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Council slips through £5m deal to buy Brick by Brick houses

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Council houses: Croydon has bought 10 terraced homes from Brick by Brick for £5.3m

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.

Going cheap: the land on the Tollers Lane Estate was one of several heavily discounted deals done with BxB

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.

Land grab: In 2016, when put out to consultation, Brick by Brick abandoned some proposals to build on local green space. But they still went ahead with garage and play space demolition

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.

Slow progress: Labour’s Alison Butler and sleepy ex-council leader Tony Newman were behind the BxB disaster

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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