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Association accused of ‘sham transactions’ records large annual loss
The housing association previously sued for allegedly selling affordable properties on the open market has vowed to continue in the sector despite financial losses.
In its accounts for the year ending 30 September 2017, Pathfinder Housing Association – previously known as London District Housing Association (LDHA) – reported a loss of £251,166, a figure almost 45 times as large as its turnover, which was £5,594.
Southwark Council had accused LDHA of “conspiring” to use “sham transactions” to sell homes on the open market that were supposed to be sold as shared ownership in a court case in 2016.
These cases reached confidential settlements, with the defendants denying all allegations and none of them conceding they were any part of any sham transaction or conspiracy.
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In July last year, a high court judge ordered leaseholders who’d bought the homes to sell them back to Southwark Council.
A statement signed by Mark Williams, chair at Pathfinder, said: “The association had been unable to expand as had been planned, due to the ongoing litigation with Southwark.
“On conclusion of the litigation, the existing board had served in excess of the recommended term for management committee members under the association’s governance structure, so a fresh board was recruited and have taken over the management of the association, and are looking for new opportunities to invest in social housing provision.”
The association’s deficit grew from the previous year, when it had lost £161,683. In that year, it had to spend a similar amount of money on legal battles with Southwark, but its turnover was 2,711% higher, at £157,266.
In its accounts, Pathfinder did not state the reason for this change, recording only that in both years, the entirety of its income came from “social housing”.
The association also noted that it had disposed of almost all its tangible fixed assets, selling off £130,502 worth of its £130,506 portfolio of land and buildings.
An Inside Housing investigation found that it has sold homes in various boroughs around London to housing associations run and funded by the same people behind LDHA.
Hackney Council has called for the Regulator of Social Housing to re-open its investigation into LDHA.
The Regulator previously investigated the association from March to May 2017, but declined to comment on the outcome of that investigation, or on whether it would investigate again.
