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Damning indictment of Town Hall’s big sell-off
• I RECENTLY made a Freedom of Information request of Islington Council in relation to the sale of commercial properties in 2007. I was concerned that some leaseholders had been unfairly treated in the prices they were required to pay for their properties.
The price paid for 393 St John Street in the Freedom of Information response sent to me on May 9 is £260,809 (Sold for £26,000… the shop worth £200,000, June 13).
On June 16, after the report in the Tribune and representations to the council, I have received a letter advising me that “a clerical error was made in compiling the schedule”. The price paid was £26,809. Unfortunately, this “clerical error” hid one of the most damning indictments of the council’s sale process.
There was no fair or reasonable valuation of any of the properties.
There were three categories of properties in the portfolio: those without a current leaseholder; those whose lessee could not “pre-qualify” by providing a letter from their bank; and those who “pre-qualified” and could purchase their property if they could raise the amount assigned to it by the property developer.
The first two categories went to the property developer no matter how much or how little he bid for them. The 393 St John Street property sold for £26,809 fell within this group.
To obtain a property with a “pre-qualified” lessee, the property developer had to ensure that the price was as high as possible (above a bank valuation) to be out of the reach of the lessee.
By ramping up prices on “pre-qualified” properties and assigning low prices to those that would automatically go to the property developer, he could ensure he achieved the highest number of properties from the sale.
This was one of our main concerns and it was voiced to the council throughout the process. It is something that they wiped their hands of by saying it was the remit of the winning property developer to “value” the properties within the portfolio. How many other clerical errors were made during this sale? How can we trust responses to Freedom of Information requests when such errors can occur?
MARGARET LAMONT
Amwell Street, EC1
• THE council’s loss of £200,000 in the sale of commercial properties in 2007 is just one small example of the errors and inequities in the flawed process of this property disposal.
Islington Traders Group challenged aspects of the sale process set out by the Liberal Democrat executive, including the initial expression of interest and financial pre-qualification.
The requirement to pre-qualify by proving an ability to raise an arbitrarily assigned amount by a certain date was one of many stipulations that was questioned and robustly challenged in 2007. Many affected businesses were initially daunted by this requirement as financial institutions found the request unusual and were extremely reluctant to comply.
Extensive lobbying of a number of financiers and concerted efforts by many traders ensured about 140 of the affected traders passed this stage of the sale process.
For the 2008 commercial property sale of about 80 properties, the council has removed the need for financial pre-qualification and all affected businesses can participate without commitment until exchange of contract.
Councillor Terry Stacy said in last week’s Tribune, with reference to the 2007 sale: “The council ran a qualifying process and the occupier failed to qualify at the earliest stage.” If this was a fair and appropriate process in 2007, why has it been removed from this year’s sale of commercial properties?
The lessee of 393 St John Street was removed from the sale process before it began because he could not prove he could raise 10 times the amount his property was finally sold for.
The sale price of £26,809 for 393 St John Street may have been an error. The council claims to have queried the amount with Structadene, which confirmed that it was correct.
The council was only concerned with receiving a global value for the properties. The £69million achieved from the sale exceeded its expectations by £11million. The council took no responsibility to ensure that the property developer, Structadene, provided a fair valuation/purchase price for each property.
The inequitable apportionment of values within the portfolio, as exemplified in extreme by 393 St John Street, exists throughout the portfolio valuations. It has variably disadvantaged all those who purchased their business premises.
DALE BARTER
Amwell Veterinary Practice
Amwell Street, EC1
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