The following story is a bit like a Tom Sharpe novel. It involves an American investment firm, an estate in London’s East End, aggrieved local residents marching on Downing Street, the family firm of (reputedly) Britain’s richest MP and a famous comedian who speaks in a sort of Victorian “luv-a-duck” lingo. All that is missing, to complete the manic Sharpesque scenario, is a climactic explosion liberally showering the whole cast of characters with the contents of the local sewage farm.
The New Era Estate in Hoxton, East London, was purchased in March 2014 by Westbrook Partners, a US private equity firm. The Benyon Estate (about which, more later) applied for, and was awarded, the management contract for the estate and agreed to take a minority interest of less than 10% in the property. That <10%, although it sounds small, amounted, by my reckoning, to over £2 million, based on the estimated purchase price of £23 million. A tidy sum. – Enough for The Benyon Estate, which is, from all accounts, a benevolent and considerate landlord, to be held to account for plans which subsequently emerged, while not being in control – a rather invidious position.
Westbrook Partners proposed to refurbish the estate and then increase the rents. That move, it was claimed (plausibly), would have led to 93 resident families, of humble means, needing to find alternative accommodation. They would have perhaps had difficulty in doing so because the New Era Estate is one of the last affordable housing projects left in the area.
As a result, there was a campaign led by the residents, with the support of local MP Meg Hillier, the Unite union, Hackney Council and comedian Russell Brand.
These events then followed:
- On November 13th, the Benyon Estate announced that it would be selling its shareholding back to Westbrook.
- On November 17th, London’s Mayor, Boris Johnson, backed the tenants and asked his deputy to find a solution to the problem with Westbrook Partners.
- On December 1st, the residents, supported by Russell Rrand, marched on 10 Downing Street and handed in a petition containing over 300,000 signatures.
- On December 19th, it was announced that Westbrook Partners had sold the estate to affordable housing provider, Dolphin Square Foundation. The new landlord is pledging affordable rents and no change during 2015.
So, the residents are to be congratulated on their successful campaign, which will hopefully allow them to enjoy Christmas more than they would have done. Credit should also be given to Westbrook Partners for belatedly seeing sense and to the Dolphin Square Foundation for taking the estate on.
The Benyon Estate is owned by the family of Richard Benyon MP. On his website, he describes it as “my family’s property firm in Hackney”. The Benyon Estate owns and runs the De Beauvoir estate, which is near the New Era estate. Let’s be very clear. Richard Benyon is not involved in the management of The Benyon Estate and wasn’t involved in the management of the New Era Estate. On The Benyon Estate website the estate manager is listed as Edward Benyon, Richard’s younger brother. This is confirmed on the Companies House website. Indeed, Edward plays a very “hands on” role in managing the estate, engaging thoroughly with tenants and often being sighted beetling around De Beauvoir town on his bicycle.
When you look at this from a simple business point of view and the perspective of March 2014, then it is logical that you may want to make use of your estate management skills by managing a nearby property (New Era Estate) and taking a financial interest in it. Simples.
However, hold on a minute. Richard Benyon is an MP. So the prospect of an MP’s family business being involved in a venture which arguably leads to working families needing to seek alternative accommodation should perhaps have set alarm bells ringing a little earlier. I would go a tad further and ask whether it is altogether morally right to (as was proposed) buy, refurbish and then raise rents on an estate, thereby probably putting people out of their homes who would have perhaps had difficulty finding somewhere affordable nearby. That is apparently legal, yes, a legitimate business move, yes, but morally right? I hae ma doots, but that is my personal opinion. However, I trust and believe that there were the best intentions on the part of The Benyon Estate to make the proposed refurbishment work without inordinate hardship for the existing tenants. (The Benyon family’s charitable concern, the Englefield Charitable Trust, does really fantastic, and rather unsung, work to help extremely needy people in local communities.)
This episode raises questions about the interplay between business, politics and, dare I say it, morality (not to mention comedy).
Of course, we should give sincere full marks to The Benyon Estate for listening earnestly to the estate residents and decisively withdrawing from the venture in November. That move was all the more praiseworthy because it, presumably, hastened the demise of the whole Westbrook scheme for the estate. Hindsight is, or course, a wonderful thing. However, at the very least, it would appear reasonable to ask whether the correct political judgment was applied at the outset of this whole episode.
* Paul Walter is a Liberal Democrat activist and member of the Liberal Democrat Voice team. He blogs at Liberal Burblings.
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9 Comments
Paul, Richard Benyon is no stranger to this sort of thing – maybe it’s just become the water he swims in and he can’t imagine what it’s like to not have a conflict of interest. In fact, having only an indirect connection to an area of controversy is maybe like not having one at all, for him. He’s a very Victorian figure, in many ways.
According to Wikipedia, George Monbiot is alleges in the past to have written of him (when he was at the Ministry of Agriculture) that he was “so enmeshed in potential conflicts of interest that were he to recuse himself from all the issues in which he has a personal stake, he would have nothing to do but order the departmental paperclips”.
Paul
As I understand it Westbrook weren’t just going to refurbish the units, they were going to convert them into luxury apartments. Westbrook weren’t just going to increase the rents, they were going to charge the market rate for luxury apartments – which could have been upwards of £2000 a month.
It is bad enough that this disgraceful act took place, what makes it far worse (and is the reason nearly all the residents of the New Era Estate nearly being forced out of their homes), is that the coalition enforced cap on benefits.
I don’t see it worthy of a Sharpe novel, it is highly Dickensian and should not have been seen outside of a history book on the Victorian Era.
I think your point doesn’t completely stack up ASL. It can’t be right for taxpayers to pay sky high rents for luxury flats to enrich American equity firms, can it? That would seem to be a complete distortion of the housing market.
So without the benefit cap, many of the residents could have stayed in their now nicer properties, and there would have been no protest. The biggest beneficiaries would have been Westbrook and Benyon estates, who unchallenged would have massively increased the state subsidy to their shareholders.
We need a system where any social housing subsidy incentivises landlords to improve their stock without driving up rents, particularly in high rent areas like London.
Paul
Better we pay than chase people not only out of their homes, but out of the districts and even city they have lived in for up to 70 years.
Of course, if we had the fair rents policy in place it wouldn’t have happened. Fair rents might or might not disuade landlords from getting into renting, but if we had decent social housing that wouldn’t matter AND we wouldn’t be hearing of
“Wouldn’t be hearing of” what?
But surely it was even better that government – local government – in the shape of the Deputy Mayor of London -brokered the solution with Dolphin Housing, was it not? Rather than debate a hypothetical which isn’t going to happen, I am presuming you have real examples to cite to back up your case (which I tend to agree with in general of course – the point about the need for better social housing – I just don’t understand why you are trying to latch it on to this case). It seems strange that you are writing “it wouldn’t have happened” when it didn’t actually happen.
Good article. I must treasure Russell Brand making a sensible political intervention.
Just would like to point out that some state-backed regeneration schemes do something rather similar. A down-at-heel area is made nice, so property values go up, rents rise, the struggling people move out and yuppies or people retiring on good incomes move in. Crime down, benefit dependency down, litter and vandalism down, income levels up – what’s not to like?
Paul Walter
Thanks for this excellent, informative article. You touch on morality. This is welcome, especially nowadays when. Some contributors to LDV seem to think that business and the so-called “free market” should be a morality-free zone.
Today’s Guardian has a front page article on overseas speculators buying up properties in London at a ridiculously inflated price. The insanity let alone the immorality of the worship of the “free market” comes home to roost in stories such as this.
The Guardian article mentioned in my last comment illustrates how the ” free market ” does not work when it comes to the provision of housing for Londoners.
For example —
“…104 luxury homes on the site of the former St John’s Wood barracks, with apartments expected to sell for up to £5m each and seven-bedroom stone-clad detached mansions around landscaped gardens that will go for more…”
And –
“… 10,000 homes on the Greenwich peninsula, including three-bedroom apartments … costing above £800,000.”
And –
“… the reality is that many will be Potemkin villages, flimsy facades behind which the lights may never even be switched on. Mostly sold off-plan in east Asia, these properties are not so much buy-to-let as buy-to-leave. Many will create empty swaths of zombie town, their retail units left untenanted, their private cinemas unused.”
http://www.theguardian.com/society/2014/dec/26/londoners-miss-out-as-foreign-investors-buy-up-home-sites