Council invested £95million in own housing developer

The company’s non-executive directors make at least £100,000 a year
By Local Democracy Reporter Josh Mellor

The council insists it will not go bankrupt even if the company fails (stock image: Pixabay)
The council insists it will not go bankrupt even if the company fails (stock image: Pixabay)

Waltham Forest Council has invested £95million into the property developer it created but insists it is too “risk averse” to be bankrupted if the company fails.

Council-owned developer Sixty Bricks was set up in 2017 to “improve the supply of affordable new homes” and aims to build 800 by 2026.

Its directors, which include the former chief of Berkeley Homes, are each paid £100,000-120,000 a year, plus a £10,000 annual bonus.

However, despite the council’s enormous investment, councillors were told yesterday there is no risk of falling victim to the mistake that bankrupted Croydon Council. 

Read more: Council housing developer warned it could be losing sight of mission

At yesterday’s budget and performance scrutiny committee, strategic finance advisor Rob Manning explained the council was too “risk averse” to rely on profits from council-owned companies to prop up its budget.

He said: “As you may have seen in rencent times some other boroughs, like Croydon Council,  built the profits into their budgets.

“We havent built in any of this profit into our budgets, so if Sixty Bricks makes £20m profit, that would just go straight into our reserves.

“If any of thse busineses were to fail, the profit element wouldn’t be an impact onto our bottom line”.

Read more: Sixty Bricks slammed by architects for ‘cost over quality’ brief

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Last November Croydon Council declared itself bankrupt, partly due to its Sixty Bricks equivalent – Brick by Brick – failing to repay part of the £260million loaned from Croydon.

Rob added that every property development Sixty Bricks undertakes has to be approved separately at public cabinet and council meetings, unlike Croydon which lent its company money “en masse”.

Sixty Bricks recently completed its first ever development – a block of 34 flats in Highams Park called Centenary House.

Other projects already underway include 120 council homes being built in Hylands Road, Walthamstow, and 31 flats in Samson Road, Leytonstone, which is the next project due to complete in March next year.

An artists impression of plans for Hylands Estate (credit: Sixty Bricks)

Another private company owned by the council is Waltham Forest Services, which provides services such as grounds work, pest control, CCTV operations and a handyman service and made a £447,000 profit last year.

The council also makes money renting out its commercial properties across the borough, which include units at co-working space The Tramworks in Walthamstow and commercial units in the EMD theatre.

Manning said the aim of the council’s Investment Property Fund is to “invest in the borough for residents”.

Giving an example, Manning said a council-owned unit at Coronation Square, Leyton, will be rented to an NHS GP surgery at a discounted rate once complete.

The council agreed to buy all commercial space being built in Coronation Square, alongside agreeing a sizable discount, after developer Taylor Wimpey warned “unforeseen costs” threatened to “significantly” delay work.

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