| |
Big sell-off’s winners and losers
• THE company employed by Islington Council and the Lib Dem executive to manage and sell off the commercial property portfolio is in the headlines again and not in a good way.
The Evening Standard reports that its share value is down 90 per cent this year. It is reported that “the company which is tottering under £180 million of debt is in talks with its banks over breaching banking covenants…”
This is the company that has been responsible for the management of the council’s commercial property since March 2005 and advised on and managed the sale of the 220 retail properties this year.
We have questioned the fees it is being paid to carry out this work but are told they are commercial in confidence and so the people of Islington cannot be told.
The council, on the advice of Erinaceous, has charged leaseholders a flat fee of 1.75 per cent of their property price as a “sale fee”. We have had difficulty in obtaining the exact purpose of this fee from the council. It appears to cover the council’s legal costs as well as advertising and management of the sale by Erinaceous.
Erinaceous originally advised the council it could raise £45 million from the sale of the properties. This escalated to an actual figure of £70 million.
Thus the “sale fee” paid by the purchasers increased by £500,000. As the legal fees for a set number of properties would presumably remain the same, one can only assume Erinaceous has benefited from this increase.
The leaseholders who have purchased their property have paid their own legal fees of between £750 and £2,000 and also been charged by the council an average £8,000 to £10,000 “sale fee” per property.
This was a cynical sale by the council at the top of the commercial property market.
Many leaseholders found it difficult to obtain finance due to the inflated asking price, the condition of their building, the timescales imposed and the sudden downturn in the lending market. Many who have bought their property will have to sell on quickly as their businesses cannot afford the mortgage required for the purchase.
The winners are the Lib Dem executive, who have £70 million to spend (can we trust them to do it wisely?); Erinaceous, which has been kept on to manage the properties for David Pearl and Structadene; and David Pearl, who has another 100 properties in Islington to add to his portfolio worth hundreds of millions of pounds.
The losers are the 100 small businesses that are now the tenants of a private investment landlord, David Pearl, rather than the council, which has a statutory duty to treat its tenants fairly and reasonably.
DALE BARTER
Amwell Veterinary Surgery
Amwell Street, EC1
• THE opportunity to gain political kudos for council home building funded by Islington Council’s recent sale of retail properties is predictable.
It is to be hoped that the 110 small businesses paying interest on their mortgages recognise their contribution to this agenda.
If the council had borrowed on the value of its commercial portfolio it would have enjoyed relatively lower interest repayments because of the bulk of its business.
The sale of the portfolio has ensured that 110 small businesses are paying open market interest on their loans to fund this rebuilding project.
These business owners are contributing more to this process than other tax payers in this borough. They are in effect shareholders. They should be encouraged to closely monitor the use of the funds for which they are paying interest.
The Liberal Democrats may enjoy building their political reputations on the back of the hard work of private entrepreneurs but their efforts are to be closely audited by those who are compelled to pay the interest on their programme.
MARGARET LAMONT
Great Percy Street, WC1
|
 |
|
| |
| Your Comments : |
| |
| |
| |
