The Chronicle understands the council is close to completing a deal with a Housing Association to take over 23 affordable homes which have sat empty for a year.
The council’s controversial developer Brick by Brick had been sitting on £7 million worth of one and two bedroom flats in the Flora Court development in Chipstead Road which were ready for sale in December 2019.
The Chronicle had been asking ING Media, a leading PR agency who the council had been paying to represent Brick by Brick – despite having its own communications department – for an explanation since July about the empty homes but none was forthcoming.
The Brick by Brick web site had said sales for these shared ownership homes worth more than £315,000 each boasting ‘private balconies with striking interiors’ were “currently on hold”.
Croydon’s chief financial officer Lisa Taylor citied one of the reasons which had prompted the issuing of the Section 114 notice, the equivalent of going bankrupt, was because of the “greater risk than previously anticipated” around Brick by Brick, “being able to make interest and dividend payments due to the council this year and for previous years” which added up to £36million.
The establishment of BxB was first set out in cabinet papers in 2016 and the plan was to maximise the use of the council’s assets to deliver new homes through a commercial model.
A number of key sites were identified for development but delays in bringing new homes to the market put the council in serious financial risk. Brick by Brick was originally loaned £250 million by the council but to pay this the council had to borrow money itself.
It is now with some irony that in September 28, just weeks before the council’s financial mess was exposed The Chronicle received an email from ING Media hailing ‘a really great year for’ Brick by Brick …”proving our innovative model works at a challenging time for public sector finances.”
It said it had completed 283 homes and was on course to post a profit for financial year 19/20, ‘defying the wider residential slowdown’ brought about by Brexit and the Covid-19 crisis.” It reported generating £23m in revenues in the financial year 19/20, and said it expected to announce a pre-tax profit of c£250k in audited accounts.
However, despite this upbeat piece of spin, Brick by Brick owed interest payments of £9.5million. These are still outstanding and its accounts which should have been released in August still haven’t been finalised.
When Cllr Stuart King, Deputy Leader and Cabinet Member for Croydon Renewal, was asked if the funds would be repaid by Brick by Brick he said the council ‘won’t be writing it off’. Adding that the council would minimise funding to Brick by Brick but would have to spend a ‘little more’ to protect a far greater sum.
An independent review of the council’s property investments was highly critical of Brick by Brick recommending the removal of its two directors Colm Lacey thought to be on a salary of at least £150,000 and Martyn Evans.
It identified that BxB’s governance structure and practices required ‘significant improvement’. In particular, it identified a need for greater financial stewardship.
Just before Christmas 2019, three residents on the council housing waiting list were the first to move in to brand new Flora Court and Bensham Manor ward councillor Alison Butler the former cabinet lead for housing, (pictured above) handed over the keys to the first occupant and said: “Ensuring people have affordable homes to live in is a top priority for the council. These new council homes are spacious, top-quality places to live and they underline why we set up Brick By Brick in the first place.”