Croydon Council has spent £19.2m buying Davis House- a move it described as a “sound investment“.

The building, adjacent to Taberner House, will be used as an asset given to John Laing as part of the council’s Urban Regeneration Vehicle (URV) scheme.

The council put down a deposit of £1m (5 per cent) and is expecting to be reimbursed by the URV after the scheme is agreed in November.

In the meantime it believes income from rent will cover the short term debt.

In a press release, the council claimed even if the URV did not go ahead, the combined value of adjacent plots is greater than individual ones and so makes financial sense.

Councillor Tim Pollard, cabinet member for regeneration, said: “Quite simply, acquiring Davis House is vital for the council’s plans to redevelop its own land holding.

“To buy the building on favourable terms, without alerting competitors, is an excellent business approach that underpins the council’s determination to secure value for money in all it does.

“The outcome of this transaction means the council will own an income-generating asset immediately alongside its own offices and will therefore be in a much stronger position to influence a more sensitive redevelopment.

“And if the URV proceeds as expected then the financial exposure will be negligible.”