I’m leaving my run of General Election blogs to look at a topic that I have been dealing with for 3+ years. Property developers in Liverpool.
I am saddened that more than 15 months after the Council’s Fractional Investment Task Group first met no report has yet been issued nor does there seem to be an end date in sight for its publication.
I joined that Group with high hopes that we would get to the heart of the problems that have occurred in the City. Increasingly, I am beginning to think that we have learned nothing at a strategic level. In practice the methodology employed within the Group was less than robust with councillors being unable to refer to specific developments with specific problems.
- There are up to 15 blocks in the city which will apparently never be finished despite large amounts of money being ‘invested’ in them.
- Many of those will have to be demolished as they have been exposed to the elements of wind and rain.
- There is no obvious source of funding for these demolitions and land remediations as the developers are insolvent in one way or another.
- More than £200,000,000 has ‘disappeared’ mostly raised from small investors some of whom have lost their savings and some of whom have committed suicide as a result of their loss.
- Liverpool has lost its reputation as a good place to develop because of the international reputation it has faced as a result of this.
- Where blocks have been completed many of them are of poor quality and are unlikely to stand the test of time.
- Promised yields on investment have failed to materialise as a glut of certain types of property such as studios, 1 bed apartments and student accommodation is forcing rent levels down.
Of course, I must make clear that there have been high quality developments in Liverpool by responsible and committed business people that have worked and are delivering for investors. Their job of running a decent business has been made more difficulty because of the need to compete with dodgy investors.
There are serious questions to be asked here of:
The Council. Why is it that Liverpool has suffered so much bad development as the rest of the Country put together? How did we sell land to developers with no track record and fail to get paid for the land? Why didn’t we notice that in one development an underground car park required as part of planning permission hadn’t even been started? Why didn’t we get the Planning consent (Section 106) money from developers before work started which was a condition of the planning permission? Why were they lured into giving planning consents for commercially zoned land when there was no reality to the developer’s residential proposals. Why was the council 7 years late in promoting it’s Local Development Framework which left the City exposed to inappropriate market forces?
The legal profession. How was it possible to allow solicitors to act for both the developer and purchaser when the purchaser had no previous relationship with the solicitor? What has happened to the overview bodies for the profession? Do they have enough teeth?
Surveyors. Why were surveyors using a RICS certification allowed to give highly optimistic capital values, value growths and yields with no reference to resale values and current rents? Does RICS exercise a sufficient control of professional standards?
Estate Agents. Some gave property descriptions and general information about Liverpool were dodgy in the extreme. They regularly gave updates about sales and work initiation which were either highly optimistic or deliberately misleading.
Architects. Why did they continue working for developers whose earlier projects were already falling seriously behind and questions were being asked about their viability?
Of course, none of these people suffered. An amazing 25% on average was paid out to professionals before a foundation was put in. They got their money it was the poor inexperienced investors who lost out.
You might ask why does this matter? It’s all in the past and to some extent it is. I do believe that under the leadership of our new Chief Executive, Tony Reeves, the Council has taken a long, hard look at itself and has made a considerable tightening pf its procedures.
It matters because:
Thousands of people have lost out. If they cannot have their money back or their investment, they deserve to know who was guilty and of what.There are unfinished blocks across the City Centre which need attention.
Money has disappeared some of it legally and some of it, possibly, illegally.
There is an overhang or properties which will drag down the market for decades
Liverpool needs to show firmly that we are doubt our best to both resolve the past and future proof our actions if we are to pull ourselves out of the reputational gutter.
The day of reckoning for some of those involved is long overdue but may be coming soon. I know that the Police (at varying levels), the tax man and the VAT man are deeply involved in reviewing some transactions.
I understand that some investors from places like Russia, China and Southern Italy will be coming to Liverpool soon to have discussions with the people they put their money and their client’s money with.
I know that journalists the world over and UK wide are ramping up their interest in this issue with particular reference to Liverpool.
It is a disgrace that Liverpool Council has prevaricated for so long on these issues. We need action and leadership from the Council if we can restore trust in our battered development industry in the City.