Brick by Brick’s empty Thornton Heath flagship affordable homes development Flora Court is among a portfolio of properties purchased by an investment company in a deal worth £29million.
Residential Secure Income PLC said it had acquired 85 new build homes from Croydon council’s house building development company Brick by Brick.
The one, two and three-bedroom apartments in new developments in Upper Norwood, Thornton Heath and South Croydon will be offered to market as shared ownership homes.
ReSI (Residential Secure Income), a subsidiary of TradeRisks Limited a fund manager which is part of the asset management company Gresham House Group, is a registered provider of social housing and is part financed by a government grant.
In November the council’s financial situation became untenable prompting the section 114, the equivalent of bankruptcy, in part due to the non payment of £36million by Brick by Brick owed in dividends and interest payments on a £250million loan.
The acquisitions will be completed in a staggered manner to align with when purchasers are ready to occupy the properties. According to ReSI’s web site, this is expected to happen rapidly, as 90 per cent of Brick By Brick’s available homes for sale are already reserved.
As far as The Chronicle could find out the 23 empty one and two bedroom ‘affordable homes’ in the Flora Court development on Chipstead Road haven’t been marketed. They have been vacant since being finished at the beginning of 2020 after it emerged lenders would not provide mortgages under shared ownership schemes on its properties because the company was not a ‘registered provider’.
The Brick by Brick web site says sales for these shared ownership homes worth more than £315,000 each which boast ‘private balconies with striking interiors’ were “currently on hold”.
Ben Fry, investment manager of Residential Secure Income PLC which invests in affordable shared ownership, retirement and local authority housing, said: “We are delighted to help Brick By Brick increase its delivery of affordable homes, while generating a return for the London Borough of Croydon. We see this as the start of a long-term partnership with Brick By Brick to facilitate its delivery of much needed affordable homes.”
The transaction will allow troubled Brick By Brick to accelerate the delivery of more affordable homes and the sale proceeds returned to the council to be spent as originally intended on frontline services.
An independent review of the council’s property investments was highly critical of its controversial house building company Brick by Brick citing that the governance structure and practices required ‘significant improvement’. In particular, it identified a need for greater financial stewardship.
Colm Lacey, who auditors recommended stood down as director of Brick By Brick remains in the position of Chief Executive. He said: “Brick By Brick’s partnership with ReSI will help us to realise the delivery of high-quality and affordable housing in Croydon and accelerate the returns we provide to our shareholder Croydon Council. ReSI’s approach means we are transacting with a registered provider of social housing that delivers best-in-class shared ownership and provides long-term housing security for Croydon’s residents.”
Shared ownership allows a purchaser to buy a property with a lower deposit requirement and lower annual costs, making the apartments more affordable and allowing local individuals and families to get onto the housing ladder.
The homes will follow ReSI’s best practice approach, as set out in its shared ownership customer and environmental charters and will be available starting at 25 per cent shared owner stakes on 250-year shared ownership leases.
ReSI describes itself as a closed-ended investment company with the objective of delivering secure income returns by investing in shared ownership and rental portfolios of homes. The deal brings the total number of homes it has acquired to 281.