A LONDON council reopened a High Court case yesterday that concerns supposedly “affordable” flats allegedly being sold on the open market via “sham transactions.”

Southwark Council took the London District Housing Association (LDHA) to court in 2016 over allegations that it had deliberately violated section 106 agreements to provide affordable housing.

Such an agreement between a local authority and a developer is often used to oblige the latter to provide affordable housing as part of a larger development.

The council sought damages of almost £2 million from LDHA, alleging that it had sold flats in the Signal building on the open market. The claim was confidentially settled with no admission of liability.

A judge ordered that the homes be sold back to Southwark, which paid around £200,000 each for nine flats in the development on Newington Causeway last year.

The housing association also confidentially settled a similar, but separate, High Court action brought against it in 2015 by Southwark, also with no admission of liability.

LDHA, now known as Pathfinder, and two linked housing associations – Kinsman Housing and St Andrews Community Housing Association – were placed under review by the Regulator of Social Housing in May.

The review could lead to the housing associations being deregistered as social housing providers.

Southwark went back to the High Court yesterday in an attempt to obtain one remaining flat which was subject to the settled claim.

Matt Hutchings QC, for the council, told the court that the case was “a claim to enforce a planning obligation which the claimant says require these various flats to be used as affordable housing.”

The High Court gave permission for the leaseholder of the remaining flat to be joined as a defendant to the settled case.