Millions of pounds may have been overspent on buying the St Michael’s Gate estate in Peterborough after the council agreed a £13 million deal to purchase 72 homes used by the city’s homeless.
Cabinet member for housing Cllr Steve Allen admitted the Conservative-run council had paid above the market price to secure the properties in Parnwell which it has previously been claimed were valued at £7 million.
However, Cllr Allen defended the decision to agree a deal with private housing firm Paul Simon Magic Homes, claiming that it was worth overpaying to make sure the homes did not slip out of the council’s grasp.
“I think we are paying too much, but sometimes in life you have to pay a bit more,” he said. “For instance, if a house you want to buy is a bit more than it’s worth, or as a business, so you have control over a situation.”
“The houses are now available and we are fulfilling our obligations to the homeless.
“We can now get rid of paying £600,000 a year to the landlords and have an appreciating asset. It’s the right thing to do - it’s a no brainer.”
The cabinet member also admitted the houses had not been left in good condition, with the £13.38 million set aside for the deal including repairs to the windows at every property as they need replacing in the “near future”.
There has previously been criticism of the heating inside the homes, as reported by the Peterborough Telegraph, which has led to the boilers being replaced.
The deal will bring a close to a three year saga after Stef & Philips, which manages the properties for Paul Simon Magic Homes, evicted the families at the 72 homes before signing a three year deal with the council for it to use the properties as temporary accommodation for the city’s homeless.
The deal was widely criticised at the time, with the council repeatedly insisting that if it had not agreed the lease, Stef & Philips would have partnered up with another authority which would have moved its homeless families into Peterborough.
Despite its argument the council faced heavy criticism for not turning its back on Stef & Philips, while national and international media followed up the PT’s revelation at how an entire community could be torn apart in such a way.
Stef & Philips has criticised media coverage around St Michael’s Gate while insisting “the suggestion that ‘this is all about money’ could not be further from the truth.”
News of the council’s deal to buy the homes has reopened old arguments, with leader of the council’s Labour group Cllr Shaz Nawaz saying: “It’s very, very disappointing taxpayers’ money has been wasted. The Conservatives should have been proactive when we told them to buy the properties in the first place.
“They’re having to eat humble pie. It shows a lack of planning, lack of foresight and lack of thinking. They’re doing everything on the hoof.”
Cllr Allen, who memorably once declared that “the business model of Stef and Philips stinks like last week’s fish,” strongly denied the accusation the council had previously decided against buying the homes. He said: “As far as I am aware the homes were not for sale before. They had been purchased and then offered to us for lease.
“If we had not taken on the leases maybe another authority would have done to accommodate their homeless.
“Peterborough people need to be accommodated in Peterborough. To lease the homes was the right thing to do.”
At a public meeting when the St Michael’s Gate argument was raging, council deputy leader Cllr Wayne Fitzgerald said the 72 properties had been on the market for £10 million but were only valued by the council at £7 million, with the authority unwilling to get involved in a bidding war.
Council leader Cllr John Holdich said: “These 72 properties are critical for us to be able to provide enough temporary accommodation in the city and therefore it is vital we retain their use in the most cost effective way. Buying is the most cost effective route.”
The council declined to say how much the annual borrowing repayments for the homes will be as the figure is currently only an “estimate”.
Rise in homelessness
When the Peterborough Telegraph broke the story of the evictions at St Michael’s Gate in 2016 the city council insisted it had only agreed to do a deal with Stef & Philips because otherwise it would have agreed a similar arrangement with another authority, leading to a huge cost to local taxpayers.
At the time the council was struggling with a sudden homelessness crisis and was having to put families in Travelodges at a high cost.
Speaking to the PT this week, cabinet member for housing Cllr Steve Allen used the same argument for purchasing the 72 properties, saying: “If we hadn’t purchased them and someone else had they may not have leased it to us,.”
Asked if he was aware of any other interest in the homes, Cllr Allen said he was “not party” to conversations over the sale, but added: “I’ve been assured by officers we were offered the places for sale and have taken that opportunity.”
The saga led to a Parliament debate, while a PT campaign drew the attention of the Government which this year pledged to outlaw Section 21 evictions, meaning landlords will no longer be able to evict tenants without good reason.
The number of Peterborough families in temporary accommodation was 70 in April 2015 and 125 in April 2016. The number has now risen to 399.