Brick by Brick, the loss-making council-owned house-builder, last night finally ended their silence and admitted that they are not able to sell homes under any shared ownership schemes.
Seven days after Inside Croydon broke the news that Brick by Brick had failed to register themselves as an approved provider of shared ownership homes, the company published a statement on its website in which they tried to shift the blame for their gross administrative failure. They claimed that banks and building societies had “imposed additional criteria” before providing mortgages on their shared ownership properties.
This, of course, is weapons-grade bullshit, since all providers of shared ownership homes understand that they require a registration as a supplier for their customers to be able to secure mortgages from lenders. Brick by Brick, which has received more than £260million in loans via Croydon Council, has been in business now for almost five years.
The company’s statement did not contain any note of contrition or apology to those potential buyers who have been so badly let down, some having got to the point of exchange of contracts before discovering to their horror that their mortgage-provider would not lend money on Brick by Brick properties.
Brick by Brick has had to halt the sale of dozens of properties, together worth more than £20million, as a result of what Croydon Conservatives described as large-scale “ineptitude”.
Meanwhile, Tony Newman, the leader of Croydon’s Labour-run council, the owners of Brick by Brick, has failed to make any comment on the parlous situation caused by his authority’s controversial and struggling scheme.
Brick by Brick has, since 2015, managed to build just three one-bed flats for social rent. With a target of 50 per cent of its homes supposed to be affordable, Brick by Brick’s inability to sell shared ownership homes will badly impact those goals. Meanwhile, sales of its other properties on the private market – with some three-bed homes priced at £600,000 – continue to be sluggish.
Brick by Brick’s “chief executive” is Colm Lacey, who until he was installed in that position by the council chief executive, Jo Negrini, had spent his entire career working in local government. Since being appointed to run Brick by Brick, Lacey has worked exceedingly hard on raising his personal profile, offering interviews and writing articles for the construction industry press.
Last night’s emergency statement issued by Brick by Brick was issued anonymously, without any mention of the company’s chief executive.
In the statement, they said, “Brick By Brick was established to create well-designed homes that are affordable for the people of Croydon.
“We develop high-quality homes on small sites or underused public land, with the proceeds from sales returned to the council to be reinvested in the community.”
To date, after five years, Brick by Brick has generated only losses, and not a penny of profit.
“We currently have a pipeline of over 1,200 homes under development, including homes for sale, homes that will be returned to the council to house local people on the housing waiting list, as well as intermediate housing (including shared ownership).
“Intermediate housing comes in various forms. In order to ensure that we provide purchasing options which are as affordable as possible we tend to focus on shared ownership, where qualifying customers can purchase as little as a 25 per cent share.”
Typically, with Brick by Brick selling one-bed flats for £350,000, that means any purchasers of these unaffordable “affordable” homes will have to make mortgage payments on borrowing of £87,000, plus find monthly rent and service charge payments of another £700.
Brick by Brick’s statement continued: “Last year we launched our first shared ownership homes for sale at Auckland Rise and Sylvan Hill in Upper Norwood; and later in the year we launched additional shared ownership homes for sale at Flora Court in Thornton Heath. These homes offer an opportunity to get on the housing ladder with a low deposit and smaller mortgage.
“Mortgage providers have special terms for lending on intermediate homes, and our buyers select from a range of mortgage products that are suitable for shared ownership.
“However, for our first schemes, as buyers came to the point of exchange of contracts, some of them discovered that their lenders had imposed additional criteria for lending on shared ownership properties, including a request that the seller become a ‘Registered Provider’ with the national regulator.
“In order to provide as many affordable financing options as possible for our customers, we are now expediting this registration process and the regulator’s guidance suggests that it will take three months.
“In the meantime, our experienced sales team are actively working with any affected prospective purchasers on a one-to-one basis to find an interim solution that works for them – some may proceed with applying from lending from providers who do not require registration, some may wish to postpone their completion giving them more time to save…”, how thoughtful! “… some may be able to move into their property on a rented basis until they are ready to complete the purchase.
“Any remaining shared ownership homes will be available for buyers to reserve on a similar basis.”
In the meantime, it appears that Lacey (estimated salary £150,000 per year), Negrini (£220,000), and Councillor Alison Butler, the council cabinet member for housing (who together with her architect husband, Paul Scott, trouser more than £87,000 in Town Hall allowances) remain in their posts, without any need for “more time to save” for their no doubt very comfortable homes.
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