Note: As the Weird Housing Payments story has been growing in breadth and complexity every week it will now be referred to as ‘Gardengate’ (we are not sure if it is a scam, a scandal or a crime as yet) because it is convenient and appeals to Mole’s sense of humour. Gardens – Homes – GardenGate. Geddit? No? Oh well…
An investigation by the Enquirer reveals that a Council owned local housing company formed in 2017 by Tower Hamlets Mayor John Biggs with the sole purpose of delivering more social housing has delivered no homes at all.
This investigation arose from our continuing research into £156m of Weird AP1 Payments.
Local Housing Companies (LHCs), also called Housing Delivery Vehicles, are independent arms-length commercial organisations wholly or partly owned by councils with the sole purpose of delivering more social housing.
These have proved pretty popular as by 2021 83% of English local authorities had housing companies.
Government rules relating to the provision of social housing are extremely tight and one way in which these rules can, to a certain extent, be sidestepped is by a council creating a LHC. These can develop, buy and manage properties within and outside of a local authority area.
In the case of Tower Hamlets the LHC consists of Seahorse Homes Ltd and Mulberry Housing Society.
Seahorse Homes is wholly owned by Tower Hamlets Council and its purpose is to acquire and develop homes for market rent and sale. The company works on a commercial basis alongside the community benefit society, Mulberry Housing Society, a charity offering a mix of social and affordable homes.
The company has three directors (council officers), with oversight by the council’s Cabinet.
This Tower Hamlets Council report, Establishing Housing Delivery Vehicles, dated 7 February 2017 by Aman Dalvi, then Corporate Director Place and Cllr Rachel Blake, Cabinet Member for Strategic Development, explains the specifics of the Tower Hamlets council approach and is very comprehensive.
This presentation about the Housing Delivery Vehicles concept by Mark Baigent, then Interim Divisional Director Housing and Regeneration, given on 29 March 2017, gives a higher level view of the benefits of the LHC approach.
All good stuff. Pity that it would seem that none of the benefits proposed have ever born fruit.
Have you got a warm feeling deep inside?
The failure of the Tower Hamlets Council LHC is even more puzzling as page 26 (New housing companies) of the London Borough of Tower Hamlets 2016-21 Housing Strategy clearly states that ‘the council is considering setting up new companies to deliver housing on its behalf’.
In the Mayor’s introduction to the Housing Strategy he says that ‘I spend a lot of time thinking about what the council should do to help.’
Which will give every borough resident a warm feeling in their tummy but seems to be complete nonsense. Or maybe he should have spent even more time thinking? Whatever.
On 10 March 2017 Seahorse Homes Limited was incorporated as a Private Limited Company (Registered Number 10664554) with Mark Baigent and Neville Murton, another senior council officers, as the sole directors. Current officers at time of publication are Ann Sutcliffe, Karen Swift Divisional Director – Housing And Regeneration and Warwick Tomsett.
That Seahorse Homes is unused can be seen by the fact that its 2020 accounts are overdue. The last accounts filed on 31 March 2020 show that Seahorse had the grand sum of £6,798 in cash assets in the bank against net liabilities of £24,296.
Seahorse Homes is not going to develop many social homes with £7k, is it?
Mulberry Housing Society Limited (Registration Number 7619) was registered as a Mutual Society on 3 August 2017 with the Financial Conduct Authority (FCA) who look after this type of organisation.
No point in looking at its details on the FCA site as Mulberry has done nothing apart from be registered.
The Wapping Mole, furry investigator of all things dodgy extraordinaire, has seen many weird things on his diggings in Tower Hamlets. But even he was scratching his head at this point as he found it hard to believe that a local authority with a calamitous social housing situation would say it would create a local housing company create it then, er, do nothing with it.
For five years.
Moley was doing his head scratching at the same time as it was revealed that Mayor Biggs had only created 225 new builds in each of its even years of existence, not the 2,046 it claimed.
A local authority only building a paltry 225 homes in seven years? Its local housing company producing nothing at all?
You don’t need to be a furry investigator of all things dodgy to begin to wonder if these two issues were connected, do you?
So Mole started digging again, this time to find anything that Seahorse Homes or Mulberry Housing Society had done.
This was no easy task as anyone who has ever needed to find any information on the Tower Hamlets Council website more detailed than how to spell Tower Hamlets will tell you.
It is a complete and utter mess.
The site search mechanism is also not fit for purpose, so Moley used his normal trick of searching it by Googling in this fashion
towerhamlets.gov.uk: "seahorse homes" The colon is essential as are the speech quotes around a search term with more than one word. But it works.
This document was found in such a way. No use to Mole at all but is a little odd that even as recently as 28 July 2021 the Council (well, someone in the Council) honestly believed that:
“The main objectives of Seahorse Homes Limited is to secure good quality homes for the residents of the London Borough of Tower Hamlets and beyond; to increase the provision of private rented accommodation in Tower Hamlets and to set exemplary landlord standards in the management and maintenance of its homes.”
Yeah. Like the only reason Vladimir Putin has thousands of tanks on the border with Ukraine is ‘cos he wanted them to go for a drive round to admire the scenery.
While Mole did not find a single Russian T-14 Armata main battle tank in the Council website (although one, even a whole regiment of them, could be in there and you would not notice) we did find a property that Seahorse Homes had some linkage to.
Even better this property is also listed in the odd AP1 data the Enquirer obtained a while back and is the subject of this story which still has us all baffled.
Angela Court can be found at 315 Burdett Road just next to Limehouse Canal and very nice it looks too, all shiny and new. While the commercial premises on the ground floor seems empty many of the flats above seem to be occupied, with residents making the most of their balcony views.
Angela Court Lease Timeline
Angela Court is a development of 42 affordable housing units, constructed by Canary Wharf Group, in line with its obligations under a S106 agreement relating to a separate site.
A section 106 agreement is an agreement between a developer and a local planning authority about measures that the developer must take to reduce their impact on the community. In other words if you want to make a fortune building something it will cost you.
As with all local authorities any developer will only be granted planning permission subject to them agreeing to provide an asset such as Angela Court or a matching financial sum in a S106 agreement.
Providing a S106 asset away from the actual development site is called an ‘off-site’ S106 deal.
One example of this is the provision of 70 homes for social rent by built by the Qatari Diar Real Estate Investment Company and the Canary Wharf Group for Lambeth Council’s housing company Braeburn Estates.
On 6 June 2017 this report by Cllr Rachel Blake, Cabinet Member for Strategic Development and Waste states that:
1.4 An opportunity has arisen to purchase a S106 site in Burdett Road. The development comprises of 42 flats all at social target rents. The report recommends granting £2.3m in RTB receipts to facilitate this acquisition. (Grant requested will contribute 30% of scheme costs associated with the rented element).
1.5 Terms of the grant to Mulberry Housing Society will be covered by a grant agreement that will be a contract between the parties for each scheme to ensure compliance.
Then this report to Cabinet of 31 July 2019 says that the Council exchanged contracts on 22 March 2019, with completion of the sale to take place following completion of construction, and that Mulberry Housing Society should be granted the a lease of Angela Court – in just the way Housing Delivery Vehicles are supposed to operate.
All well and good.
On 31 July 2019 the Tower Hamlets Council Cabinet met to discuss and agree on leasing Angela Court to Mulberry Housing. There is nothing untoward in this document although there is mention (3.1) of the fact that “on 10 November 2017, the Mayor agreed a budget of £60m to fund the purchase of new affordable housing in the borough, to be built by developers as part of planning obligations.”
The borough enjoys yet another idyllic sweltering summer with cloudless blue skies and cute little birdies flying around the front door of every home, nobody has a care in the world. Until…
Disaster! The wheels fall off the Angela Court Mulberry Housing deal!
“The report (Issue Details Angela Court 20 December 2019) is proposing that the Mayor adopt one of the alternative options for Angela Court that were set out in the Cabinet report of 31 July 2019. This is because the agreed option – to grant a lease to Mulberry Housing Society (MHS) has not materialised and Angela Court needs to be put to alternative use. “
That document in turn references this document for Cabinet dated 18 December 2019, two days before, which although longer has no more detail as to why Angela Court would not be part of Mulberry Housing than the previous report. Have a read, especially points 3.8 and 3.10.
3.8 In July 2019, the Council completed the purchase of Angela Court and has been working with Canary Wharf Group to get the building ready for occupation.
3.9 The Council approved the terms of a transaction for MHS to take on Angela Court at a meeting of its Cabinet on 31 July 2019. Officers began negotiations with MHS on a lease, finance and grant agreement.
3.10 Unfortunately, negotiations have not progressed at the pace anticipated and it has become necessary to put the homes to alternative use.
Instead of Angela Court being leased to Mulberry Homes it would be acquired by the council’s Housing Revenue Account (HRA) just like any other social housing.
“Negotiations have not progressed at the pace anticipated”
What exactly does the phrase “negotiations have not progressed at the pace anticipated” mean?
Were Tower Hamlets Council officers dawdling with the paperwork that the Mulberry Housing Council officers needed and became tired of sending endless email reminders?
As the Council was negotiating with its own wholly owned entity Mulberry Housing did Tower Hamlets Council fall out with itself?
Did Ann Sutcliffe, Corporate Director of Place at Tower Hamlets Council, have a big falling out with the very same Ann Sutcliffe, member of the Mulberry Housing Society Board of Directors and so the lease arrangement was ditched?
But seriously what happened in the five months between July 2019 and December 2019 to cause the lease on Angela Court to be jettisoned? If you know please do email us at email@example.com and tell us as yet again we have no idea.
But there’s more.
The screen grab above is of the list of Weird AP1 Payments that the Enquirer was sent recently and we wrote about in this story.
As you can see the line in red type relates to the purchase of Angela Court Burdett Road E14 7EL for £6,930,528.60 in April 2019 (201904). The number 13746 is just a sequential number for our own internal use, AP1AC0001 can be broken down as the payment type (AP1), AC refers to the property (Angela Court) followed by a sequential number.
- In April 2019 Angela Court is bought by Tower Hamlets Council for just under £7m, for some reason this transaction, like many other property transactions, is carried out using the AP1 system.
- Between July 2019 and December 2019 something somewhere causes the long-held plan to lease on Angela Court Mulberry Housing is ditched in Limehouse Canal.
- Since that failure neither Seahorse Homes or Mulberry Housing have been used for anything whatsoever.
We double checked this was the case with a couple of Freedom of Information (FoI) requests which were responded to very quickly by the Tower Hamlets Council FoI team which is pretty good seeing as we have been bombarding them with requests the last month or so. Thanks!
FOI 34036833 Mulberry Housing Society Limited
Q Please can you tell me how many properties are currently under the control of Mulberry Housing Society Limited?
A There are no properties under the control of Mulberry Housing Society Limited.
FOI 32887345 Seahorse Homes Limited
Q How many homes did Seahorse Homes Limited build per year? Please provide a breakdown by bedroom category (room, studio, one bedroom, two bedrooms, three bedrooms, four or more bedrooms).
A Seahorse Homes Limited have not built any homes.
In addition nobody was currently employed by Seahorse Homes Limited at the time of the FoI request and nobody had been employed in previous years. Seahorse Homes Limited had not built any homes, had not demolished any homes and did not own any homes.
Which is pretty clear.
Angela Court? Never heard of it
Odd thing is that on 21 February 2021 Nicola Klinger, Housing Companies Manager, gave this presentation to the Housing and Regeneration Scrutiny Sub- Committee about Mulberry Housing Society and Seahorse Homes Limited.
The final slide is entitled ‘Opportunities and future activity’ and can be seen below.
Not a word about Angela Court and the failed attempt to lease it to Mulberry Housing.
As if it never existed.
Or maybe Tower Hamlets Council thought nobody would ever know about Angela Court?
Tower Hamlets Council response
We have asked the Council for their comment on this story but at the time of publication they were still working on it. We will update this story when we get it.
Three things? Or three views of the same thing?
It is reasonable to argue that by itself this weary little tale is not of huge importance. However once it is considered along with the other housing stories we have been running recently, the council only delivering 256 social homes not 2,046 as claimed and the purchase of housing using AP1 vouchers its significance becomes greater.
There are now three narratives that relate to the provision of social housing in Tower Hamlets
- Our first story about a large amount of social housing properties being bought by LBTH using the AP1 system where Angela Court is listed as being one of the properties purchased
- Mayor Biggs false claim that his administration had delivered 2,046 new homes when in fact he has only delivered 256
- The local housing company Angela Court fiasco described above.
So where do we go from here? It would help if we knew what we are dealing with but we do not. Is it that:
(a) Are we looking at three aspects of the same thing but cannot join them all up because we still do not have enough information?
(b) Or are the three issues completely separate only linked by the inability of the London Borough of Tower Hamlets to build and deliver anything more complex than a flat-pack Ikea bed?
(c) Or is there a perfectly reason explanation for all this?
This story about Angela Court, Seahorse Homes and Mulberry Housing only emerged when Moley was working through some theories about the weird issue of social housing being bought using the infamous AP1 system and was almost ditched as being a dead end.
Luckily Mole instinct prevailed and it was pursued.
He still has the main story of the odd use of the AP1 ‘spot purchase’ to buy properties to delve into. Moley tells us that there is even more odd stuff to be explained.
- Delivering the renaissance in council-built homes: the rise of local housing companies The Smith Institute October 16, 2017
- What is a Section 106 Agreement? Kingsley Smith solicitors
- Housing Delivery Vehicles concept presentation by Mark Baigent
- Housing Delivery Vehicles concept LBTH 29 March 2017
- Local authority housebuilding – where are we now? Royal Town Planning Institute
- Mark Baigent Consulting
- Council housebuilding: back with a vengeance – Inside Housing 2019
- Meet the councils quietly building a housing revolution – The Guardian
- Building the homes we need – New Economics Foundation