The Brent Council Cabinet is poised to approve a huge financial arrangement to purchase units in the blocks (known as E01 and EO2) from Quintain. This would involve a loan of up to £110.5m and purchase of shares by by Brent's investment company i4B or its housing company First Wave Housing - initially up to £21.8m and then £22.2m for Phase 2.
The four blocks range from 12 to 15 storeys and are close to Wembley Stadium. Some of the flats would provide key worker homes for those on moderate incomes.
The Council would purchase 153 units: 60 one bedroom and 90 two bedrooms. Key worker housing is badly needed in Brent with social workers, teachers, police and NHS staff being priced out of the borough and resulking poor recrruitment and retention rates. They will also consider investing in shares in 300 existing homes.
The Cabinet Report to be discussed on Monday October 14th can be found HERE
QUINTAIN@S PRESS RELEASE
A London council is set to approve a loan of £110.5m to one of its wholly-owned companies to purchase a residential block to provide investment income and house its staff at below-market rents.
London Borough of Brent’s cabinet will next week consider a proposal to borrow money from the Public Works Loan Board and lend it to either its investment company i4B or its housing company First Wave Housing.
The money could be used to buy a block of 153 homes being built by developer Quintain in a new development in Wembley Park.
A report by Minesh Patel, the authority’s director of finance, which is set to go before councillors, says:
Officers are exploring whether this could support the council to recruit and retain officers in specific roles, for example children’s social workers.Under a section 106 planning agreement between the council and Quintain, Brent has the option to buy the block for between 70% and 75% of the market rate, to let at intermediate rents.
This would contribute to a long term strategy to attracting and retaining key workers in Brent.
In addition, purchasing the block is a potential investment opportunity for i4B/ First Wave Housing, since the block would be acquired at a discount from the open market value.
If the council decides not exercise its option to purchase the block, it will still acquire, for free a 25% to 30% share in the block.
However, Patel said that the council could not realise this asset until individual owners of the flats chose to purchase the remaining equity.
He said:
The asset is therefore very illiquid. After a few years this would provide a stream of capital receipts to the council, the value and timing of which would depend on the assumptions made about how quickly owners would choose to staircase out and the change in property values.The cabinet will also consider a proposal for an investment in 300 existing homes purchased by i4B.
The deal would see the council purchase shares in the company up to a maximum of £21.8m.