The stalled developments in Liverpool that will cost £billions to put right

Happily Norfolk Street was completed after it stalled for a year or so. There are now 39 developments in Liverpool that may never be completed and hundreds of £millions may be lost from unfortunate investors.

In September last year I called for a task force to be established within the Council to look at the size and complexity of the stalled development scene in Liverpool. I also asked for a report under the ‘Councillor’s Right to Know’ about these stalled developments. That task force was set up and I have just received an edited version of the report it has produced. The edits arise because many of the facts within the main report are clearly commercially confidential. Making them public would make tackling the problems even harder.

If you had asked me 6 months ago how many sites there were I would have said 16 or 17, but the report compiled by the Task Force working throughout the Autumn has indicated that there are up to 39 stalled sites in the City Centre and immediately adjacent to it and that the solution to dealing with them will be complex and involve a range of national and local agencies in addition to the Combined Authority, City Council and the private sector. In total this probably means between 5,000 and 7,000 units of accommodation which are part completed and which have been sold with guaranteed returns to investors looking for a high rate of return on their investments.

I am pleased that the Council is clearly getting to grips with 10 years of problems within its regeneration department and that the new regime and methods introduced by the Chief Executive are both showing the problem’s extent but also beginning to search out solutions for the derelict sites which are littering our City Centre and the areas immediately adjacent.

When I asked for this report to be produced, I had no idea that the scale of the problem was a great as is revealed by this work. The problems of some of them such as the Rise development and the Paramount development on Lime Street are well known but the fact that the Paramount site has now been half completed for 4.5 years indicates just how difficult the problem is to deal with.

This is particularly true of sites built using the fractional investment model where there is now doubt about who owns what. On one development the individual investors have taken out more than 200 individual charges against an incomplete building which might, in practice, have no value. In others there may be a private sector solution with a simpler debt structure whereby administrators can seek a take over of assets and a disposal to a competent developer. Dealing with this will be a tremendously complex legal and financial task which may well take years.

In either case, I cannot see how on most sites the private sector can get there money back. In some cases, there is a little money in the hands of administrators but if there had been enough money to finish the sites they would have been finished. In other cases, large amounts or work needs doing and all the money has been used up or is just missing.

That means that in the vast majority of cases there is clearly going to be public sector money needed to either finish off or demolish half completed buildings and remediate the land for sale. We cannot yet begin to put a price on this but it will be huge, probably £1 billion+ and it is right that the Council keeps the Government fully informed of the progress being made because the Council clearly has not got all the cash required.

The Council is having to find money in the short term to pay for a semi-permanent team to pursue these issues on a site by site basis. It is applying to the Liverpool Combined Authority for the cash for this short to medium term work. Most sites will need structural reports to indicate what is saveable; legal reports which indicate what the current ownership structures are. Then financial reports will need to be produced which indicate who owns what and what assets there are available. Only then can a way forward be found for these sites. It is likely that some of these sites will take years to sort out others might be dealt with quickly with the backing of the Council.

Where will the money come from? The Council has no spare cash although in some cases it may be possible to invest in these sites if the eventual quality will meet the quality and type that the Council wants to see developed.  Basically, we don’t need more one bed apartments or student pods. We need family accommodation some of which could be in blocks but most of which needs to be provided at a lower level than a tower.

In addition, there are numerous other sites where litigation is in play on developed sites where there are physical problems, such as Fox Street, or other sites where the developers are in dispute with investors about a failure to deliver promised returns.

I was contacted recently by an investor from a small development in Liverpool 18. In this case although the retail units on the ground floor are occupied and paying rent to the developer none of the student rooms have been let since the Council closed them 3 years ago on safety grounds. Investors have received no payment for 3 years and the whole project is now in administration. This site is not a stalled development

At least now the Council is acknowledging the scale of the problem but it will take a lot of time and money to build out, or demolish for more appropriate family development, some of these stalled sites. I know that a lot of you want to see action and indeed, despite the fact that I have been battling these developments and seeking answers for 6 years, some think that I have been dragging my heels on the issues.

I feel however, that we are beginning to bottom this out and that we need to proceed cautiously rather than speedily. If money has been taken illegally, I want people to be brought to justice. If money has been used badly, I want those people never again to be able to run companies that fleece people. If investors money can be saved in all or part by patient negotiation, I want it to be saved. If we can get money from the Government or the private sector because we methodically prepare the ground for receiving such money, I want to be patient.

As citizens we should never forget and never forgive the problems that have been caused to so many small investors all over the world who have been fleeced in our City. Nor should we forget the role of the Council in allowing to happen and in many cases encouraging to happen developments that were at best reckless and at worst totally fraudulent. What is certain is that this is a set of actions that will weigh the City down for many years to come and that those who allowed it to happen must pay an electoral price.

About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
This entry was posted in Uncategorized and tagged , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s