MP urges pause on transfer of London council block to struck-off airspace developer

Leaseholders at Tomlinson Close served a notice to the council in 2020 to transfer their homes into a new limited company and chose Mr Gold as ‘nominee purchaser’.

But some no longer want to go ahead, claiming the terms have changed and that the transfer is an “abuse” of the collective enfranchisement process.

Meanwhile, Mr Gold is threatening to sue the leaseholders if the sale collapses. He told Inside Housing that he was helping leaseholders take control of their building from “council mismanagement” and it was “disappointing” they were trying to derail the process at the last minute.

In addition to Ms Ali, Tower Hamlets councillor Asma Islam has intervened, saying she is “deeply troubled” that residents face the “impending risk” of their property being handed over.

“This does not seem like it is best value for the council or the residents of Tomlinson Close, and requires urgent review,” Ms Islam said.

The saga stretches back to 2020, when Mr Gold approached leaseholders in the low-rise block off Brick Lane during the coronavirus pandemic with a proposal for building an “airspace” development. At the time, building homes on rooftops was gaining popularity in the capital.

Only seven of the 13 leaseholders needed to sign up for the deal to progress. The block also contains three social housing tenants, who under the enfranchisement would remain Tower Hamlets tenants through a leaseback to the council. 

An agreement signed in April that year set out the strategy for a speculative “airspace” development above Tomlinson Close. It included cash incentives of £500 and a further payment of £20,000 on “completion of any rooftop development works”.

The agreement stated that the company will loan the residents company money to purchase the property and to pay all costs and fees associated with the purchase.

On completion, the residents company would repay the company by granting a 999-year lease over the roof and airspace above the block. This lease will give the company the right to develop the airspace to add flats in and each new flat will gain a share in the freehold company.

Once leaseholders agreed, Mr Gold, as director of the new limited company, served a Section 13 notice to the council under the Leasehold Reform, Housing and Urban Development Act 1993. The sale was due to be completed this month. 

Yet at the end of October, 10 leaseholders, including five of the seven who signed the 2020 agreement, wrote a letter to Tower Hamlets requesting the council “immediately halt” the transfer pending a full investigation.

The letter said residents believed they were signing up to a “genuine” resident-led company, but the transaction was now “materially different” from the one they originally supported.

It accuses Mr Gold of a “hostile takeover” and said he had attempted to change the company to “strip residents of control” by passing a “special resolution” and creating 100 special voting shares, giving the director 500 votes versus the leaseholders’ seven. 

He also tried to insert new clauses that allow the director to seize a member’s share for £1 if they obstruct the development, the leaseholders claimed. This special resolution failed to pass.

Leaseholders also said they have not been paid the £500 incentive set out in the agreement. Mr Gold insists payments were sent to everyone who provided bank details.

The letter, sent on 31 October, also referenced Mr Gold’s expulsion from RICS in 2022, two years after the initial agreement was signed.

RICS’ disciplinary panel decided to expel Mr Gold after finding he acted dishonestly and mishandled client funds while he was the owner of Landmark Lofts, a company which was later liquidated. 

The leaseholders’ letter said: “The council is proceeding with the sale of a publicly held asset to an individual who has been formally and publicly adjudicated by his professional body as ‘dishonest’ and a ‘significant risk to the public.’”

The letter was followed by a formal notice of withdrawal from five leaseholders from the enfranchisement, however, the council said this was invalid.

The leaseholders were then contacted by Mr Gold, claiming they were in breach of their 2020 agreement and if the letter causes the purchase to fall through, they would be liable for losses. 

These include the lost profits of the rooftop development, as well as costs incurred in progressing the transaction and liability to Tower Hamlets. It claimed that the anticipated development profit alone exceeds £1.5m and said residents will “personally be pursued” for the entire sum.

A spokesperson for Tomlinson Close leaseholders said: “This is abuse of the collective enfranchisement process and the terms of the special resolution proposed by James Gold were significantly different to those leaseholders initially agreed to in giving him the right to purchase the property.

“We feel the council is letting us down in completing a sale with the knowledge that risk-averse leaseholders haven’t yet been able to ascertain the strength of a case they might be able to make in court.”

They said that one of the problems with the collective enfranchisement process is that it “splits leaseholders up”. They added: “Even though there is a majority of leaseholders in favour of something, they might subject minority leaseholders to poor terms.”

However, Mr Gold said some leaseholders misunderstood their legal position. “We have worked hard on behalf of the leaseholders of 33-63 Tomlinson Close over the last five years to help them take control of their building from council mismanagement and inflated service charge,” he said.

“It is disappointing that some leaseholders have tried to derail that process at the last moment in breach of their agreement with us.

“This is a unique opportunity for all residents to benefit from much-needed upgrades to a dilapidated building, improving access, amenities and uplifting the value of existing flats. The alternative is a cycle of continued neglect and escalating major works bills passed on to leaseholders by the council.”

A spokesperson for Tower Hamlets Council said: “The participating leaseholders appointed the nominee purchaser company and James Gold as director to acquire the freehold in accordance with the Leasehold Reform, Housing and Urban Development Act 1993.

“The transfer has to take place if the conditions set out in the act are satisfied. The council did not instigate this process; it was the participating leaseholders within Tomlinson Close who authorised the nominee purchaser company to serve a [Section] 13 notice in accordance with the 1993 act.

“If they no longer wish to proceed, they will need to withdraw from the process again in accordance with the 1993 act.”

Commenting on the case, Liam Spender, head of real estate litigation at Velitor Law, said: “This sounds like very sharp practice. It is also unusual to have non-leaseholders as shareholders in any company nominated to buy a freehold. 

“Leaseholders do have the right to withdraw from a collective purchase at any time before a binding agreement for sale is made with the freeholder, but they are liable to pay the freeholder’s costs if they withdraw. Unfortunately, it appears that the leaseholders cannot withdraw here because a binding agreement for sale has already been reached.”

Tower Hamlets councillor Ms Islam said other residents who may be approached with schemes similar should seek the advice of their local authority’s leasehold service and “get independent legal advice before making any decisions”. 

“Councils should be actively warning their leaseholders of these schemes and advising them to get independent legal advice as well.”