A report going to Brent Council's Wellbeing and Scrutiny Committee next week LINK reveals that blocks built in 2009 on the South Kilburn Estate by Higgins suffer from water penetration and cladding, fire safety and window issues. The blocks are known together as Granville New Homes.
The problems are so bad that demolition was one of the options considered. Brent Housing Partnership purchased the properties for £17.1m and the estimated cost of remediation works is £18.5m.
The report summarises the issues:
First Wave Housing (FWH) is one of the Council’s wholly owned housing companies. It is a registered provider with 326 properties. Of FWH’s 326 properties, 110 are located at Granville New Homes. These 110 properties comprise of 84 social rented properties, 25 intermediate rented properties, and one leaseholder.Granville New Homes is a residential development that completed in 2009. It was developed by the Council and Higgins. The Council’s Arms Length Management Organisation, Brent Housing Partnership (BHP), purchased the properties at a cost of £17.1m. This figure met the Council’s development costs and was funded via a loan from the Council. BHP also received 45 one bedroom market rented properties in order to cross subsidise the acquisition, as on its own, the purchase of Granville New Homes would not have been viable for BHP. Since 2009, the properties have been managed as part of BHP/now FWH’s portfolio.FWH commissioned a report from Ridge Consultants to investigate water penetration, cladding, fire safety and window issues at FWH’s Granville, Princess, and Canterbury blocks (otherwise known as Granville New Homes). Ridge have recommended that works be carried out at the blocks to remediate these issues. It is estimated that the cost of works will be £18.5m.
A report going to Cabinet on October 11th after Scrutiny has considered the issue set out the options that were rejected:
The Ridge report stated that the issues identified are not easily repairable in a way which will offer a guaranteed and satisfactory solution. On this basis, the only available option is to replace the facades, roof coverings and balcony waterproofing systems. These works include:
· Removing and replacing all cladding (both cementitious and brick effect panel) with non-combustible A1 or A2 fire rated materials;
· Stripping external façades and removing all external doors and windows;
· Providing new external doors and windows within a new panelised cladding system;
· Replacing insulation; and
· Stripping roofs and providing new roof coverings. 3.9 Including consultancy services, the waking-watch, the fire alarm system and contingency allowances, the estimated total cost of remediation works is circa £18.5m (including VAT). This figure includes £2m of contingency costs. If the remediation is carried out as outlined, the estimated completion date is September 2023. At present these costs are not affordable for FWH. It should be noted that the £18.5m is an estimated value from Ridge; until works are tendered and completed the actual cost will not be known.
The Cabinet Report suggests the following complex option to resolve the issue:
5.1 The recommended option is for FWH to dispose of the blocks to the Housing Revenue Account (HRA) and for the HRA to carry out remediation works as recommended in the Ridge report. There are nuances to this option in regards to how the transaction would be structured. These are detailed in section 6.
However, broadly, under this option:
· The transfer occurs at zero value as the blocks’ asset valuation of £12.5m is offset by the £15.4m of works required to the asset (the figure excludes VAT as this is reclaimable by the Council). The HRA as part of the Council will come
within the scope of public law principles. Therefore, it cannot act unlawfully or irrationally. Therefore, the HRA cannot pay a sum for the blocks.
· The HRA carries out the remediation works.
· The 84 social rented tenants would become secure Council tenants.
· The 25 intermediate rented tenants would be transferred to i4B under the recommended option; the HRA will recharge i4B for its proportion of the works.
· FWH’s loan for the blocks would be refinanced to a more affordable rate.
· As the transfer will formally be valued at zero value by the valuer no capital gains or SDLT costs are anticipated. As the transaction is a commercial transaction to support the ability of FWH to trade as a going concern, any tax
implications to the transfer are incidental and would be in accordance with General Anti avoidance Rules operated by HMRC. Tax advice from the Council’s tax advisors have confirmed this position.
5.2 The following assumptions have also been made:
· It is assumed the housing management function will be managed within existing staffing resources. There will be a reallocation of resource time and cost from FWH to the HRA to reflect the work associated with the transferred units.
· Rent inflation at 1.5% in line with CPI+1 and cost inflation at 2% per annum in line with Bank of England target rates.
· The cost assumptions in this report do not include estimates for decarbonisation works, as this is a known budget limitation across the sector.
· Further major works at £2,000 per property assumed from year 8 of the HRA Business Plan.
5.3 This option balances the cost between FWH, i4B, the Council’s General Fund and the HRA. It also offers the minimum disruption to residents in the blocks by offering the most rapid solution to addressing the remediation works required.
Furthermore, it is acknowledged that this is a reasonable way to achieve appropriate levels of different types of housing tenure in the borough.
Higgins and Brent Council celebrating the start of the current Stonebridge scheme in December 2020 (first published on Brent Council & Higgins' websites)
The elephant in the room is of course Brent Council's partner in the development Higgins and what their responsibility is regarding these very expensive defects. Higgins, who appear to go under various names - Higgins Partnership, Higgins Homes, Higgins Group, seem to be a favoured partner of the Council with a £22m contract for 73 council homes in Stonebridge signed last August and another South Kilburn development at Chippenham Gardens.
I am sure councillors on the Scrutiny Committee will be keen to find out more about the partnership and its future.
UPDATE - Comment from Wembley Matters contributor Philip Grant
First Wave Housing Ltd is the same company as Brent Housing Partnership
Ltd - there was simply a change of name in 2017. It's details on the
Companies House Beta website (Company No. 04533752) make for interesting
reading.
The Chairman of the company appears to be Martin Smith
(other details unknown), and other directors are Akintoye Durowoju (who
appears to be a Chartered Surveyor and Brent Council employee), two
senior Brent Officers, Phil Porter and Gail Tolley (although there is
conflicting evidence about whether one or both have resigned or are
still in post), and Councillor Saqib Butt (appointed in November 2020,
after the previous councillor directors George Crane - to September 2020
- and James Denselow - Sept. to November 2020 - had both resigned).
The
most recent accounts submitted are for the year to 31 March 2020. These
include a £1.1m increase in the value of its properties, based on
valuations by Jones Lang LaSalle. It will be interesting to see what
their valuation is at 31 March 2021!
The balance sheet shows net
assets of around £26.7m, but this includes a revaluation reserve of
£15.5m. The cash flow (profit or loss) for the year showed a deficit of
£264k.
There were loans of £36.8m from Brent Council, and the
accounts were prepared on a going concern basis, as 'The Council has
confirmed, in writing, of its intention for FWH to remain as a going
concern for at least twelve months from the date of approval of the
annual report and financial statements.' The financial statements were
approved on 29 September 2020!
With the loss of rental income
when a third of its properties are passed to Brent Council (and i4B),
and the value of its Granville New Homes properties written down to NIL,
but still with interest to pay on the loan from the Council to purchase those homes in 2009, there must be
some doubt over whether First Wave Housing Ltd can continue as a going
concern.
First Wave Housing Ltd outstanding £17.8m loan on Granville New Homes from the Companies House Charges Register
15 comments:
Unfortunately, this shows yet again what many of us have been saying for a long time - and Brent Council vehemently denies - that much of the new building in South Kilburn is sub-standard. The Council has known for some time that there is a problem with Granville New Homes, but this is only now becoming public.
Higgins is also the partner with Islington Council to build on the green spaces of Highbury Corner Dixon Clark Court 🤦♀️
Pete Firmin says that these problems have been known about for a long time, and I'm sure that many of those living in these new (built in 2009!) homes at Granville, Princess and Canterbury in South Kilburn will be able to back him up on that.
Which raises the question, what about the builder's liability for this shoddy workmanship, or the architect's liability for poor design?
Yes, the Council must ensure that these homes it had built are put back into a "good state of repair" for its tenants as quickly as possible.
But it should also be looking to recoup a big part of the cost from those responsible for these blocks being in a poor state, rather than the whole cost falling on the Council (that is, through either direct funding or interest on loans, Council Taxpayers and Council tenants).
A reader writes:
iB4 Holdings Ltd. is also wholly owned by Brent Council and its Directors are the same 3 at First Wave Housing.
And the irony is Brent closed down BHP saying that ALMOs cannot work in Brent but both of these companies are just that ALMOs.
The council identified their biggest risk being " If we find that some of our First Wave Housing units were poorly constructed and that the costs of repairing them might result in the company not being able to afford to repair them, which would put our business plan at risk".
First Wave Housing Ltd is the same company as Brent Housing Partnership Ltd - there was simply a change of name in 2017. It's details on the Companies House Beta website (Company No. 04533752) make for interesting reading.
The Chairman of the company appears to be Martin Smith (other details unknown), and other directors are Akintoye Durowoju (who appears to be a Chartered Surveyor and Brent Council employee), two senior Brent Officers, Phil Porter and Gail Tolley (although there is conflicting evidence about whether one or both have resigned or are still in post), and Councillor Saqib Butt (appointed in November 2020, after the previous councillor directors George Crane - to September 2020 - and James Denselow - Sept. to November 2020 - had both resigned).
The most recent accounts submitted are for the year to 31 March 2020. These include a £1.1m increase in the value of its properties, based on valuations by Jones Lang LaSalle. It will be interesting to see what their valuation is at 31 March 2021!
The balance sheet shows net assets of around £26.7m, but this includes a revaluation reserve of £15.5m. The cash flow (profit or loss) for the year showed a deficit of £264k.
There were loans of £36.8m from Brent Council, and the accounts were prepared on a going concern basis, as 'The Council has confirmed, in writing, of its intention for FWH to remain as a going concern for at least twelve months from the date of approval of the annual report and financial statements.' The financial statements were approved on 29 September 2020!
With the loss of rental income when a third of its properties are passed to Brent Council (and i4B), and the value of its Granville New Homes properties written down to NIL, but still with interest to pay on the loan from the Council to purchase those homes in 2009, there must be some doubt over whether First Wave Housing Ltd can continue as a going concern.
A P.S. to my comment at 17:09 above:-
In the First Wave Housing Ltd accounts on the Companies House website, the notes to the financial statements include the methods of valuation for the "land and buildings" assets.
For valuing social housing properties ['made up of social rented properties (general needs), intermediate market rented properties, settled homes initiative properties, new build properties and an equity share property'] the 'estimated useful economic life' of these properties is 100 years!
It might be if they had been properly built and maintained. [May I suggest, for example, "Altamira", the locally listed heritage Victorian villa at 1 Morland Gardens in Stonebridge, which Brent Council plans to demolish in order to build a block of new Council homes on the site, which has stood there since 1876, and is still in a good state of repair?]
Received by email:
A correction, George Crane did not resign, Butt removed him
A correction to the senior Council officers who are now shown as Directors of First Wave Housing Ltd. Instead of Phil Porter, it should read Peter Gadsden.
Comment received via email:
Have you seen this?
https://theglasshouse.org.uk/our-work/innovating-practice/granville-new-homes-south-kilburn/
Project consultation 2005 or there abouts. (might be worth checking when planning permission was awarded and to whom).
Designers win awards in 2010
Residents very satisfied
Participatory Design Champion - Robert Johnson from Brent Housing department( Now Councillor Robert Johnson - representing Northwick Park ward).
When did things start going wrong?
Email response to above:
Interesting information. I have found the planning application pages on Brent's planning website.
Application 05/2625 was submitted by the architects, Levitt Bernstein on 13 September 2005, on behalf of the applicant, the South Kilburn Housing Project Team. The landowner was the London Borough of Brent.
The application went to Planning Committee on 11 January 2006, and on the Officer's recommendation they agreed it in principle, but delegated the final decision to the Director of Planning. He (? - signature illegible) granted consent in a letter of 20 March 2006.
Brent's decision had to be referred to the Secretary of State for confirmation, as it was effectively a Brent Council scheme on Council land, but this does not appear to have raised any problems (apart from the slight delay this would have involved) before the planning permission was effective.
As a resident of Granville New Homes, this is so sad and damning. Thank you for posting. We definitely need to seek legal advice, we have so far tackle FWH on our own, emails, complaints but having read this report, it makes us feel so let down by the lack of respect FWH has to its residents, in noway at all have we been informed as to the complexity and seriousness of the situation. Thank you again.
Dear Anonymous (3 October at 18:46),
I fully understand your feelings. Brent Council only spreads "positive" stories about its actions, and we are lucky to have Martin willing to share news of what is really happening in the borough.
FWH is a Council-owned company, and its staff are Council employees, so you are entitled to expect Brent Council and FWH to act responsibly in their dealings with you over Granville New Homes. According to the Chief Executive's report (for the 11 October Cabinet meeting), the Council itself has been aware of the serious problems at GNH since at least December 2020.
Brent Council is supposed to operate within the terms of its written Constitution (available on its website), and here are some key sections, setting out its responsibilities, from Part 1 of that document:-
'The purpose of the Constitution is to:
- support the active involvement of citizens in the process of local authority decision-making;
- help councillors represent their constituents more effectively;
- enable decisions to be taken efficiently and effectively;
- create a powerful and effective means of holding decision-makers to
public account;'
'The Constitution sets out how the Council operates, how decisions are made
and the procedures which are followed to ensure that decision making is
efficient, transparent and accountable to local people.'
'The Council is comprised of 63 members, otherwise called councillors who
are elected every four years. Three councillors are elected by the voters of
each ward ....'
'All councillors will:
- collectively be the ultimate policy-makers;
- represent their communities and bring their views into the Council’s
decision-making process;
- be involved in decision-making;
- maintain the highest standards of conduct and ethics;
- contribute to the good governance of the area and actively encourage
community participation and citizen involvement in decision making;
- effectively represent the interests of their ward and of individual
constituents; and
- respond to constituents’ enquiries and representations, fairly and
impartially.'
I would suggest that you raise your concerns (in writing, preferably by email) with your Kilburn Ward councillors. Ask them to forward your concerns to the relevant Council officers, to demand a detailed response, and to share that response with you and all of the GNH residents.
If you also wish to share the correspondence with Martin, so that he can consider giving the questions and answers a wider readership, I am sure he would be happy to hear from you.
I sent a "link" to Martin's blog to the Chair of Scrutiny Committee, and have now sent a further email (see full text below).
I think it is important that GNH residents have the opportunity to make their views known on this situation before any decisions are made, rather than being "consulted" after Brent's Cabinet has decided their fate.
If you are a representative of GNH residents (or the one leaseholder), you may wish to let Cllr Ketan Sheth know if you would like to speak at the meeting on Thursday evening (7 October at 6pm). His email address is:
cllr.ketan.sheth@brent.gov.uk
This is what I wrote to him this morning:
'Dear Councillor Sheth,
Further to my email last Friday, I hope you won't mind me raising two further thoughts on this matter with you, ahead of your committee meeting on Thursday.
Although I am not directly affected by the problems at Granville New Homes ("GNH"), I do have an "historic" interest in housing, as my original career was in housing management (including with Brent People's Housing Association in the 1970s).
You may already have thought about these points yourself, but in case not, here they are:
1. Although GNH raises major problems for Brent Council, the people most directly affected are the residents.
There is a recommendation in the report to Cabinet that residents should be consulted, but consulting them after Cabinet has made its decisions does not reflect how Brent is supposed to conduct its business. The Council's Constitution gives a commitment to 'support the active involvement of citizens in the process of local authority decision-making', and this appears to be an excellent opportunity to do that.
Will you invite a member of the GNH residents' association (if one exists), or a representative of GNH residents, to your Scrutiny meeting on Thursday, give them an opportunity to express their views, and recommend that Cabinet does the same at its meeting on 11 October?
Not all of the GNH residents are First Wave Housing ("FWH") tenants. The report mentions that there is one leaseholder, although I can't see any reference to how the leasehold property will be dealt with. I think that leaseholder also deserves to have the opportunity to share their views with your committee and with Brent's Cabinet - especially if that leaseholder purchased their home under shared ownership.
As the remediation costs (exclusive of VAT) are estimated at £15.4m, a 1/110 share of that would be £140k! How does the Council plan to deal with that potential cost to a leaseholder who bought their home in good faith?
2. One of the main points that Scrutiny has been asked to look at is the proposed financial arrangements.
I've attached a copy of the Fixed Charge certificate (from the online Companies House records), showing that the £17,802,000 loan from Brent Council to FWH (under its previous name of Brent Housing Partnership Ltd) is secured on the land and property at GNH.
That loan will therefore be repayable in full by FWH to Brent Council when FWH disposes of GNH (to Brent Council, under one of its headings). The Report to Cabinet refers to various "refinancing" options, but basically it will amount to Brent making a loan to FWH which is at least partly unsecured, and therefore involves a much higher financial risk.
I feel sure that you will wish to ask Officers at your meeting to explain how this risk to the Council, and its Council Taxpayers, is justified, and will be managed. If they cannot explain this satisfactorily on Thursday, you may wish to recommend that they do so to Brent's Cabinet next week.'
Fascinating stuff from The Glasshouse Community Led Design: you couldn't make it up......
https://theglasshouse.org.uk/our-work/innovating-practice/granville-new-homes-south-kilburn/
New Deal for Communities money paid for Granville Homes project ( Brent's want)and South Kilburn community (the 5 themes) cancelled (not enough funds to build them) has not been a great GH outcome either for this communities quality of life, wellbeing, health, education, employment and pandemic resilience.
The by Brent cancelled neighbourhood partnership masterplan of 2004 also had the public open space loss impact caused by Granville Homes mitigated by an expanded in size South Kilburn Public Open Space- Brent Kilburns only park sized park, which is now in its turn under major Brent threat itself of being (even as the 100 veteran woodland flood defence asset it is) cancelled.
Progress regress- do we see a pattern to corporate abuse here?
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