You are viewing 1 of your 1 free articles
Croydon set to reject offer for beleaguered housing company
Croydon Council plans to reject an offer to buy its housing company and instead intends to wind down the business after building out a number of sites.
A report that will be reviewed by Croydon’s scrutiny and overview committee next week recommends the council reject an offer from Urban Splash, the regeneration specialist, to buy Brick by Brick.
Instead, the report recommends that Brick by Brick builds out 23 of the 29 sites in its ownership and returns the remaining six sites back to the council for sale.
It was reported in May that Croydon had received an offer from Urban Splash to buy Brick by Brick. This came after issues with the housing company came to light last year. Croydon had announced it was freezing all non-essential spending after declaring a £66m budget deficit.
Croydon employed Savills and PwC, the consultancies, to review the bid offer. The former concluded the offer was “not unreasonable” and the latter concluding there was “no evidence that the financial standing of the bidder should rule them out as a suitable acquirer” of Brick by Brick.
READ MORE
However, the council is proposing to reject the bid and instead build out 23 of the sites it owns, with councillors set to take the final decision.
While the council said this option comes with a higher degree of risk, it said it is also likely to cost the council less in terms of the portion of outstanding loans to Brick by Brick that it would need to write off.
According to the report, the council would only have to write off between £26.6m and £52.7m as a result of the build-out option, compared with between £54m and £68.4m if it sells the business.
Of the 23 sites that Brick by Brick plans to build out, 21 are expected to be completed by the end of this calendar year.
The council also said Brick by Brick will need additional support to build out the sites, as it is likely to lose staff.
Following discussions with Homes England, the council said it has already interviewed two companies that have agreed to provide this support.
Hamida Ali, leader of Croydon Council, said: “Our priority over the future of Brick By Brick has always been to find a solution that both secures the best possible return for the council’s investment on behalf of our taxpayers and provides much-needed genuinely affordable homes for local people.
“We have thoroughly explored our options to find a way forward on Brick By Brick that represents the best possible value for our taxpayers, and I want to thank all our expert external advisers for their important contributions on this.
“Now our focus is to make sure that the Brick By Brick homes under construction are completed, with all the support and guidance it needs to do that.”
Sign up for our Council Focus newsletter
Already have an account? Click here to manage your newsletters
