Westminster Labour Councillors have called on the City Council to mount an urgent investigation in to a Sunday Times report that uncovered that
“A PROPERTY investor has been caught boasting how he hopes to make so much money by snapping up cut-price council houses under the coalition’s right-to-buy scheme that he will “never have to work again. Nicholas Carlino, a director of London Investment Property Group (LIPG), told an undercover reporter how easy profits are available because councils are massively undervaluing the properties, which he can buy from tenants and resell for much higher prices.”
Labour Councillors say that the activities of this company might be connected to the fact that almost 20% of RTB sales in Westminster since 2012 have been to people in receipt of Housing Benefit.
The article identified First Avenue in Queen’s Park, Westminster as one of the areas being targeted by the company.
Queen’s Park Councillor Paul Dimoldenberg, Leader of the Labour Group, has written to the Council’s Chief Executive, Charlie Parker demanding an inquiry.
“I was concerned to see this story in yesterday’s Sunday Times and wondered whether the increase in the number of HB recipients making RTB applications is in some way connected to the activities of these two characters?
I believe that the Council has a responsibility and duty to investigate further those on Housing Benefit making RTB applications. I am particularly concerned to see that properties in Queen’s Park are being targeted. It is completely unacceptable for the Council to shrug its shoulders and say that the RTB legislation does not require the Council to make detailed enquiries about where the money comes from to exercise the RTB.
Can I also remind you of the Question I asked at the last Council meeting to which I got a very ambivalent response from Councillor Astaire;
To the Cabinet member for Housing
Can he explain why almost 20% of RTB sales since 2012 have been to people in receipt of Housing Benefit?
Can he explain how people on HB can (a) afford to buy property worth hundreds of thousands of pounds (b) can afford to put down a substantial deposit running into tens of thousands of pounds and (c) afford the monthly mortgage payments?
Is he not concerned that there might be huge fraud taking place right under his nose and why is he not taking urgent action to stop the loss of council property and millions of pounds of public money?
Please can you give this urgent attention.”
Sell us your council house and we’ll split the profit
Nicholas Hellen, Kate Mansey and Robin Henry Published: 17 August 2014
Nicholas Carlino and William Johnson offered money to council tenants to sell their homes
A PROPERTY investor has been caught boasting how he hopes to make so much money by snapping up cut-price council houses under the coalition’s right-to-buy scheme that he will “never have to work again”.
Nicholas Carlino, a director of London Investment Property Group (LIPG), told an undercover reporter how easy profits are available because councils are massively undervaluing the properties, which he can buy from tenants and resell for much higher prices.
“It’s a joke, isn’t it?” said Carlino, whose firm has leafleted 60,000 council house tenants with the offer of six-figure financial rewards for working with him. He explained that councils are losing public money.
An investigation by The Sunday Times into the scheme, which is entirely legal, has sparked condemnation of the right-to-buy policy.
Critics say the legislation was badly drawn up and accuse councils of failing to ensure that properties go to deserving buyers rather than opportunistic developers.
Chris Williamson, a Labour MP and member of the communities and local government select committee, said: “This is profiting at taxpayers’ expense. The big players are able to use their financial muscle to scoop up a large number of dwellings and either sell them on or rent them out at inflated prices.”
The leaflet distributed by LIPG, designed to resemble the front page of a tabloid newspaper, carries the headline: “Right to buy tenant moves & scoops £100,000”. It says: “A lot of tenants are unaware that if they have a right to buy offer or they use their right to apply, then they could gain anything from £20,000 to £100,000.”
It cites case studies including a “Mr Jacobs” who “had been yearning to return to Jamaica but it was merely a dream until he received £100,000 which made his dreams come true”.
A reporter posed as a council tenant living in a two-bedroom terraced house in First Avenue in west London, one of the streets leafleted and where a former local authority house recently sold for £925,000. The reporter met Carlino last week to discuss the possibility of signing up with LIPG.
Carlino said councils “always undervalue properties”, adding: “If they value the property at £550 [thousand] and it’s worth £650 [thousand] to me on the open market, that’s where I can give you money.”
He said he would give the £550,000 to the council and on the same day “my solicitor would give you whatever [sum] we agree . . . and the property would come into my name or I may even sell it on”.
Carlino said LIPG would cover legal bills and stamp duty and emphasised that even if the tenant received a right-to-buy discount, which can be up to £102,000, it would be irrelevant because the firm would have to pay it back to the council. Asked if the scheme was basically exploiting a “legal loophole”, he replied: “Exactly and that’s why if Labour get in they’ll probably close it because a) they’ll reduce discounts and b) they like social housing and they don’t want to sell them . . . If I get 500 or 1,000 of these [properties] in my cabinet, I’ll never have to work again.”
London Investment Property Group has leafleted 60,000 council house tenants
Carlino, who claimed LIPG had completed 19 such deals and was looking to buy a further 132 properties, said councils did not object to the scheme. “They want the money in as much as anyone. The council gets a lump sum, you get a lump sum and I get a property. Everyone’s quite happy,” he said.
William Johnson, managing director of LIPG, later said the firm had yet to complete any deals and insisted there was “no grey area” in the way it bought the properties and therefore was not exploiting a loophole.
Carlino told the undercover reporter that LIPG complies with all “buy back” rules.
“We have to write to the council and say, ‘Look, I’m going to sell this property on the open market. Do you wish to buy it?’,” he said.
“And they always write back and say, ‘Thank you very much for the opportunity but on this occasion we won’t’.”
The businessmen said they require tenants selling to LIPG to prove they have firm plans to move elsewhere so are not a burden to the council. “I won’t deal with . . . single mothers who want a few quid now and will be knocking on the council’s door in two years’ time,” said Carlino.
The property investor said councils are massively undervaluing their houses (Getty)
Daniel Astaire, Westminster city council cabinet member for housing and regeneration, said: “If we have reason to believe attempts are being made to exploit the system . . . we will take thorough steps to thwart them.”
The council conceded that “given the state of the property market in London there is likely to be a significant discrepancy between value at valuation and value at completion” but denied undervaluing properties.
Brandon Lewis, the housing and planning minister, said: “The reinvigorated right-to- buy is both increasing housing supply and reducing waiting lists, as every additional home sold is now being replaced with a new affordable home for a new social tenant.
“Critics of right-to-buy are enemies of home ownership and fail to appreciate the wider benefits of helping people to move on and up the housing ladder.”