Havering cabinet members have greenlit plans to eventually convert car parks despite the opposition leader calling it "madness". 

The cash-strapped council will sell six bits of land - including four car parks - to its own holding company, Mercury Land Holdings Ltd, which would then seek planning permission for the sites. In the meantime, Mercury Land Holdings would lease the land back to the council at a very low, or “peppercorn,” rate. 

Despite protests from councillors that it was “absolute madness,” Havering’s cabinet agreed to push ahead with converting the car parks, in Hornchurch and Romford, at a meeting on Wednesday, May 15.

It is expected to bring in almost £9million for the authority, which is keen to make money as quickly as possible after accepting a £54m loan from central government in February. 

The scheme had been initially approved on April 22 – in line with the council’s agreed ‘capital strategy’ – but a coalition of Conservative and Labour councillors called the decision in for scrutiny on Tuesday, May 7.  

Plans were put forward to build six three-bedroom homes on the Keswick Avenue car park in Hornchurch last month, shortly after the scheme was first agreed, but councillors criticised the lack of a wider business plan. 

At the meeting, Tory leader Keith Prince said it made the scheme “difficult to understand,” with fellow Conservative David Taylor having previously argued the council should not transfer funds without knowing how much it stands to profit.

Kathy Freeman, Havering’s chief financial officer, maintained it cannot produce a breakdown for each site until planning permission has been secured, which some councillors said was “putting the cart before the horse”. 

Romford Recorder: Keith PrinceKeith Prince (Image: Chantelle Billson)

Alongside Keswick Avenue, the council has also earmarked Como Street car park in Romford, Dorrington Gardens in Hornchurch, Angel Way in Romford, Century Youth House in Albert Road, Romford and land off Priory Road in Romford for housing.

Como Street has been selected for a “significant” project.

Council leader Ray Morgon said that plans for each site would be subject to scrutiny in the future.  

Financially sensitive breakdowns have been produced for each site, but they are exempt from the public. 

Cllr Morgon added that anything more in-depth was “impractical at this stage”. 

Councillors had also attacked the nature of the scheme, which would involve transferring the sites to Mercury Land Holdings in exchange for equity in the company. 

During a lengthy debate, Cllr Prince said he “cannot understand the madness of what we’re doing”. 

He called it “farcical,” saying the council was simply moving its assets around “to look like something’s happening,” but Ms Freeman argued the authority could stand to profit. 

The council would be given a capital receipt of around £8.69m, valuable for companies or enterprises saddled with debt. It aims to raise £20m in receipts by March 31 2025 – or as close to then as possible – and has so far raised £8.75m. 

Once the council has a capital receipt, reflecting the value of the land, it may later profit from an overage clause. An overage clause, or ‘clawback,’ can allow a seller to benefit if the value of the land increases after a sale. 

After Cllr Prince suggested the council could also profit now by creating a public bidding war, she said the revenue would be greater further down the line. 

Despite the loss of £190,000 in annual revenue from the car parks, council officials are confident a housing scheme would balance out.

The call-in was dismissed by the majority of cabinet members. Had it been approved, the scheme would not go ahead.