A row has broken out after it was revealed part of the West Hendon Estate was sold to developers for £3 - even though it was valued at £12.3m.

The estate is currently undergoing regeneration, with people being moved out under compulsory purchase orders to make way for 2,000 new homes.

Barnet Borough Council was granted permission to sell the land to developers below market rates in September 2013 by the Department for Communities and Local Government.

But a Freedom of Information request, made by West Hendon Labour councillors, asked the authority how much the estate was valued at before the council asked for permission to sell.

The response showed that the unrestricted value – that given if there were no attached conditions on the land – was considered to be £12.3m by the District Valuation Service.

However, because the developer had to provide 500 affordable homes on the site, the restricted value – which means there are conditions attached - was placed at £3.

Following the response, Andrew Dismore, London Assembly Member and Labour’s parliamentary candidate for Hendon, accused Barnet Council of a “free giveaway land bonanza”.

In a post on his website, he said: “As I have been stating for years now, Barnet Council, under direction from their Conservative masters, are a soft touch for developers. This time, a Conservative giveaway has cost Barnet taxpayers over £12m.

“Not only have they given the land away for nothing, they have not even demanded that the developer replace the social housing they have demolished.

“Barratt has almost doubled its profits this year off the back of deals like this. It represents yet again shocking financial incompetence on the part of Barnet Council.

“The only reasonable solution is for Barnet to go back to the developer, cap in hand, and demand a full renegotiation of this deal. All residents, secure and non-secure who live on the estate must be rehoused on the new estate, in accordance with the Conservatives’ original pledge and all leaseholders must be given a fair value for their homes.”

But Conservative councillor Tom Davey, chairman of the housing committee, accused the Labour politician of distorting the truth by not including the restricted value in his post.

Cllr Davey said: “You have to conclude that Mr Dismore is either deliberately misleading residents or has a total lack of understanding about how such valuations and sales work.

“As the details were set out in the FoI response, it is disappointing he chose to discard half the answer for political purposes. This seems an unfortunately underhand way for a prospective parliamentary candidate to behave.

“Labour bangs on about transparency and openness and then goes and hide the facts when given half a chance.

“This is not the first time Dismore has wrongly issued hostile press releases. Who can forget his slamming of the council for not holding a public planning meeting to consider an application for the British Library Newspaper site in Colindale – when, not only had the meeting taken place, he himself had spoken at it.

“I understand that some of Dismore’s Labour colleagues on Twitter have back-tracked from his position on the land sale – with Cllr Adam Langleben conceding that the £3 sale price is not necessarily wrong - but I now hope that a formal withdrawal and apology are forthcoming, or else a complaints procedure may have to be considered.”

In response, Mr Dismore said Barnet Council should have insisted on a greater proportion of “genuinely affordable” homes, as the scheme was not replacing all of the social rented homes on the estate.