The city of Norwich in Norfolk is facing a significant setback in its efforts to provide affordable housing to its residents. Lion Homes, a housebuilder set up by the local authority to meet the city’s housing needs, is on the verge of being liquidated just five years after it was bailed out by Norwich City Council. The company, previously known as Norwich Regeneration Limited, has been struggling to pay off its debts despite the council’s intervention in 2020, and its latest accounts show losses of £4.4m over the past four years. The council, which is the sole shareholder in Lion Homes, is liable to lose up to £10m, and the decision to liquidate the company is set to be finalized at a cabinet meeting on July 9.
The story of Lion Homes is a complex one, marked by a series of challenges and setbacks. The company was established to help Norwich City Council meet its housing targets, but it struggled to deliver on its promises. In 2020, the council was forced to step in with a £6.1m loan and a £3.4m equity purchase to prevent the company from going bankrupt. However, despite this injection of funds, Lion Homes continued to hemorrhage money, with its losses mounting year after year. The company’s difficulties were exacerbated by a loss-making 1,000-home development at Rayne Park, which had been forecast to result in losses of £10.4m if the council didn’t intervene. The scheme, which included a 70-home Passivhaus development, had been started in 2017, but it proved to be a costly mistake for the company.
The decision to liquidate Lion Homes has been met with criticism from opposition councillors, who argue that the Labour-run council has mishandled the situation. Green Party councillor Alex Catt has called for a full and public investigation into the collapse of the company, saying that the council’s “sheer arrogance, incompetence, and lack of openness” have led to an “enormous loss” for the public. Catt also pointed out that the council has known about the impending collapse of Lion Homes for a long time, but has failed to take decisive action to address the issue. The council’s leadership has defended its decision to liquidate the company, saying that it is the best option for the city and its residents. Cllr Carli Harper, the cabinet member for finance and major projects, said that the recommended option is a controlled winding-down of the company, which would allow the council to ensure that everyone owed money is paid before it officially shuts down.
The liquidation of Lion Homes has significant implications for the city of Norwich and its residents. The company was set up to provide affordable housing, and its collapse will leave a significant gap in the market. The council has said that it will continue to work to provide new and affordable housing for the city, but the loss of Lion Homes will undoubtedly make this task more challenging. The council’s leadership has said that it will use the assets of Lion Homes to mitigate the losses incurred by the company, but it is unclear how this will work in practice. The company’s website is no longer functioning, and attempts to reach its teams for comment have been met with silence.
The story of Lion Homes is a cautionary tale about the risks of public sector intervention in the private market. While the council’s initial investment in the company was well-intentioned, it ultimately proved to be a costly mistake. The company’s struggles highlight the challenges of delivering affordable housing in a complex and rapidly changing market. The council’s decision to liquidate the company is a pragmatic one, but it also raises questions about the future of affordable housing in Norwich. The city’s residents will be watching closely to see how the council responds to this setback and what steps it will take to ensure that affordable housing remains a priority.
In conclusion, the liquidation of Lion Homes is a significant blow to the city of Norwich and its efforts to provide affordable housing. The company’s collapse is a result of a series of challenges and setbacks, including a loss-making development at Rayne Park and a failure to deliver on its promises. The council’s decision to liquidate the company is a pragmatic one, but it also highlights the need for greater transparency and accountability in public sector decision-making. The city’s residents will be hoping that the council can learn from its mistakes and find a way to deliver on its promises to provide affordable housing. The future of housing in Norwich remains uncertain, but one thing is clear: the collapse of Lion Homes is a wake-up call for the city’s leaders to rethink their approach to housing and to prioritize the needs of their residents.
