CROYDON IN CRISIS: Already hugely subsidised housing built by Brick by Brick was bought back by Croydon Council in the days before the local elections. EXCLUSIVE by BARRATT HOLMES, housing correspondent
Serious questions are being raised over the suspiciously generous valuations given to terraced houses built in Old Coulsdon by Brick by Brick, after Croydon’s Housing Revenue Account shelled out £5.3million to buy 10 properties off the council’s failed housing company.
The houses had all effectively been paid for by Croydon Council already, from the £200million loaned to Brick by Brick. And they had been built on land that had been sold to BxB by the Labour-controlled council at a massive discount.
But the properties failed to be sold when offered on the private housing market last autumn.
With the council buying the homes using money from the HRA, the deal – pushed through in the weeks before the local elections – sees millions of pounds transferred from the ring-fenced housing budget and on to the bottom line of Brick by Brick, while the business is being wound down.
Brick by Brick played a major part in the bankruptcy of the Labour council, as the housing company failed to repay a penny of its multi-million-pound Town Hall loans, nor pay off any interest incurred and did not return any profit on its various development schemes in the five years following its establishment in 2015.
The company’s role in the £67million refurbishment of the Fairfield Halls is also now subject to a fraud investigation.
The council’s use of HRA money is already under close scrutiny because of the alleged misappropriation of £73million of housing cash on other spending at the cash-strapped council.
At least one previous attempt by the council to off-load some of Brick by Brick’s unsaleable properties got blocked by government officials and external auditors, suspicious of the “circular nature” of the financial arrangements, with the Labour-controlled council seeking to spend millions to buy property it had effectively already paid for.
There were other, hidden subsidies, too.
The site off Goodenough Way, on the Tollers Lane Estate, was sold by the council to Brick by Brick in 2018 for less than £64,000 – significantly below the market value. That, though, was one of the better land sale deals: Brick by Brick was allowed to buy other sites from the council for as little as £1 each.
At the time, the council argued that the “value” in the properties would return to the Town Hall coffers through the profits made once the houses were built and sold. That, as predicted, never materialised.
The Old Coulsdon homes are expected to provide much-needed council housing, although that was not the intention, as the properties were originally offered for private sale to generate profits to go back to the council.
Then, this spring, while the Town Hall’s red and blue leafleting cults were out campaigning ahead of the local elections, the sale of the 10 houses built on in-fill sites on the Tollers Lane Estate was slipped through.
The properties are not large homes, but are all three-bedroom houses, of a kind much in demand for social housing. They were acquired at an average price of around £530,000 each.
The Tollers Lane Estate scheme was among the first brought forward by Brick by Brick in 2016. Yet the housing that was built by the company in Old Coulsdon was not made available for sale until October 2021. Brick by Brick built 18 flats and four two-bed and 18 three-bed houses on the site of old garages, an electricity sub-station and kids’ play areas, in between existing housing.
The 10 homes bought with HRA money were those which remained unsold, despite the offer of 40per cent discounts through the government’s Help To Buy subsidy for developers.
Some of the properties, which had been standing vacant for many months since the developers got sign-off, had become vandalised.
According to BxB’s own propaganda last year, “Tollers Lane is a collection of family houses located in Old Coulsdon, launching for sale on 8th October 2021. Designed by Mae Architects, there are two- and three-bedroom properties available, all with our popular interior specification including timber parquet flooring and matt grey kitchens. Help to Buy is available on all homes.”
The Tollers Lane Estate was among the first BxB projects granted permission in a flurry of activity when Paul Scott was in the chair of the planning committee in 2017.
The slow pace of delivery, taking more than five years to complete, was part of the downfall of Brick by Brick, and therefore the council’s financial crash.
Of the Brick by Brick schemes approved together with Tollers Lane in June 2017, several others have also been blighted with building issues and delays, including Auckland Rise and Sylvan Hill, Upper Norwood; Heathfield Gardens, South Croydon; Longheath Gardens Estate, Ashburton; and Station Road, South Norwood.
Some apparently completed buildings remain vacant more than a year after builders have left the site.
Back in 2017, Croydon Council was claiming that “the full value of development growth is kept in the borough – whether it be in the form of additional affordable housing, physical improvements in the local centres or dividend return to the council to fund council services”.
Today, a Katharine Street source told Inside Croydon, “The Labour administration under Tony Newman and Alison Butler was blocked from using HRA money to buy some Brick by Brick flats, and the auditors have sounded the alarm over the misuse of HRA funding to bail-out other over-spending council departments.
“Given that these properties in Old Coulsdon struggled to be sold on the open market, the price paid for them by the council appears very generous.
“It might be the pragmatic thing to do in the efforts to shutdown the Brick by Brick operation, but the council has a fundamental duty to ensure best value for the Council Tax-payer and I’d expect the new administration under Mayor Jason Perry to conduct a swift and transparent investigation into how the property valuations were arrived at.”
Read more: Council sells off public green space to Brick by Brick for just £1
Read more: Council set to take £100m hit as it winds down Brick by Brick
Read more: ‘An accountant could have foreseen this more than a year ago’
Read more: Conflicts of interest, incomplete contracts, unlawful payments
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So the required audit is quite simple. Just follow the money > “Who authorised the payment for these houses, under what authority?” That authority is then either within their legal powers or it is illegal (a police matter).
This is also a curious priority just as the Labour group are about to abandon ship. They would have known (I assume) that this would come under scrutiny. And what is the possible up-side of moving cash to BxB in this way?
At best this payment just massages the already dire BxB balance sheet and P&L.
Who on earth would pay over 500k to buy a house on a council estate in Old Coulsdon?
I would love to see how this fiasco is made using double entry book keeping in the Council Accounts. Croydon must have it’s own system of double speak entry book keeping. Debit debit debit debit all round. No sign of any credit.
Are you saying that developement land for 18 flats, 4 2bed houses and 18 3bed houses was sold for £64,000. Surely the land value to a builder would be nearer 1.5 to 2 million?
Obviously I have not understood this matter very well, because I cannot believe it would be possible to sell off land in this way legally. I understand sometimes properties needing special restoration etc. are sold for £1 because they are not attractive investments, but this does not seem to be the case here. Please enlighten me.
We know that there were four (down from the originally intended six) plots of land in and around the Tollers Lane Estate that Brick by Brick built on.
But in the land sales data released to the Bureau of Investigative Journalism in 2019, we can only recognise one sale related to land in this part of Old Coulsdon.
Most developers work on a ratio of 1/3:1/3:1/3 for land cost:development cost:profit.
Working backwards, the land for the 10 houses alone that have been bought by the council might been expected to sell for £1.76million…
Is such a sale legal?
This money comes from peoples rent and charges into this account yet we have been excluded from this decision and the Labour Group wonder why they lost control.
Another glaring example of ignorance by politicians and Interim Housing Management. Shame on all of you!!
Will any Croydon Labour councillors own up to knowing about this and agreeing to it?
What a shambles, Presumably suppliers need paying. I imagine suppliers to the council can be pretty confident they will get paid no matter what. Glad though that there’ll be some new council houses, Regina Road council tenants’ families should have priority.
The Regina Road support group can confirm that the Council are pushing back on relocating a number of families still living in the blocks and are using the 95-page housing allocations to do it. Some of those families have strong medical evidence to warrant a move but senior council officials and cabinet members will not accept it
The Regina Road residents should be entitled to compensation for the trauma they have been through and prioritised for new homes.
The mayor needs to start a formal investigation into this shambles as a major priority
How can you buy something twice? Well the council tax payers of Croydon keep finding out.
These properties have been touted around the private sector for the past six weeks. The sum I heard was between £4.5 and £4.75m. Why has CC paid an inflated price.
Please can Katherine Kerswell make a public statement.
said all along the Fraud squad should be called in…..
Pure genius– a wonderfully Kafkaesque way of creating new Council houses !
OK, a tad expensive, but nevertheless, a superb example of thinking outside the Boxpark …. I meant, box!!
Disgusting waste of money why is this still going on
Given what these people in the Council have done over the last few years I am completely lost as to why they still got such a bit vote. They’ve run down the borough of Croydon for everybody; services, Fairfield Halls, loss of green spaces and family homes, etc. seemingly to line their own and their friend’s pockets. I really hope somebody with some clout will bring them to justice as in my view what they’ve done is totally reprehensible and disadvantages so many people in so many ways.