Sixty Bricks shelved by Waltham Forest Council

A council-owned housebuilding business for Waltham Forest is to be shelved amid “challenging economic conditions”.

Waltham Forest Council has built 299 homes, including 188 council homes, through its company Sixty Bricks.

However, a report published this week says the council will make the company “dormant” due to financial uncertainties.

It says that since the company completed its first 299 homes – at a profit of £3million – property development has “changed significantly” with increased building costs, slow growth in sales and borrowing becoming more expensive.

The funds available to the council have also become “more constrained,” the report added.

This week, the council’s corporate director of financial services Ursula Gamble suggested the financial loss would not be a “significant hit” but admitted she could not give a “definite answer”.

Conservative John Moss commented: “Are we going to get our money back?”

Sixty Bricks had been poised to build up to 226 homes in its second phase of building work, using loans of up to £130m from the council.

This included 100 new homes at Church Lane Car Park in Leytonstone, 40 flats at Chingford Library and Assembly Hall, 23 flats in a vacant nursery in Vicarage Road, Leyton, and to continue building at Hylands Road in Walthamstow.

Cracks in the company’s plans began to appear last year when the council spent £5.4million buying 13 unsold one-bed flats in a Sixty Bricks development known as the Jazz Yard in Brunner Road, Walthamstow.

External consultancy 31Ten reviewed the company’s plans in Autumn last year and found that its future “pipeline” of properties was not financially “viable”.

A summary of the options estimates a saving of £2.1m per year on the company’s operating costs, which include about 16 staff.

There will also be “reputational implications” with making the company dormant that “would need to be managed” – particularly projects which have already used funding from Greater London Authority, which is run by the Mayor of London.

Making the company dormant may mean costly severance payments to senior staff such as Sixty Bricks chief executive officer Emma Osmundsen, who said she wanted to build the “best council homes in the world” after joining in December 2022.

Only one of the company’s proposed projects is likely to go ahead – an “infill” of 83 flats in Walthamstow’s Priory Court council estate – although this will be handed to an in-house team at the council.

A “specialist financial and legal advisory service” will now manage the move at a cost of £150,000.

Sixty Bricks only built on land the council already owned and was partly funded using loans from the council at an interest rate of 6.5-8% per year.

In turn, the council financed those loans at a profit by taking out government-backed loans at low rates available to local authorities.

When Sixty Bricks was set up in 2016 under former leader Chris Robbins to develop land in the borough.

At one point the council said it hoped the company would deliver a huge 5,000 new homes by 2037, about one fifth of the council’s controversial target of seeing at least 27,000 new homes in the borough by the same year.

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Josh Mellor

Local Democracy Reporter