Thursday, 28 August 2014

L & Q set up in-house construction business

London & Quadrant has set up its own in-house construction business.

The 66,000-home association has set up Quadrant Construction as a wholly-owned subsidiary to deliver part of its 10,000 unit pipeline.

The landlord says it hopes to build QC into a £40 million turnover business. It is funded by a £50 million loan from L & Q.

Work on its first project, a 146-home scheme in Lewisham, began yesterday. Jerome Geoghegan, director of development at L & Q, said: ‘Working with external contractors can be risky in a post-recession climate, with the ever-present possibility of contractor failure.

‘At the same time, in boom times investing in a subsidiary business can help ensure we can generate adequate surpluses to reinvest in future developments.

‘While we will continue to work with other developers to build and increase our portfolio, by launching Quadrant Construction we believe we are better spreading our risk, as well as maintaining a diverse business offering and varied profit streams.’

Diversification was crucial to business success in a fluctuating market, Mr Geoghegan, and this would ultimately put L & Q in a better position to continue providing new homes and providing services in communities.

‘In today’s market, more than ever, it is vital for housing providers to ensure delivery certainty so we can continue to build the thousands of affordable homes urgently needed across London and the South East,’ he added.

Readers' comments (9)

  • Only One

    I'm awaiting an L&Q tenant having a go for the RSL investing so much money in a building company when it could have mended my loo......

    But considering the amount RSL's spend on contracting out the development side it could save money, and even provide a cross subsidy in these times of belt tightening. Keep the profit, sorry surplus, in the sector.

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  • Sexton

    As I mentioned previously in my comments, housing associations are profit making organisations. although the terminology has been changed to surplus.

    This move is an speculative approach, using the rent payers money, at the same time squeezing repair and maintenance and the investment budget to a bare minimum.

    As the central government grant funding has been the basis for building such significant stock; it is the time that government impose a levy in order to have an appropriate return for the tax payers money injected in a mini quango, regulated by the bigger, ineffective quangos such as TSA or HCA. IT IS TIME TO CHANGE

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  • Sidney Webb

    There is huge sense to having an in-house team, which is why the past 30-years of forcing public services into the private sector was so wrong, and remains so.

    In RSL land though there is a danger in the sort of arrangement L&Q are making. There was a historical situation where the executive board of a south of England RSL was also the executive board of the contracting firm. The executive board of the firm made extensive profits through the contracts agreed with their RSL alternative selves. Whilst no laws were broken the arrangement was removed to ensure that the tenants received value for money and the executives did not profit via questionable arrangements.

    Mechanisms need to be in place to ensure that the services offered remain value for money, and that L&Q's status to not make a profit is not undermined through the owned company profiting out of the arrangement at tenants expense.

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  • Sexton

    PSR
    This mechanism means a new sets of rules and frameworks. On the top of the list is unelected board of management.

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  • Only One

    Sexton - you cynicism is to be expected on such a forum. Surplus retained in the organisation, not shareholder dividend, management employed, board voluntary. Profit, shared between shareholders, who are usually execs of the organisation. Now we've cleared that up here's the science!

    As a wholly owned subsidiary all the 'profit' will be gift aided to the parent group, therefore giving subsidy into the organisation, therefore reducing the reliance on grant ("what grant?" I hear you all ask!!). However, the benefits you enjoy in having 'social' rent levels (as they are now know) are as a result of the Govt grant you talk about, and any surplus on the development cost straight into the pockets of the PRIVATE construction companies. So your choice is either to retain any surplus within the organisation, as part of it's charitable objectives, to provide further housing such as the one you have the benefit of living in, or give it to Jon Smith Builders Ltd to fund his nice shiny BMW. Or give it to Connaught, or Rok to spend on whatever, and leave thousands out of work, and countless other companies unpaid for work completed or underway.

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  • Norman Blunt

    What's this? An L&Q story without a comment from Kass? How can this be?

    The least I would expect is another juvenile rant from her, and come to that from Junior as well, to go alongside the ignorant and ill-informed nonsense above from Sexton.

    Most disappointed!

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  • Sexton

    ONLY ONE

    I think you have selrcted a correct nick name. I am sorry to say that normally the truth is bitter. and this bitter taste does not suit all.

    In the market economy one must be fully aware of the role of tax payers

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  • Norman Blunt

    Ok that's enough from you now, Sexton. Back to school!

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  • Norman Blunt | 18/01/2011 6:49 pm

    What is exactly your issue with me, as it is a few times you have been insulting me without any provocation from me?

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