Developers can make fortune as council sells off 'cut-price' properties
A cash-strapped council is auctioning "cut-price" houses to developers who can then make tens of thousands of pounds' profit.
Lambeth council, which is facing a fraud investigation into a £22million overspend of housing budgets, sold a property for £128,000 in February.
Six months later it has gone on the market with a local estate agent for £215,000, making the seller a potential profit of £87,000.
Critics say the sale is "irresponsible" when thousands of families are left without a council house or in cramped and overcrowded accommodation.
The ground-floor, two-bedroom flat in Cricklade Avenue, Streatham Hill, needed little more than a new kitchen and bathroom, with total refurbishment costs of about £10,000.
It is under offer near the asking price through Kinleigh Folkard and Hayward who describe it as "a charming period flat on a desirable street close to the amenities of Streatham Hill and Tulse Hill and Streatham Hill Stations".
James Brooks, from the firm said: "I didn't see it before it had a new bathroom and kitchen but I would have anticipated valuing it at about £160,000 to £170,000.
"Had the council sold it through an estate agent they would have made thousands more."
The property was bought by a consortium that targets auctions.
Spokesman Jack Frankel said: "I realised pretty quickly that this was a bargain."
Opposition councillors today attacked the way the Labour-run council has managed its housing stock.
Liberal Democrat housing spokesman Jeremy Clyne said: "There are thousands of families who are homeless or overcrowded who have a right to be enraged about it.
"We took a look at this and other flats before they were auctioned off, and Cricklade Avenue needed very little work."
At the end of last year it was revealed houses had been left empty while the council continued to pay private landlords.
Some 300 squatters took the chance to move into the Limerick Court estate for six months, costing about £500,000 to remove.
Bosses also failed to account for a cut in funding from the Department for Work and Pensions.
All these factors led to an overspend of £6million in 2007/08, a projected overspend this year of £7.5million and one of between £6.38million and £8.65million for 2009/10.
A spokeswoman for Lambeth said: "It is council policy to sell a limited number of properties which need substantial repairs and to invest the money in the refurbishment of other empty residential properties."
She added: "Since the council sold the property conditions in the property market have improved, and this may be reflected in the price at which the new owner hopes to sell the flat."
