Manchester landowner to sue GMCA over Renaker loans
Weis Group is taking the Greater Manchester Combined Authority to court, claiming it has breached the Subsidy Control Act in awarding two loans totalling £140m to the prolific Manchester developer.
Documents expected to be published by the Competition Appeal Tribunal will state that Weis Group believes the GMCA’s decision to provide Renaker with the loans has ‘distorted’ the Manchester property market, Place North West understands.
In total, Renaker and connected SPVs have received £500m from the GMCA’s housing investment loans fund. This amounts to more than half of the £940m handed out through the fund altogether.
Weis Group, owned by high-net-worth individual Aubrey Weis, claims the amount is even larger when all Renaker-linked vehicles are factored in.
A spokesperson for the Weis Group said: “While we cannot comment on the case itself, from publicly available information it appears that following the proposed loans recently approved by GMCA, these will bring total overall lending to Renaker by GMCA and its affiliates to £745m at state-subsidised lending rates, although full disclosure of the terms of the latest loans remains outstanding.”
The GMCA has previously denied that the loans are provided on favourable terms.
Speaking to Place North West earlier this year, former GMCA chief executive Eamonn Boylan said: “Everyone assumes that somehow this is cheap money. It is not. It is [at] commercial rates, effectively.”
Weis Group also contends that the GMCA is overexposed due to the amount it has awarded Renaker as a proportion of the fund as a whole.
The spokesperson added: “This case will examine whether there have been manifest breaches of the lending terms, including unusual overexposure to one entity. Under commercial lending norms the best practice for lenders is not to exceed 10% of its loan book to one borrower or group. In this case, from the information made available, it seems that this figure is closer to 70%.
“It will also examine the judiciousness of such unprecedented loans, given Renaker has made the case at planning committee that all of its schemes are ‘unviable’ and do not meet market standard profits tests.”
The most recent Renaker loans are the ones subject to Weis’ legal challenge.
They amount to £120m – with the potential to rise to £140m – for two towers providing upwards of 1,000 homes at Great Jackson Street and Trinity Islands. They were signed off at GMCA meeting in March.
A spokesperson for the Greater Manchester Combined Authority said the organisation is “aware of a claim submitted to the Competition Appeals Tribunal” regarding the loans.
“The GMCA has been delivering these investment loans to a range of developers for a number of years and we are confident in our processes,” the spokesperson added.
Renaker was contacted for comment.
Last year, Great Jackson Street Estates, which is controlled by Weis, took Manchester City Council to court.
The applicant sought the court’s consent to modify covenants attached to a lease it holds on a plot of land at Great Jackson Street.
Weis’s company has planning consent for two residential towers on the site, whose freehold is owned by the city council.
By modifying the covenants, GJSE sought to broaden the scope of what could be delivered on the site in terms of use.
However, the court dismissed the application.
I find it extremely ironic the statement from Weis concludes with the need for “transparency the city so needs” yet we know almost nothing about this mysterious property individual is and who’s approach is equally clandestine as Renaker’s agreements with GMCA. I think the people of Manchester have a right to know who all these people and companies are rather than hiding behind the parapet.
By js1000
Yet again the jealousy and bitterness coming through – as a manifestation of not being able to do a deal with the City when many others have. The Council have not given any special treatment and this has upset Mr Weis and this is his retribution.
By Council Dave
Individuals have a right to privacy. Public Bodies should be Public and have some transparency.
By Anonymous
Mr Weis’s money is his own and he’s consequently entitled to spend it as he likes. Similarly, ‘the people’ of Manchester have no right to access anything about his private or business life.
The GMCA is a public body and therefore should (and now will) face the the scrutiny and transparency that any body charged with allocating public funds (the money of ‘the people’ of Manchester) should.
By Anonymous
I suspect this might get settled before it makes it into the court room, documents are disclosed and a judgement is made.
By Anon
Given what has happened at other councils, notably Warrington and Liverpool, GMCA should stop lending money to developers. If commercial enterprises won’t back these developments then it’s obvious that they are not viable.
By Anonymous
So the tax payer takes all the risk and Renaker take all the profit. What could go wrong.
By Andrew Gaskin
This smacks of a vendetta and nothing to do with the Weiss scheme. PNW – get under the skin of this!
By Anonymous
Amid an alleged building boom there is a valid question for the city council to be forced to answer; Why are they ploughing money into developments that only serves to continue to spike prices. There is no affordable housing involved, meaning ordinary residents are being priced out. Meanwhile the economic imbalance this causes (high construction costs) reduces quality elsewhere. While fanboys stand in awe of their favourite erections, Manchester’s elitist, selfish economic vandalism has real and significant consequences.
By Jeff
What a waste of public money.
By Starmer
Jeff – get your facts right. It is not the City Council “ploughing money into developments”. These are loans (ie they are repaid!!) provided by the Greater Manchester Combined Authority.
By Anonymous
I don’t know about legal stuff but I do know Darren Whittaker, gets things done. This smells of sour grapes to me.
By Elephant
If Lees & Bernstein had held to ‘if commercial enterprises won’t back these developments then it’s obvious that they are not viable’, Manchester & GM would be a very different place today, and much for the worse.
If local authorities won’t attract inward investment, plan, and co-ordinate development – what purpose do they serve? Commissioning adult social care & sorting out the bins?
As for other comments regarding the building boom, measuring the sector’s viability by the number of projects on the ground is unwise. Plenty of articles on this very site showing how expensive Manchester is to build in, and how tight margins are for many developers.
Building more homes does not ‘spike prices’. Increasing supply does not cause ‘economic imbalances’ and you can’t ‘price out’ anybody when you’re building homes on scrubland and former car parks.
Social housing in Manchester is over a quarter of total stock. How do you propose MCC to find resource to take that further, if not by increasing the tax base, attracting residents, and growing the local economy?
Economic vandalism.. a city region with productivity growth running at a faster clip than London?
Elitist.. a city core mostly populated by asset poor young people renting?
By Anonymous
There is definitely a need for an article on how the Greater Manchester Housing Investment Fund works. My understanding is that it was established to fill the gap left by banks and other financial institutions who would not lend / overexpose themselves to the housing development market in Greater Manchester. The issue raised in this article about scheme viability is a separate planning issue and dealt with in a very separate swim lane.
By Anonymous
They want to build more towers even though Deansgate Square residents don’t want them ro
By Anonymous
@ Council Dave.
if you are at the Council, isn’t GMCA a separate entity to MCC?
also is it likely that Weis would not be bitter if he had received the same treatment as Renaker😂
By puzzled
As a note, puzzled, I would never read into a commenter’s name on PNW.
By Julia Hatmaker
While from an outside perspective, it might seem like preferential treatment… I’m prepared to turn a blind eye. Renaker have proven they can build at scale and pace. From the perspective of a city centre resident, I’m far more concerned about urban regeneration occurring in a timescale that I can actually enjoy than who has what market share.
By Anonymous
@Anonymous at 1030 – I think that is incorrect – these are not separate issues or ‘swim streams’, only one can be right.
It cannot be argued on one hand that the schemes are so unprofitable that they cannot support any meaningful S.106 or affordable housing payments to MCC while at the very same argued that they are sufficiently viable so as to be acceptable lending risk when borrowing from an affiliated body – the GMCA Loans Fund. GMHILF are supposed to act as a responsible lender of taxpayer funds.
Even if it is found that these ‘unviable’ developments pose acceptable loan security, at best GM should be charging a rate that corresponds with the risk attached and not put so many eggs in one basket. If it is right that 70 percent of loan book has been lent to one Developer that’s exceptional on any basis. It will be interesting to see if the court agrees with Eamon’s assertion around market rates.
By Not Council Dave
Let this run it’s course…if there’s nothing to hide; nothing untoward, nothing sinister and everything is above board, then Mr Weiss will have wasted quite a lot of money. However, they might have a point or uncover other issues. Keep your eyes peeled Dan Whelan.
By anonymous
the GMCA was set up by the tories to boost Manchester
By Anonymous
Not Council Dave – you clearly do not deliver residential development. You think but do not know!
By Anonymous
My understanding is that the GMCA cash primarily comes from Homes England, and that GMCA then lend the money in line with their approved strategy. It is UK taxpayer cash rather than money ‘taken’ from other Manchester or GM budgets. HE also lend directly too. On the point re the loan book value point, I think that is a fair question. If the money has been lent in separate batches, and then repaid before the next is provided, then its possible the % numbers are not as high as a simple calculation of Total Fund Value / Money lent = 70% would suggest. Scrutiny should be applied to public bodies but I don’t feel GMCA will be panicking too much about this.
By Anonymous
The fact that this fund has turbo-charged local delivery and has been recycled numerous times with a capable party against a backdrop of a severe supply shortage…im all for it personally. And whilst transparency of local bodies is critical and all individuals have a legal right to redress any perceived wrongs, I do wonder if there is another story here, it is interesting to know how some companies do business…
By Sour Grapes
Many of these developments are complete, sold off and I trust loans repaid, Renaker have certainly delivered.
By Mark Clayton