Brick by Brick’s losses pile up even after selling £89m of homes

As the failed development company staggers towards its ultimate demise, it is maintaining its unwanted record of never making a single penny in profit, as our housing correspondent, BARRATT HOLMES, reports

Flyover Towers: it took BxB four years to build Kindred House. More than six months since completion, the 128 flats have been sold but appear largely empty

Brick by Brick, the council-owned housing company, sold £89million-worth of property last year, yet still made a loss of £20million.

That’s according to the latest set of accounts, for 2021-2022, just released through Companies House.

Brick by Brick was formed in 2015 to build housing on council-owned sites, yet by late 2020, despite having received more than £200million in loans from the council, the company – run by former council executive Colm Lacey – had failed to make a penny in profit and was struggling to repay its loans and interest.

The failure of Brick by Brick was a major factor in Croydon Council’s financial collapse.

Lacey, and the company chair, Martyn Evans, along with the rest of the board that failed the borough so badly, had their appointments as directors terminated in November 2020.

The directors appointed to replace them are working on instructions from Croydon Council to wind-up the failed company, finishing off any developments and off-loading the buildings.

According to the accounts, which cover the period up to March 31 2022, the winding up process is expected to be concluded in the 2024-2025 financial year.

The 2021-2022 loss is down from the £25.3million losses reported in the previous annual accounts (2020-2021). It means that Brick by Brick’s record of never having made a penny profit remains intact, and unlikely ever to be broken.

The latest audited report shows that Brick by Brick completed 200 homes across nine sites in the financial year to the end of March 2022, and it confirms that work on another five sites and a further 311 homes was completed by the end of March 2023.

In charge: Colm Lacey (centre) was BxB’s CEO responsible for mismanagement and failure

The reports states, “The company has incurred a net loss of £20million, in large part due to write downs in expected sales prices for undeveloped land and bulk sales of developments required to wind down the company’s activities.”

The accounts include a “downward adjustment” of £4million to the “revenue receivable” from Croydon Council for the bungled redevelopment of the Fairfield Halls (payment for which had been recorded in the previous year’s accounts). Another “downward adjustment”, this time of £3million, “was made to the cost of sales on the Fairfield Halls project recorded in the previous year”.

The report outlines that, “During the year to 31 March 2022 individual apartments were sold to owner occupiers and bulk sales of entire blocks or entire developments were sold to investors of shared ownership property and to [Croydon Council] as provider of affordable housing in the community.

“In the period to signing the financial statements this process has continued including the bulk sale of 128 units at Kindred House to an investment group that will provide affordable housing and private housing.” The identity of the buyers of Flyover Towers has not been disclosed, and while building work on the site on Wandle Road appeared to be completed at least six months ago, there’s no sign that any residents have moved in.

And the directors’ report contains a warning (or is it an excuse?) for the slow progress of some of their disposals: “The current economic climate has raised challenges in selling the remaining units, as individuals face difficulty in obtaining mortgages and investors evaluate the current and future interest rate and inflationary conditions.”

The accounts do show a decrease in staffing costs, down to £1.67million in 2021-2022, when there 22 on the books, down from £2.61million when Lacey and 42 others were still employed for all or part of 2020-2021.

Redefining hubris: Lacey’s love letter to himself about his ‘achievements’ at Brick by Brick

Unusually for a publicly listed company, Brick by Brick, which was effectively publicly owned, avoided ever giving the remuneration figure for its highest-paid staffers. Funny that.

Some council sources suggest that Lacey may have been paid around £200,000 per year when running Brick by Brick.

Today, Lacey appears to be inhabiting another dimension of reality.

He’s established a property consultancy firm called Soft Cities, where he shovels very similar piles of bullshit to that in which he wallowed when running Brick by Brick. In doing so, he has probably redefined the concept of hubris. And onanism.

According to Lacey’s new website, Brick by Brick was an overwhelming success.

Lacey, his Soft Cities website claims, “was previously Founding Managing Director and CEO of Brick By Brick, a multi-award winning development company and architecture practice and key influencer in a new era of public housing delivery.

“After setting the company up in 2016, Colm grew it to become a national leader in council-led development, with an unwavering focus on high-quality design and affordability.

“By the time of his departure in 2022, the company had an annual turnover of over £100million and had developed hundreds of new homes and a range of commercial spaces on multiple sites in South London, helping to address local housing and employment need and permanently influencing the quality of the wider urban environment.

Oh yeah, baby!

We did the italics just for emphasis.

As you pay your Council Tax bills, increased by 15per cent this year in part because of the mismanagement of Brick by Brick, you might want to read more of what Lacey has to say about his “achievements” achieved at the expense of Croydon tax-payers: click here to visit the Soft Cities website.

Read more: The end is nigh: Brick by Brick’s final tower block is sold off
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: Conflicts of interest, incomplete contracts, unlawful payments

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11 Responses to Brick by Brick’s losses pile up even after selling £89m of homes

  1. Stephen Tyler says:

    It’s a good job that they didn’t go into pubs otherwise we would die of thirst!

  2. Chris Myers says:

    Everything that’s rotten about virtual reality right there

  3. Steve French says:

    This is a unbelievably sorry state of affairs.

    Everyone must be accountable.

    Heads must roll 🙁

  4. Henry says:

    Lacey is taking the **** and MUST be held accountable. Important Council services being cut due to him. Croydon residents must be furious.

  5. K8te Gardener says:

    I hope Lacey is indeed proud of the diabolical cuts made to disabled people’s voluntary jobs at Cherry Orchard Garden centre, just as one example!
    Some of these men have worked there for 33 YEARS. That’s a lifetimes working of blood sweat and tears, their friendships disbanded, their lives upended, their routine shot up against a wall. I’m ABSOLUTELY DISGUSTED he’s being allowed to create another fulfilling and lucrative life for himself, especially when he and Croydon Council have anhiallated so many other peoples lives, there is NOTHING ELSE FOR THEM TO DO. Caged animals get better treatment.
    Make them accountable.

  6. derek thrower says:

    I see the Purley Oaks Station development is just rotting in plain sight. Is Colm Lacey hiding out inside there? Perhaps we can send in “Croydon Sean” Fitzsimmons inside it to finally see if he is holding onto the profits which were going to be ploughed back in developing more social housing, which was going to make Brick by Brick the virtuous circle of social housing development.

  7. Anthony Miller says:

    How do you lose money developing housing on land that you own?
    It’s an economic mystery. Of the kind the police should investigate.

  8. Sarah Bird says:

    Where is the Accountability ?What efforts have been made by the Council to chase the money? If this was the private sector ,heads would roll with immediate effect. The same should apply at the Council.

    • If this was the private sector those responsible would be getting massive bonuses for having ripped us off. The old “public sector bad, private sector good” bolleaux doesn’t stand up to the slightest scrutiny, e.g. the water industry

  9. Lewis White says:

    It woud be interesting to see a breakdown of all B by B sites– land cost, design fees, build cost, etc etc –predicted sales incme– and actual sales income.

    Have any B by B sites turned out to be profitable?

    Such a shame how it turned out. Many of the sites were “hard to develop” being on precipitous hill slopes or in other places with difficult acess. Presumably, that is why they had been avoided by previous generations of builders.

    The Purley Oaks one highlighted above, which is located on a very long and riduculously narrow plot alongside the railway, is so close that the residents muust be able to touch the passing trains. If, that is, they are actually thin enough to get to their front doors, as the access road must be barely wider than a footpath.
    The land is at the bottom of a slope, and looks to be the sort of place that might flood.

    It still seems so odd, wrong, mad, bizarre etc, that in some cases the land was almost given to B by B by the Council, and that little or no “Council Housing” was built.

    I wonder, if the council had just sold the land off for building, stipulating what would be built—– what the outcomes –and the income–would have been. Loads of flats no doubt, but would the council have turned a paper profit?

    The “flyover view” tower seems to be an example of a plot that should not have been developed as the pollution levels must be well above all known allowable maximum level. That is not a place where people should have to live, but perhaps it will end up populated by urban-living folk like many South Amercans, not suburban folks like most in Croydon

  10. Nicholas Panes says:

    The £20m loss is just a guess. Important to note that the auditors have qualified their audit report on the basis that the business may not be a goung concern and that the work in progress valuation dependson the accuracy of furure sales predictions.

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