented homes.

"Now there's going to be over 2,500 new homes and nearly 2,000 of those are going to be free market. We're losing all our council housing here."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 7 minutes 28 seconds 7 m Homes For Profit, Not People: Watch Europe correspondent Steve Cannane's Lateline story on the Heygate Estate.

The council estate at Elephant and Castle was once 100 per cent socially rented homes. Under the deal struck between Lend Lease and Southwark council the area will now have 25 per cent affordable homes.

Some of the old residents have not only had to move out of the neighbourhood, but London itself.

Terry Redpath had lived in South London all his life. He brought his family up on the Heygate Estate and in 1986 bought a 125-year lease on his three-bedroom flat.

When it was demolished as part of the redevelopment Southwark council gave him 172,000 British pounds ($285,957) in compensation. But it was not enough to remain in the area.

"We could no longer afford the type of properties they were building there, and the compensation we were given by the local authority gave us very little choice but to move outside of London," he said.

Development replaces 'failed' public housing: Morrison

While in London, Mr Morrison toured Trafalgar Place — the first stage of the Heygate redevelopment. It's a place Mr Redpath cannot afford to buy into. A two-bedroom flat there sells on the open market for over $1 million.

There is a small proportion of socially rented flats in Trafalgar Place.

Last year Peter John, the Labour councillor who signed the deal with Lend Lease, was asked how many of the old residents had moved back in to the first stage of the redevelopment.

Back then he responded: "It's a handful of people who have moved back in."

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Mr John insists the development is good for the area, good for jobs, and is revitalising an area which he describes as a failed housing estate.

He says the vast majority of the former residents have been relocated to somewhere else in the borough.

When Mr Morrison's office was asked whether they were aware the development had actually led to less affordable housing in the area, a spokesperson responded in a statement:

"The development replaces what was once a notorious and failed public housing estate. "We were advised by the Council that residents were relocated within Southwark to enable the development to proceed. The new development has a higher density — so the proportion of affordable housing is applied to a higher base of dwellings. "The development also includes upgraded community facilities, including a new leisure centre. "There are similar developments also in the Southwark area that are increasing the availability of affordable housing. Rents being offered are at a third of the market and are being managed by one of the UK's largest social housing associations — not Lend Lease or the Council."

Former residents like Mr Flynn and Mr Redpath challenge the view that Heygate was a failed housing estate. These kinds of arguments are set to continue in the UK.

London's property market has become a magnet for foreign investment, especially with the British pound dropping after the Brexit vote. Land is scarce and councils own an extraordinary 25 to 30 per cent of the land in the capital. That means there is pressure on them to knock down old housing estates and sell them to developers.

As for how much money Southwark council has made out of selling the land to Lend Lease, and allowing them to redevelop what was once a council estate, that remains unclear.

The profits aren't due to come back to Southwark council until 2025, 15 years after the initial contract was signed. And neither side can say how much it will be.