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Westminster urged to investigate firm using right to buy to ‘amass property’

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Westminster urged to investigate firm using right to buy to ‘amass property’

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Published by Max Salsbury for 24dash.com in Local Government and also in Central Government, Finance, Housing

Westminster urged to investigate firm using right to buy to amass property Westminster urged to investigate firm using right to buy to amass property

Westminster City Council has been urged to begin an investigation after a newspaper report apparently exposed a company's scheme to profit from the controversial right to buy scheme.

An undercover reporter for the Sunday Times recorded a director of a London property firm boasting that he hopes to make enough money from buying up heavily discounted council homes under right to buy that he will "never have to work again".

Nicholas Carlino, of London Investment Property Group, gleefully told the reporter that he could make huge amounts of profit from right to buy because local authorities are "massively undervaluing" their homes. Carlino is then apparently free to snap them up on the cheap and resell them for much greater prices.

Now Westminster's Labour councillors have said that the company's activities may be connected to the fact that almost 20% of the borough's right to buy sales since 2012 have been to tenants on housing benefit.

The Sunday Times article highlighted First Avenue in the Queens Park area of Westminster as one of the areas being targeted by the London Investment Property Group.

According to the article, Carlino's firm has delivered leaflets to 60,000 council house tenants, offering them large cash incentives to let him buy their houses from their local authorities.

Queen’s Park councillor Paul Dimoldenberg, leader of the Labour Group, has written to the council’s chief executive, Charlie Parker, demanding an inquiry.

He wrote: “I was concerned to see this story in yesterday’s Sunday Times and wondered whether the increase in the number of HB recipients making right to buy applications is in some way connected to the activities of these two characters[Carlino and partner William Johnson]?

"I believe that the council has a responsibility and duty to investigate further those on housing benefit making right to buy applications.

"I am particularly concerned to see that properties in Queen’s Park are being targeted. It is completely unacceptable for the council to shrug its shoulders and say that the right to buy legislation does not require the council to make detailed enquiries about where the money comes from to exercise the right to buy."

During the last council meeting, Cllr Dimoldenberg asked the cabinet member for housing, cllr Daniel Astaire, if he could explain why almost 20% of right to buy sales since 2012 had been to those in receipt of housing benefit.

He asked: "Can he explain how people on HB can (a) afford to buy property worth hundreds of thousands of pounds, (b) can afford to put down a substantial deposit running into tens of thousands of pounds and, (c) afford the monthly mortgage payments?"

Dimoldenberg asked if the cabinet member was not concerned that there "might be a huge fraud taking place right under his nose", and questioned why he was not taking action to stop the loss of council property and "millions of pounds of public money".

Councils in London are able to offer discounts of up to £100,000 on their properties under the Tory-led coalition's re-invigorated right to buy.

Dimoldenberg claims he received a "very ambivalent" response from cllr Astaire.

The leaflet delivered by London Investment Property Group explained to council residents that “A lot of tenants are unaware that if they have a right to buy offer or they use their right to apply, then they could gain anything from £20,000 to £100,000".

The Sunday Times reporter posed as a tenant living on Westminster's First Avenue and met with Carlino.

The company director explained to the reporter that he could pay the council the asking fee "on the same day" and then his solicitor could whatever sum the two agreed.

Westminster Council has said that in the event of a tenant on housing benefit failing to disclose the source of funding, a fraud investigation is automatically launched.

The council has questioned Labour's claim that nearly 20% of right to buy sales since August 2012 have been to tenants on housing benefit. The council says that 22% (20 units) of right to buy sales have been to people in receipt of housing benefit at the time of application, but only 11% (10 units) of sales have been people on housing benefit at completion.

In a statement, Cllr Astaire said: “We fully support the principal aim of the right to buy scheme, which is to help more people onto the property ladder.

"If we have reason to believe attempts are being made to exploit the system and subvert that aim we will take thorough steps to thwart them. We would urge anybody considering taking part in such a scheme to check all the facts with their local council so they avoid any potential legal difficulties.

“We absolutely refute any claim that council properties are undervalued. All right To buy valuations are carried out by external surveyors and include comparisons with similar properties on the open market. And of eleven property valuations reviewed by the district valuer last year, nine were actually lowered.”

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