CROYDON IN CRISIS: The borough’s Tory Mayor is accused of ‘doing a Tony Newman’ over a multi-million-pound property deal, one which will cost future generations tens of millions.
EXCLUSIVE by STEVEN DOWNES
This one’s a £120m whopper: Jason Perry’s porkie pies just keep on getting bigger
Meet the new boss. Same as the old boss.
Jason Perry, Croydon’s part-time Tory Mayor, has been accused of pulling off a property deal as bad as anything that was done during the time when Labour’s Tony Newman was running the council into the ground.
“It stinks,” according to one source who has carefully crunched the council’s own figures.
It was announced on Friday that the five residential blocks built on a council car park in Coulsdon had been “sold” for £38million, significant as marking the end of the shambolic and costly episode in Croydon civic history that was Brick by Brick.
This latest deal was pushed through, in a style reminiscent of how Newman liked to conduct council “business”, without any discussion or debate in the Town Hall Chamber, and without being looked at by the scrutiny committee.
And what piss-poor Perry has failed to tell you is that the council is leasing back three of the blocks for £127.9million over 50 years. Once all other payments and income is factored in, the deal will end up costing the residents of cash-strapped Croydon close to another £60million.
“It’s just a re-financing deal, and a bad one at that,” according to the shocked source, a professional financial analyst.
Another source, Andrew Pelling, a Town Hall whistleblower when Newman and his Numpties were in charge of the council, said: “It’s a property deal with public assets that has taken them more than a year to cook up, and now looks like it heavily favours a private property company, rather than the people of Croydon.
“The nature of the behind-closed-doors stitch-up has all the feel of a Tony Newman dodgy deal when he was in charge of the council – most information hidden in the secret ‘Part B’ of the report, no open discussion at the Town Hall, no scrutiny call in, and apparently the government’s improvement panel has waved it all through without batting an eye-lid.
New address: the first residents of Red Clover Gardens in Coulsdon have moved in over the past week or so
“They really have learned nothing from the years that led to the council’s financial collapse,” Pelling said. “In fact, what they are doing now is simply gas-lighting the public, Whitehall and the external auditors.”
Pelling had the party whip removed at Croydon Council for his stubborn opposition to Labour measures, and has since joined the Liberal Democrats. He is their candidate for Croydon East at the General Election. “I am amazed that the Conservatives are boasting of the sale price when it is such a bad deal for Croydon residents.”
Red Clover Gardens is the final disposal of a development by Brick by Brick, the council-owned house builder that bankrupted the borough. It consists of five “architect-designed” blocks, built on what was the Lion Green Road council car park in Coulsdon. Brick by Brick’s construction contractors finished most of the work there two years ago, but – in the middle of a housing crisis – the site’s 157 flats have remained empty, until this month.
In the fire-sale of assets following the financial collapse of the council in 2020, potential buyers for Red Clover Gardens were thought to include the housing department of an inner London council and Notting Hill Genesis, a housing association.
But the Notting Hill Genesis deal broke down in 2022 when agreement could not be reached over the price tag for the flats – reckoned, even then, at a conservative £40million.
Then, last July, Croydon’s Tories proclaimed that they had found a buyer, Regen Capital, a little-known property firm. The deal, they promised at the time, would be settled by August 2023.
August came and went… There was stubborn silence from the Tory-led council for almost a year.
Then, on May 28, the council published an official report, but one with most details kept strictly secret from the public or opposition councillors. It is titled “Update to Lease Acquisition and Underlease Disposal at Red Clover Gardens”. The report’s authors are given as Jane West, Croydon’s finance director, and Susmita Sen, the director of housing.
Secret report: the council thinks it has hidden most of the dirty details… but there’s a way of digging out the numbers
The elected representatives whose names appear at the top of this report and, therefore, carry all responsibility for its recommendations, are Perry, plus Jason Cummings, his cabinet member for finance, and Lynne Hale, Perry’s cabinet member for housing.
Inside Croydon has been following the saga of Red Clover Gardens ever since the then Labour-led council, under Tony Newman, “sold” the car park site to Brick by Brick for the bargain price of £1.5million: probably less than one-quarter of its true value at that time with planning permission. So the site has already been a significant loss to the Council Tax-payers of Croydon.
Last week, after the council report was published, we put a set of questions to the propaganda department at Fisher’s Folly, asking for Perry or Cummings to provide some answers to the utterly opaque public report.
Croydon Council has refused to answer our questions.
Instead, on Friday – in the middle of what is supposed to be a politically sensitive, pre-election purdah period for local authorities – Croydon Council issued a triumphant press release, unusually even including the price achieved for the sale of Red Clover Gardens.
“Brick by Brick has sold the Red Clover Gardens development in Coulsdon to Regen Capital for £38million,” they said.
Financial pressures: council finance director Jane West
“This transaction will enhance housing availability in the borough, providing 85 affordable rented homes and 72 private sale/rents.”
In the officially approved statement from the council, they told us that “Regen Capital has acquired the freehold of the development”. Regen has created a company, called RCG Coulsdon Ltd, which will rent or sell 72 of the homes.
And they told us that “the council will retain a long lease for the 85 affordable rented homes, sub-letting them to a housing association”. They omitted to say who the housing association is, but it turns out to be Plexus RP, a subsidiary of Mears.
“Croydon Council will retain 100% nomination rights, which means the council can nominate residents from its housing waiting list for the homes. This helps to provide homes for those in need while also reducing costs for temporary housing,” the council said, drifting away from the truth.
With purdah restrictions in place, the council opted not to use rent-a-gob Perry for a quote. Instead, West put her name and reputation on the line, claiming that this was all “best value” for residents. “The sale will help to reduce the financial pressures faced by the council, while providing much-needed housing in the borough,” West said, again, not altogether candidly.
Croydon Tories crowed about the deal on their own, politically unfettered website, which did include a quote from Perry: “The sale of Red Clover Gardens is a huge step towards ending the sorry saga of Brick By Brick – Labour’s failed property developer which has cost the taxpayer tens of millions of pounds – for good. I’m grateful to all those involved in negotiating this deal, selling the site for millions of pounds more than speculators had suggested.”
An odd thing to say, since the sale price that Perry’s council announced is comfortably below what most in the property trade suggested ought to be achieved.
And “Congo” Chris Philp, in a battle to retain his parliamentary seat in Croydon South, seized upon this opportunity to score some political points against his Labour rivals, too.
According to millionaire Philp, who dabbles in a bit of off-shore property speculation himself, Regen Capital “focus on providing affordable housing”. Which is only true if you regard £2,400 per month as “affordable” – the rents being charged through a Redhill-based firm of estate agent.
Sky-high rents: how a Reigate-based estate agent is marketing the Brick by Brick flats in Coulsdon. According to millionaire ‘Congo’ Chris Philp, these are ‘affordable’
“A lot of work has gone on to get the best price for the flats and undo the mess that Labour created with this complicated scheme,” Philp said, overlooking the even more complicated scheme that his Conservative chums have now agreed.
But here’s what they are not telling you.
Richard Howard is a chartered financial analyst. He also happens to be one of Philp’s political rivals in the General Election, as the Liberal Democrat candidate in Croydon South.
Money-spinners: someone’s making a load of dosh out the the BxB flats. Just not the people of Croydon
He told Inside Croydon that he is shocked by the financial games being played over this deal, and sees it as adding to the council’s long-term financial problems. “It stinks,” he said.
Howard, like most Croydon residents, has been refused full access to the details of the Red Clover Gardens deal. But he has been able to back out vital figures using the information that the council provided in their public report last July (the May 28 report is referred to as an “update” of that original set of business proposals).
“The top and bottom of this is that this is simply a refinancing exercise – and a really terrible refinancing exercise at that,” Howard told Inside Croydon.
“It’s actually a loan for £22.8million from a private company, to buy back the thing we just sold them, locked in for 50 years, with no break clause, at an interest rate of 7.91%.
“Basically, they sold five blocks for £38million then effectively bought three of them back for £22.8million.
“Given that the fixed, 50-year Public Works Loans Board rate is currently 5.60%, that is a terrible deal.”
Howard explains that a finance lease is the same as borrowing money to buy the asset, and then paying back the loan with interest. If they treat the headlease as a finance lease (which they should, due to the bargain acquisition clause), then they will have to capitalise the lease payments on their balance sheet.
“They might try and treat it as an operating lease, which would mean they wouldn’t have to show this as effectively a loan from Regen,” Howard said.
“However, they tried this before and that didn’t get past the auditors – the £73million mis-accounted with respect to Croydon Affordable Homes. Surely, they won’t try and pull this stunt again?”
‘It stinks’: Richard Howard, a chartered financial analyst as well as parliamentary candidate, distrusts the financial games being played by the Tories
Howard thinks Croydon’s Tories are deliberately cooking the books, to try to make them look a lot better come 2026, when the next local elections are due to be held.
According to the council paperwork, Regen are offering an initial two-year rent-free period. “The net costs are kicked down the road into the long-term,” Howard said.
Depending on the accounting treatment, the council can move the lease liabilities off balance sheet, making the council’s overall financial position look better in the short term.
And there are other, more dubious “up-sides”, too.
The tenants won’t officially be council tenants. “So that’s a Conservative-led council eliminating the tenants’ ‘Right to Buy’. Funny how Perry and Philp haven’t mentioned that little move.”
Perry’s council plans to offset its costs by hiking the rents by around 10% in the future.
“They even declare that they plan to ‘carefully select’ the tenants who will be able to afford these increases,” Howard said.
“Overall, this is a deal which will make the council’s financial position worse in the long run, but more favourable before the next election in 2026. They are paying a lease at higher, inner London rates and receiving rents at the lower, outer London rates.
“The ‘carefully selected’ tenants who will be rinsed for higher rents while having their rights to buy the properties removed,” Howard said.
Read more: Brick by Brick’s final flats put up for rent at £2,400 per month
Read more: BxB’s collapse was predictable. Why did no one else notice?
Read more: Building towards the council’s financial ruin, Brick by Brick
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ROTTEN BOROUGH AWARDS: In January 2024, Croydon was named among the country’s rottenest boroughs for a SEVENTH successive year in the annual round-up of civic cock-ups in Private Eye magazine
Perry’s either a fool or a crook
Or both.
Regen Capital are based in that well known agglomeration of high finance Grays, Essex. Perhaps a better known resident of the town is Thurrock Council. The now bankrupt council that borrowed a billion pound of public debt to invest in the ownership of Solar Energy Sites, but found to their surprise that they had no legal ownership or claim to the Companies and Assets that they assumed they had title to.
I am not at all stating the same sort of scam is happening again with politicians of the competence of Perry & Cummings to protect the public interest. Just that this stinks to high heaven. Desperation is more important than good public finance practice when Tories hive of assets to their pals in order to make a killing and make a short term gain at the long term expense of the people they are supposedly representing.
“Croydon Council has refused to answer our questions.” Did the Communications Executive simply not respond, or ignoire tghe question? Will no one put their head above the parapet? Can we get a response under FOI? There MUST be more to this …
Even the part where 157 finished flats were sitting empty for two years, I’m struggling to wrap my head around that part. Is there a reason why they weren’t being rented out? I don’t know what the average rent is, but say it’s £2000 then they lost out on £7.5m of rental income. If they didn’t sell they would have effectively been able to get back the sale price within a decade through rental income alone and keep what were public assets, in public hands. I’m struggling to understand the logic and mentality behind this other than they seem to hate the public having assets and are determined to sell everything there is for cheap to another dubious company and have found another creative way to riddle Croydon with even more long term debt.
Lion Green was originally given to the people of Coulsdon ,until the Council nicked the land and gave it Brick by Brick. We all loose out in this fiasco.