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TRADERS: ‘WE DIDN’T STAND ANY CHANCE’
Businesses face the boot as deadline to buy properties passes
MORE than 100 small traders struggling to buy their own premises from Islington Council were forced to give up this week after many failed to raise funds by the deadline.
They may now face huge rent increases and the possibility of going out of business.
Meanwhile, despite council assurances that the sale of 223 properties was fair, questions continue to be asked.
Traders have demanded to know:
• Why wouldn’t the council reveal how they set the prices?
• Why are a number of properties apparently being sold priced above market value?
• What rents will tenants have to pay now their landlord is millionaire developer David Pearl, reputedly one of Britain’s richest men?
Mr Pearl, chairman of the property company Structadene, based in White Lion Street, Angel, bid £69 million for the entire portfolio, beating 25 other developers.
Each trader had the chance to buy their freehold or 999-year lease with Structadene snapping up the rest and becoming landlord.
It has also emerged that the Town Hall did not apply for permission from the government to make the sale until June.
Traders claim that valuations given by their banks were considerably less than those of Structadene.
Those who couldn’t afford to buy fear a repeat of a recent sale where development giant Derwent Valley increased some rents by 200 per cent.
The deal was finalised on Friday and Islington hopes to raise £69 million to build new schools.
Structadene director Daniel Parnes said: “We’ve attributed what we considered to be a market value to each property. We went around to each one and inspected it.”
He added that in many cases Structadene believed the properties to be worth more than the value given by banks.
Mr Parnes said: “I can understand that some of the tenants are upset and that they don’t believe (the properties) are worth what we believe they are worth.”
Vet Dale Barter, of Amwell Street, Clerkenwell, bought his practice for £577,500 at £27,500 more than his bank valued.
Ian Tweedy, 59, owner of Premier Plumbing in Drayton Park, Highbury, said the council had initially valued his terraced business at £120,000 but Structadene gave a price tag of £231,000.
He said: “Our solicitors wrote to Structadene asking for reasons why the price was so high, but they just kept saying it was non-negotiable.
“We decided in the end it just wasn’t worth it. We never would have got our money back.”
Council finance chief Andrew Cornwell had always claimed that traders “had the protection of their leases”.
But Premier Plumbing looks set to have its annual rent on its 350-square foot unit more than doubled.
The firm took out a nine-year lease in 2000 with a rent review every three years on the industry standard calculation that the rent is the value divided by 15 years.
Therefore, the council originally valued Premier at £120,000, thus its annual rent of £7,400.
But because Structadene valued the property at £231,000, Premier may face paying £15,400 per year.
The Tribune understands that most tenants had leases of between five and 20 years, each with a built-in rent review.
Mr Parnes said: “We are going to look at each property on its own merits. I can’t give guarantees that we won’t put any of the rents up across the whole portfolio.
“But it’s not in anyone’s interests to put the rents up so high that it forces people to leave.”
Until Monday, council officials repeatedly refused to reveal the process by which the portfolio was valued, even when pressed under the Freedom of Information Act, until the sale was agreed.
A statement released on Monday said: “The council can also confirm that it has now completed on a contract with local property firm Structadene which enables Structadene to acquire any other properties where local businesses fail to complete their transaction.
“The council has a duty to taxpayers under the Local Government Act 1972 to obtain the best price on the sale of property assets.”
Mr Tweedy said: “The thing that concerns us most is that if rents are increased we might have to move our business on.”
Chris Roche, the Islington-based architect and development consultant, said: “If properties come to the market then they would reach their true value but when they come in a job lot then it is impossible to put a price on it.
“Someone has been given carte blanche to negotiate and it is a clear distortion of the market.” |
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