Why was Brick By Brick set up?
Croydon council set up Brick By Brick in order to ensure people in Croydon have access to high quality housing. Croydon has over 5,000 families on the housing waiting list, and many more would like to be registered, so there is a real need for new homes, especially at social rent.
Brick By Brick is an innovative way of ensuring that housing supply meets housing need. For many years councils had stopped building new homes, and hardly any new council homes. Instead, private developers were required to provide a proportion of affordable housing within their private schemes. However, there was little control over how many affordable homes were provided, and councils would not benefit from the profit generated.
With the Brick By Brick model, any development profits are returned to the council as shareholder and recycled to fund council activities. By establishing an independent development company, the council can keep the full value of development growth within the borough – whether it be in the form of additional affordable housing, physical improvements in the local centres or a dividend return the council to fund council services.
Who owns and runs Brick By Brick?
Brick By Brick is owned by Croydon Council, the sole shareholder.
Corporate decisions are made by a Board comprised of two Directors nominated by Croydon Council.
Brick By Brick is an independent business, and does not form a part of Croydon Council. The financial operations of Brick By Brick are decided by our Board and detailed in our business plan. Croydon Council is entirely separate, and has its own processes and procedures for deciding on its finances.
Wind down plans for Brick By Brick
In July 2021, and in the context of significant wider financial challenges, Brick By Brick’s shareholder Croydon Council opted to wind the company down once the sites currently under construction are completed. This is anticipated to be in summer 2023.
Brick By Brick will continue to operate until then, and a reduced team will oversee the completion and sale of all of our active schemes, to the same high standards we have always achieved, before closing the business.
How does Brick By Brick work financially?
We build and sell new homes, of a variety of tenures, and this activity creates a profit. Any profit realised by the development process creates a dividend which is returned to the council (as sole shareholder). This means 100% of the profit made by the company is returned to the Council and is available to fund the delivery of frontline services.
Development requires an initial investment of capital, which is typically provided by funding. The council has provided some funding to Brick By Brick, initially lending against individual schemes. We needed to demonstrate a financially viable business case for the scheme, similar to what we would provide a bank if they were lending to us. Brick By Brick pays market rates of interest on these loans, and all lending is secured against the land.
The interest we pay on borrowing provides an additional revenue source to the Council which can also be used to fund frontline services. Loans are repaid to the Council (along with all accrued interest) once individual developments are completed and the homes are sold.
We often purchase land from the Council, again at market value. This creates a capital receipt for the Council. Even though the Council already gets 100% of the profit generated by the company, the land purchases also include an overage arrangement which means that any increase in the value of the land is added to the land value and paid to the Council upon the completion of the scheme.
Since Croydon Council’s financial recent difficulties which were revealed in 2020, and the Covid-19 crisis, the council and BBB have updated all extant loan arrangements into a single consolidated agreement which formalises all funding terms and the timing of any repayments.
How do we find land to develop on?
Our main source of land is currently Croydon Council. Potential sites that are owned by the Council that fit a defined set of criteria are identified, and we then conduct viability assessments to gauge whether the land is suitable for us to deliver housing, including the appropriate financial return, and the right balance of homes.
We purchase land from the Council at market value, and include an overage arrangement (see above).
How does the planning process work?
The planning system is informed by planning policy, some Acts of Parliament and some Statutory Instruments and is administered by the Local Planning Authority at Croydon Council. Brick By Brick has to follow all the same policies, legislation and processes as any other developer.
All developers have the option to seek ‘pre-application advice’ which is a paid service from the Local Planning Authority that could include site visits and meetings with the planning team. Brick By Brick pays for pre-app advice on all its developments through Planning Performance Agreements.
Community engagement is also an important influence on the designs and proposals, and we go beyond the statutory requirements, giving local residents and stakeholders even more opportunity to comment and input than normal.
Once applications are submitted for approval, planning proposals are posted on the Council’s website so that anyone can review them and make comments.
Planning applications are either determined by delegated authority or by the planning committee, which comprises local councillors, and is an open meeting for residents to attend (or is streamed live online).
Historic suggestions of planning bias relating to BBB projects by residents have been considered in detail by both the High Court (following a judicial review of a BBB project at Avenue Road), and by the independent Planning Ombudsman (following a complaint relating to the Montpelier Road development). Both found in favour of the council, with no issues of concern.
How do you go about building the homes?
On receiving planning consent on a scheme, we award a building contract to the winning bidder from our approved contractor list. The construction process begins, overseen by our Development team, including an independent Clerk of Works who checks work on site. Once a contractor starts work on a scheme, they also take responsibility for keeping the local community updated on site progress, and any construction activity that might affect them such as pavement or road closures, delays and so on.
How do you protect the planet and wildlife when you build?
The climate crisis is a primary concern for our business, and we aim to contribute to carbon reduction targets in the local Croydon plan. The built environment offers lots of opportunities to help protect the planet and wildlife, and we have signed-up to the One Planet Living framework to ensure that we respond to them all.
See more information about our commitments to People and Planet.
How many homes have you built?
To date (May 2021) BBB has completed construction of 333 homes across 15 sites previously owned by the council. BBB also currently has another 548 homes under construction.
With regard to sales, BBB sales has now sold or reserved a total of 311 homes. Of these, to date 125 of the sales have now completed – of those sales completions 73 have been sold to private buyers and 52 to the council for the provision of council housing.
On completion of the additional reservations, BBB will have generated approximately £100m of revenue from the sale of private and affordable homes. Sales revenue is used to fund development activity and repay development finance and interest costs to the council.
What is our target for affordable homes?
Our target is for 50% affordable homes across our portfolio. This does not mean every development will have 50% affordable homes within it, some developments may be entirely affordable, some entirely for private sale and others a mix of both.
What do we mean when we refer to ‘affordable homes’?
We refer to the GLA’s Affordable Homes Programme 2016-21 which defines the three types of affordable housing as:
- London Affordable Rent – for people on the housing waiting list on low incomes
- London Living Rent – helping Londoners on average incomes save for a deposit to buy their first home
- London Shared Ownership – for people who want to buy but can’t afford the open market.
We currently provide Affordable Rent or Shared Ownership homes. Our Affordable Rent homes are often sold back to the council who allocate them at a range of affordable rents on the basis of need. Our Shared Ownership homes are sold by us.
We also provide homes for private sale and the Help to Buy scheme, so not all of our housing falls under the Affordable Rent or Shared Ownership designation. However, all the profit we create from private and Help to Buy sales goes back to Croydon Council to fund frontline services.
How do we engage with the local community?
We are committed to consultation with the local community. Our Resident Engagement Team (sometimes working with external consultants) undertake a lot of consultation during the design and pre-planning stage, and also during planning and construction. This takes a variety of forms, from one-to-one meetings or telephone calls, to public events (in person or online) to digital correspondence. This enables us to have a very open conversation about development locally, and amend the designs where necessary to address local issues. We often use Commonplace, an online forum where residents can view and comment on plans, as well as consultations and presentations face-to-face in a local area.
During construction, local residents receive regular newsletters giving details of progress on site and upcoming works, along with details of who to contact in the event of any concerns. Notices will also be clearly displayed on site noticeboards.
In addition, for larger developments, residents and key stakeholders within the catchment area will be invited to attend regular meetings or drop-in sessions with us and the building contractor appointed to carry out the construction works on our behalf.
What about the Fairfields Halls project
We worked with MICA architects and Croydon Council to complete the spectacular transformation of Fairfield Halls, which re-opened in September 2019. For tickets or information about upcoming performances please visit www.fairfield.co.uk. For FAQ’s about the Fairfield Halls project please click here.