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18
May
‘It makes matters worse’: Concerns raised over financial performance of council housebuilder
Concerns have been raised over the performance of a North Yorkshire Council housing company, which is set to post losses of £3 million.
Brierley Homes, which was founded in 2017, is part of the Brierley Group of 12 companies owned by the council.
The company has built homes in locations including Woodfield Square in Harrogate, North Road in Ripon, The Paddocks in Great Ouseburn and Yew Tree Farm in Marton-cum-Grafton.
However, the company is set to report a loss of £3 million for the 2024/25 financial year.
The move has led to concerns that taxpayers are set to continue underwriting losses for a firm which was set up to make income for the authority.
‘Makes matters worse’
The forecast outturn for Brierley Homes is set to see two successive years of reported losses.
In 2023/24, the company reported a net loss of £1.3 million and is set to report further losses in the last financial year.
In both financial years, Brierley Homes has pointed to issues at its Marton-cum-Grafton site as partly responsible for its performance.
According to a report to the council’s shareholder committee on May 13, the company reported a £2.1 million loss for the third quarter of 2024/25 which was largely driven by “delays in the receipt of sales income” and “associated increases in the company’s financing costs”.
The report adds that the company’s outturn for the year is now expected to see an additional loss of around £1 million due to delays in sales income — which is partly due to issues at sites in the Harrogate district.
It said:
The delayed sales are in part due to extended defect works on three plots at the Marton-cum-Grafton development and extended design issues at The Paddocks, Great Ouseburn site.
A similar reason was given in 2023/24, when the council reported that “ongoing challenges which have resulted in delays and additional costs” at its Marton-cum-Grafton site has contributed to a £1.3 million loss.
Brierley Homes' Paddocks development in Great Ouseburn, pictured in 2023.
The ongoing issues at Brierley Homes has led to concern among some councillors over its finances.
Cllr Stuart Parsons, leader of the Independent group on North Yorkshire Council, told the Stray Ferret he was concerned about taxpayers having to underwrite the company’s losses.
He pointed out that council finances were already tight and the housebuilder’s performance will not help matters.
He said:
It’s very disappointing results for a council-owned company which was created to support North Yorkshire Council’s income stream. Taxpayers will have to continue to underwrite this rather than see their money supporting services.
Council finances are already tight and this just makes matters worse.
The council has sought to increase Brierley Home’s loan facility in an effort to help facilitate the company’s construction programme until sales income is received.
The loan facility was introduced in March 2018 as a means of funding the firm to construct and sell homes.
In February 2020, the company exercised its ability to draw upon the loan facility and was approved £22.9 million to construct and sell homes.
But, in April this year, the council made a decision to extend the facility to £25 million.
Karl Battersby, corporate director for environment at North Yorkshire Council.
The Stray Ferret asked the council whether it was confident that this was the right financial decision to help the company and, in return, the council itself.
Karl Battersby, corporate director for environment and chairman of Brierley Homes, said:
As with any house-building company, cashflow projection relies on sales completions which can experience some delays.
These completions form part of the company’s wider pipeline of productivity – from identifying sites to obtaining planning permission, designing and constructing houses, and then taking them to market.
This decision is in line with the executive’s approval to grant a loan facility of up to £25 million in March 2018, and the council will continue to charge the usual market rate of interest.
‘It’s a timing issue’
Speaking to the Local Democracy Reporting Service, Cllr Carl Les, leader of North Yorkshire Council, admitted that the financial results for Brierley Homes, were “disappointing”.
However, he sought to defend the company’s position and pointed out that the finances had to be seen in context. The Brierley Group as a whoele is projected to record pre-tax profit of £2.63 million for 2024/25.
He said:
It is disappointing when you look at the figures on a piece of paper, but you have to see it in context.
It’s a housebuilder, it buys land, it gets planning consent, it starts to build and develop that land, and then it sells the houses.
There’s always going to be a timing issue and it’s a timing issue in this case.
Cllr Les, who is also chair of the council’s shareholder committee, said other companies within the Brierley Group had recorded better results.
He said:
There’s some very good results in there, particularly Yorwaste and Align Property Partners.
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