A Havering Council-owned company's plans for new homes in Harold Wood faced questions from councillors.

Mercury Land Holdings (MLH) is proposing to redevelop the former St Bernard’s Day Centre in Harold Wood into nine flats.

However, a council decision to lend the company £3.4million needed for the scheme faced extra scrutiny last week at a meeting on November 15.

At a call-in meeting to discuss the decision, Labour’s Matt Stanton suggested that the council look at whether it could afford to include council homes.

Havering Residents Association’s Phil Ruck agreed, adding that he was “concerned” that Havering’s cabinet – led by Ray Morgon – did not have independent expert advice to assess the investment risk.

Cllr Ruck, who was previously chief executive of Brentwood Borough Council, said Havering’s “really perilous” financial position means it should seek extra advice on the risks.

Although Cllr Graham Williamson, cabinet member for planning and regeneration, was not at the meeting, MLH’s director Gary Green attempted to reassure councillors.

He told councillors the property, in Peel Way, is a “good purchase in a good location” as it is a short distance from an Elizabeth line station.

Mr Green added that while the housing market is “not the best” at the moment, he felt confident that it will “turn and be in a better position”.

MLH has also employed “valuers, cost consultants, architects and others” to make sure the project is worth going ahead with, he said.

Councillors including Conservative David Taylor had pushed for the meeting to ask for more information about the “financial viability” of the plans for nine homes.

But overview and scrutiny board members voted not to uphold the call-in, so the decision will be sent for formal approval by Havering’s cabinet, with a note about the board’s concerns.

These include questions over whether the council can develop the scheme itself rather than via MLH, whether it should keep the flats to rent at low-cost social housing rates, and whether cabinet should seek independent financial advice on the deal.

The council decision to make the loan to MLH was published on its website last month.

Earlier this year, cabinet approved MLH’s business plan to invest £270m in properties in the borough over the next three years, details of which remain secret due to their purported commercial sensitivity.

However, despite the secrecy around MLH’s plans, the company submitted a publicly-accessible planning application for the day centre site in February.

The plans show one accessible, four one-bed, four two-bed flats in a three-storey block-shaped building with a communal garden.