Inside Croydon’s editor, STEVEN DOWNES, reports on the latest massive set-back to the council’s loss-making house-builder
Brick by Brick, Croydon Council’s controversial in-house house-builder, has been forced to suspend all sales of shared ownership homes. The delay in selling the apartments under shared ownership schemes could last at least six months, perhaps as long as a year.
The Auckland Rise development in Upper Norwood, where shared ownership flats were on offer for more than £450,000. Not any more they’re not…
Dozens of prospective buyers have had to be put-off or disappointed after it was discovered that banks and building societies will not provide mortgages under shared ownership schemes on Brick by Brick properties because the company is not recognised as a “registered provider” of shared ownership properties.
Even a modest estimate suggests that the delays could affect properties worth more than £20million.
Brick by Brick was the brainchild of Jo Negrini, now the council’s £220,000 per year chief executive, and her sidekick Colm Lacey, with the enthusiastic backing of the Labour council’s political leaders Tony Newman and Alison Butler, who is the council cabinet member responsible for housing.
Brick by Brick was registered at Companies House five years ago, in 2015, but it was only in 2019 that it completed its first new builds, the majority of which are being sold on the private market.
Building on council-owned sites – sold by the council at vastly reduced values – and financed with £262million borrowed from the Treasury by Croydon Council and then loaned on to the company, half of the new homes Brick by Brick builds are supposed to be “affordable”.
So far, after five years, Brick by Brick has managed to complete just three one-bed flats for social rent.
Jo Negrini and Colm Lacey, who between them never bothered to register BxB to sell shared ownership properties
The majority of its provision of “affordable” homes were supposed to be available through shared ownership, though it appears that Lacey, who has subsequently transferred off the council staff and now glories in the title of “chief executive” of Brick by Brick, forgot to do the paperwork to get his company recognised as a registered provider of shared ownership properties.
According to Brick by Brick’s own website, it is offering 24 shared ownership apartments in Flora Court, Thornton Heath, it has another 13 on offer in its development in Auckland Risse and Sylvan Hill in Upper Norwood (with one shared ownership home listed as “reserved”), while “coming soon” are 29 apartments in Longheath Gardens, near South Norwood Country Park.
One young couple looking to move into their first home in Croydon, but who have been left high and dry because they cannot finance the purchase through no fault of their own, told Inside Croydon: “We’re just annoyed because they are still advertising while potential buyers now are left in limbo having paid reservation and mortgage fees and such like.
“Now we’re being told that the wait could be 12 months.”
Alison Butler (right) at the opening of Flora Court last month. Within days it was clear that lenders would not provide mortgages on its shared ownership flats
The first distress signals were sent out just before Christmas, shortly after Butler and the council were trumpeting the great success of Flora Court’s completion – nearly a year later than scheduled.
The shared ownership flats in Flora Court were aimed squarely at first-time buyers, and were described in the marketing materials as “stylish”.
Potential part-owners would be expected to take out a mortgage for £78,750 for a quarter share of a one-bed flat, which at full price would cost £315,000. They would then be expected to pay the mortgage, plus £700 per month in rent and service charges for the three-quarters of their flat that they wouldn’t own.
“Council welcomes first 100% affordable Brick by Brick development” it boasted on the council website – without realising that BxB had never registered to sell property under shared ownership schemes.
On December 18, the Brick by Brick sales team sent out an email to potential buyers wanting shared ownership properties.
“Following the recent handover of our first lot of shared ownership homes, it has been flagged that a number of lenders are not satisfied with Brick by Brick as a private provider of shared ownership, and whilst we have demonstrated our intentions to operate and abide by regulatory standards specific to shared ownership, it has been advised that we become a registered,” the email said.
“Although the necessary steps towards meeting this obligation are being made, all shared ownership related sales will now need to go on hold until complete. This however is not a straight forward process and can take up to six months.
“Our legal team are doing all they can to resolve this issue and are currently exploring an interim solution in which could have you in the property a lot sooner. This we are hoping to be updated on following Christmas which once confirmed, you will be notified immediately on.
How Flora Court flats are still being marketed for shared ownership
“We sincerely apologise for the inconvenience this may cause you and will in touch as soon as we receive further update from our legal team.”
The post-Christmas update was duly sent out by a senior member of the sales team on Thursday this week. It was not good news.
“It has been confirmed that whilst we are not a registered provider, the opportunity to sell any shared ownership is very limited and only at the discretion of your lender,” Brick by Brick told their out-of-pocket and increasingly angry potential customers.
“We have now initiated the process to meet this requirement, however have been advised that it could take anywhere between six and 12 months.
“In addition to securing [registered provider] status, our priority is [to] manage the expectations of all purchasers and therefore would like to reassure you that we are doing our upmost [sic] best to not only accelerate this process, but also put in place an interim solution.
“One of these solutions entail a renting to buy concept at a subsidised rate, subject to BBB obtaining [registered provider] status. This, our legal team are working on, however as you can appreciate is not as simple as it may sound and therefore unable to provide either confirmation or an indication of timing.
“We are hoping to have further clarity on this next week which as and when we do, will send another update to you immediately.”
As well as being hugely disappointing for the eager house-hunters, the delay in being able to sell the properties – two-bed shared ownership flats in Upper Norwood are being marketed for nearly half a million pounds each – will put a massive dent in Brick by Brick’s already stagnant cashflow.
Lacey was boasting to trade journals last September that the company will be make its first profit in 2020. Unable to sell any shared ownership flats for at least six months, that must now be in serious doubt.
The delays in the sales while Brick by Brick completes its regulatory requirements – which might have been done any time in the past five years – is also likely to destroy the house-builders attempts of delivering on its promise that 50 per cent of its builds will be “affordable”.
It will be interesting to see how Butler, Negrini and Lacey try to spin Brick by Brick’s latest expensive disaster – they went at least £11million overbudget on the incomplete and unfinished refurbishment of the Fairfield Halls – to their various partners involved in the shared ownership schemes, one of whom is the Mayor of London.
- Shared ownership is an unaffordable joke
- A level of ineptitude which would be tolerated no where else
- Butler: We’ll let Brick by Brick build on all under-utilised spaces
- Croydon’s Brick by Brick model is well and truly broken
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This is what happens when you get incompetent idiots playing at being “professional” property developers. Not that they need to worry because the Croydon council tax payer will bale them out in the end while they take their fat salaries and gold plated pensions.
A new low in the competence level of those in charge of this company. How can they have been in this business for five years without realising the importance of being a registered provider? One wonders what else has been missed? Hopefully they have a guarantee scheme.
Scott, Butler and Lacey will carry the can for this, as they should, and will have to do a lot of flanneling and spinning to get out of the mess they have landed themselves in.
The two other complicit partners, Newman and Negrini, will walk away unscathed. Oh, well, that’s politics.
Colm Lacey’s position as Head of Brick by Brick is now untenable. In what profession can such an error of such magnitude which prevents the company even trading be tolerated as acceptable. It is not as if they have had enough time to snag every possibility that has to be faced as a Shared Ownership provider?
Why doesn’t Colm Lacey borrow a skip from Croydon Waste and Recyling, fill it with cash and then take it over to Beddington Lane to be incinerated – that’s the equivalent of the mismanagement of Brick by Brick under Lacey and Jo Negrini.
When he and Negrini are at the International Property Festival at Cannes in the Spring (paid for by Croydon residents), there will be one thing that differentiates them from everybody else in the room: the fact that everybody else knew you had to be registered to engage in the complex activity of providing shared ownership homes. The naivety of not known this beggars belief and yes, Lacey should step down with Negrini. Negrini puts herself forward as a development specialist as well as Croydon CEO. She attends numerous development forums having her time and expenses paid by Croydon residents and she didn’t ensure Brick by Brick was registered.
It’s like a pilot hurtling down a diminishing runway at 190mph telling passengers “sorry, we’re going to crash because nobody told me to pull the nose up.”
And what about all the Executive Directors who sat on the Brick-by-Brick Board who should also have advised on such rudimentary housekeeping matters? Where was their advice? What about the great Jane McGivern, an ‘independent’ director on the Brick-by-Brick Board, now scurried off. Why didn’t she draw on her vast experience experience in Development to point out the need to be registered?
The same goes for another Brick by Brick ‘not-so’ independent director, Jeremy Titchen – why didn’t he advise of the need to be registered?
You have independent executive and non-executive directors on Boards precisely to give this sort of advice. Who in Croydon Council is approving these useless people on the company’s Board? You’ve guessed it, it’s Jo Negrini rewarding mates she meets at development conferences.
And why bother having Shifa Mustafa and Mark Norrell, both Croydon Council employees – what do they bring to the table?
Nothing.
Solution – gets some proper development executives running Brick-byBrick and someone has to kick Jo Negrini out – she is simply not worth her VAST salary. And who put Negrini there, promoted beyond her means? Yes, Mr Ineffective 2015-2020, Tony Newman.
If the people involved in this scandal had an ounce of decency they should resign. This is unbelievable incompetence and in any normal business they would be shown the door.
How much longer can much needed tax-payers money be wasted like this?
I hope that the poor people that were duped into buying these properties have any fees reimbursed.
How are properties at these high prices affordable? Further more how does pricing them out of a lot of people’s affordability help the housing crisis???
I think not at all is the answer!!
They clearly are not, as we this report from nearly a year ago when Brick by Brick took out advertising space in the Evening Gideon to promote their sales (that worked well, didn’t it?), and price comparisons through property websites showed that their homes were seriously over-priced.
You can check out our latest report – that they’ve sold just five, or six, by clicking here