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London councils welcome ‘sham transactions’ investigation
London councils have welcomed the Regulator of Social Housing’s investigation into a housing association accused of “conspiring” to violate Section 106 agreements.
Four councils, all of whom have been identified by Inside Housing as governing areas where sites have been bought by figures linked to a landlord accused in court of carrying out “sham” affordable housing transactions, said they welcomed the regulator’s intervention.
The Regulator of Social Housing is investigating Pathfinder, previously known as London District Housing Association, which was taken to court by Southwark Council over claims it deliberately violated its Section 106 agreements.
The organisation was accused of effectively selling homes which should have been shared ownership on the open market. It denied the claims, brought to the High Court by Southwark Council in 2015, and the case was settled confidentially.
As part of the settlement the judge ordered the homes be sold back to Southwark Council.
The regulator is also investigating Kinsman Housing and St Andrews Community Housing Association (SACHA), both of which are linked to Pathfinder.
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Pathfinder has transferred sites around London to both associations, which are also funded by companies run by the same man who funds Pathfinder, Terry McMillan, according to HM Land Registry data accessed by Inside Housing in April.
Mr McMillan was accused in court by Southwark Council of being part of the “conspiracy”.
According to information obtained by Inside Housing from the HM Land Registry, Companies House and through the Freedom of Information Act, there are 10 local authorities in London where these associations own or have owned sites.
These are: Southwark, Camden, Ealing, Lewisham, Hackney, Westminster, Kensington and Chelsea, Wandsworth, Greenwich and Brent.
Of these, four told Inside Housing they welcomed the investigation.
Stephanie Cryan, cabinet member for housing at Southwark Council, said: “We welcome any action to ensure much-needed affordable homes go to those who need them most.”
A Westminster City Council spokesperson told Inside Housing the council was “currently in the process of referring suitable households to occupy the units at 22-28 Paddington Street and 74-76 Chiltern Street”, sites where the council entered into a Section 106 agreement with a developer who then sold the affordable housing allocation to Pathfinder.
They added: “We welcome any investigation into any case where there may have been a breach of an agreement to provide affordable housing.”
In Brent, Kinsman Housing manages six shared ownership homes on Christchurch Avenue. Shama Tatler, the council’s cabinet member for regeneration, told Inside Housing: “We welcome any investigation into activity that deprives those in need of the affordable homes that had been promised.”
Hackney Council is one of three local authorities who have encouraged the regulator to investigate since 2015.
A council spokesperson said the council “welcomes that an investigation is now taking place”.
