‘Taken for mugs’: Business owners claim council is offering them a quarter of real value for buildings at Bridge Close project
PUBLISHED: 15:00 16 October 2020
The threat of compulsory purchase orders has been hanging over businesses on an industrial estate for four years. But they claim bosses behind the council-led regeneration scheme are offering them a fraction of what their properties are worth. Charles Thomson investigates.
Murat Karatay was in his twenties when he set up his own butchery and catering business on Romford’s Bridge Close industrial estate in 1996.
But like most companies on the estate, Romford Catering Supplies has been in limbo for more than four years.
In June 2016, Havering Council approved plans to flatten the site and replace it with more than 1,000 flats. Since then, business-owners have been living with the threat of compulsory purchase orders (CPO), meaning there is nothing they can do to stop the council buying their properties from them.
Works on the Bridge Close regeneration were supposed to have begun by now, but there is not yet a start date. Murat is just one of several business-owners who say they see “no light at the end of the tunnel”.
They claim they are already thousands of pounds out of pocket for surveyors’ fees owed to them by the council, and claim the sums they are being offered for their properties are hundreds of thousands of pounds short of the market value.
“My family left Turkey because of corruption,” Murat sighs. “They came to England in the 1960s for a more just system.”
But the CPO process has left him frustrated.
After voting to regenerate Bridge Close, Havering Council went into business with two private companies – developer First Base and real estate company Savills Investment Management.
The trio formed a joint venture, with which the Bridge Close businesses have been negotiating ever since.
‘Taken for mugs’
Council leader Damian White says the joint venture has not yet pursued CPOs for any premises and “has employed experienced and reputable valuers with a view to making appropriate offers, at market value, to acquire the necessary land and property for the regeneration via private treaty discussions.”
But paperwork seen by the Romford Recorder shows that offers made by the joint venture to some businesses contain constant references to compulsory purchase powers – and owners say the prices they are being offered seem to fall far short of the market value.
Julia Herold’s family business AC Preou – a heating maintenance company which services hospitals and schools – has been based on Bridge Close since 1986.
Now, they fear they will lose their investment. Based on prices for similar premises in the borough, Julia believes the joint venture’s offer on her property is a fraction of its true value.
The last offer AC Preou received was £1million, which amounted to £140.45 per square foot. But earlier this year, when Julia found a suitable new building in Gidea Park, the sale price was £596.03 per square foot. The stark difference meant that even though the new building was less than half the size of the family’s Bridge Close site, it would cost almost twice what the joint venture was offering to pay them.
When Julia looked into who was marketing the Gidea Park property, she discovered it was Savills – Havering Council’s business partner in the Bridge Close development. The firm was trying to buy the business’s home of 34 years for around a quarter of what it was charging for a replacement in the same borough.
“You can see what we are up against here,” she says. “We’re being taken for mugs.”
Savills did not respond to requests for comment.
AC Preou is not the only company which has seen significant differences between what the joint venture was offering to pay and what it would cost to purchase a new site.
Murat was also offered £1million, but his building is bigger than Julia’s, so it amounted to £127.28 per square foot. He says similar sized premises are typically coming to market between two and three times that price.
Ian Griffin, who runs lift maintenance firm Griffin Elevators, was offered £118.77 a square foot.
“We’re wondering where Havering came up with this figure, because it bears no relation to any sales down Bridge Close or any surrounding areas,” he says. “When we went and viewed a property in Brentwood, we were seeing indicative prices of £400 per square foot.”
Unable to sell their current premises without a new site to go to, the Bridge Close businesses will be forced to take out sizeable mortgages to move.
“But the sale won’t cover the cost of the new property,” says Murat. “Not even close.”
Cllr White says the council is “unable to comment on individual discussions which are taking place with property owners”.
But the business-owners’ complaints go beyond the prices being offered for their buildings. Ian’s property has parking spaces for 15 vehicles, but he has been told he will be paid nothing for that land.
“A car parking space has no value, as far as CPO is concerned,” he explains. “It’s purely based on the size of your building. I said to the council, ‘So if you knock my building down, that land now has no value’? And it all went a bit quiet.”
Murat and Julia have been told the same. Julia’s land includes front and rear parking, a loading bay and a yard, none of which she will be paid for.
“This land is a stone’s throw from Romford station, but they claim it has no value because it isn’t a building,” says Murat. “Yet I found one of the partners in the joint venture selling a property for £1.85million for industrial use – and it was just yard space.”
‘Move to Chelmsford’
When the regeneration scheme was first announced, says Murat, “they made a big song and dance about how they would help all of us relocate to new premises.”
But each business the Recorder spoke to said it had been shown a handful of inappropriate sites and had last been contacted about relocation a year or more ago.
Murat, who has to drive heavy palettes around his current building on forklifts, was offered new premises set across multiple storeys with no commercial lifts. Ian says he was asked to view properties which turned out to be “dilapidated”. Julia, meanwhile, says she was shown a property 20 miles away in Chelmsford.
“It was a lovely building but it took us an hour to get there,” she says of the viewing. “The traffic was awful – and that was on a Sunday morning. We’ve always lived in Gidea Park, but if we did have to relocate the business to somewhere like Chelmsford, I would have to move there.”
“We were told that under the CPO process, we wouldn’t be left in a worse position than we are now,” says Ian. “But as it went on, the picture started to change and they started backpedalling.
“What we are finding out is that it’s a 200-year-old law that has never been revised. It’s very draconian and a very blunt instrument.”
The years of uncertainty, says Murat, have had dire consequences for his health.
“I’ve suffered a heart attack because of the stress and strain that it’s put on me,” he says. “You’re running a business in volatile times anyway and then you’ve got this venture on your back that’s continuously saying, ‘We’re going to take your premises’.
“I was working 20-hour days – running the business, looking at properties, researching the law. It just ran me down. I turned to alcohol to drown my sorrows. Because, what do you do? To run a business, you need a plan of action. You need to be able to set targets. But with this, we didn’t know where we were.”
Murat is now back at work, but only a few hours a day. One of his sons has given up another job to come and help, whilst his other son has postponed going to university to do the same.
Julia has founded the Bridge Close Business Alliance, which is lobbying the council for fairer treatment and raising public awareness about the scheme.
Havering Council announced last month that the joint venture had broken down because the private sector partners felt the scheme was not sufficiently financially viable.
The council’s cabinet held an online meeting on September 16, to consider the future of the project. But when it came time to discuss Bridge Close, the administration voted to exclude the business owners and take the decision behind closed doors. Once in private, it agreed to try to buy out the private partners and press ahead with the regeneration.
“Do I see our council in any worse a light than I did before?” asks Julia. “Yes, I think I do – because they don’t seem to be looking after the people who have looked after them for many, many years.
“But the council are only using a tool that every other council would use and does use. The compulsory purchase tool is a weapon that really is very outdated and it should be abolished, because it’s railroading people’s lives all over the country.”
Cllr White responded by saying: “The Bridge Close development is an opportunity to regenerate an underused industrial area of Romford to provide around 1,070 new, high quality homes for local people – with at least 30 per cent being affordable. The site would also include new retail and commercial space, a primary school, a health facility, as well as better walking route to the station and town centre and the revival of that stretch of the River Rom.”
He added that any fees the joint venture had agreed to pay for the businesses would still be met by the council.
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