Mill Investigation: How housing for the vulnerable became a ‘lucrative opportunity’ for property investors
A company with links to the Chancellor of the University of Manchester offers ‘government backed’ returns of 10% a year. Do the sums add up?
Dear Millers — good morning and welcome to a special edition of The Mill, containing an investigation we’ve been working on for a couple of months now.
It started when a longtime reader got in touch. He had come across an investment deal that seemed compelling: a flat in Heywood offering 10% returns guaranteed for 25 years, all backed by rents paid by the government. Oh, and not only was it financially alluring, but it was also an ethical investment that would benefit the community: the flat would house someone with acute mental health issues.
When our reader searched online, he found that the company behind the 25-year lease was linked to none other than Nazir Afzal, the former chief prosecutor in the North West who now serves as the Chancellor of the University of Manchester. In fact, the high-profile lawyer had been one of the directors. Afzal now tells us he is no longer involved with Yale Housing Association and that he stepped down as a director after realising it does not align with his values.
Something about the deal didn’t seem right to our reader, which is why he approached us and asked us to look into it. Something about getting emails from property agents with claims like “Investing in social housing can be an incredibly impactful and lucrative opportunity,” didn’t sit well with him. In today’s story, Joshi finds Yale being linked in marketing materials to more than 500 flats, and tries to unpick what exactly is going on here. He also hears from the Financial Conduct Authority, the all-powerful regulator, after we found that Yale’s FCA filings “are full of holes”.
As always, this story is fully readable by paying Mill members whereas regular Millers can get a good sense of it before it cruelly cuts off and presents a pink paywall. Why do we do this? Because to be frank, reporting stories like this doesn’t work if people don’t pay. The kind of journalism we are trying to do on The Mill isn’t ever going to be sustained by ads or any other model that requires huge scale. It only works if we have paying members whose subscriptions we can rely on every month and who allow us to work on stories that will never go viral but which we think perform a valuable role in Greater Manchester.
If you think so too, and you’re not a member yet, join up today to read this strange, twisty, insightful investigation about a company that has never been properly examined by the media before. We need dozens more members to hit our growth target this month, and you could help us get there. Just hit that button below.
On Wednesday, we sent our members a wonderful piece by Sophie about a great Manchester novel you have probably never heard of. It was published in 1930 by Madeline Linford, but the book received middling-to-dismissive reviews and has barely been seen since. Out of the Window explores class and love in 1920s Manchester, and now it's back in print! It tells the story of Ursula Fielding, a beautiful 18-year-old from Cheshire and her life with Kenneth Gandy, a working-class man from Shakespeare Street in Manchester. Sophie makes a strong case for why this is a novel we should be treasuring and talking about again.
Your Mill briefing
⛓️ The Manchester tech tycoon Lawrence Jones has been found guilty of drugging and raping two women, who a court heard were “stupefied and left partially conscious but unable to react”. Jones built a £700m fortune via his web hosting company UKFast, one of the North’s most prominent technology startups. After yesterday’s verdict, it can now be said that Jones “has spent the past nine months behind bars after being convicted of sexually assaulting a female employee at a London hotel,” reports the Daily Mail. “Jones was a menace, a sexual predator who presided over a toxic culture at his tech company in Manchester that had long been derided as outdated and sleazy,” writes Michael Taylor for the Business Desk.
💷 This week’s Autumn Statement confirmed a Greater Manchester Investment Zone backed by £160 million of public funding. “It will help us bring forward our plans for Atom Valley and deliver industries of the future and jobs to match in the north-east of Greater Manchester,” said Andy Burnham, who also welcomed the unfreezing of the Local Housing Allowance, which local leaders think is linked to rising homelessness.
🏥 Sources in GM’s local councils are less pleased — the rising demand for social care is their biggest headache and there was no new cash for that. If you want to understand the Autumn Statement, we recommend the Political Currency podcast in which Ed Balls and George Osborne make clear that taxes are definitely going up not down.
🚳 Burnham this week met with “senior representatives” from the food delivery giants Deliveroo, Uber Eats, and Just Eat to discuss concerns from residents about “couriers riding at excessive speeds; riding on pavements and failing to observe traffic signals; and failure to use lights at night or wear reflective clothing.”
🎓 We hear that a shortlist has now been drawn up for the Vice-Chancellor job at the University of Manchester. Dame Nancy Rothwell is stepping down next summer after 14 years, leaving a vacancy in one of the most influential jobs in the city and one of the most coveted roles in Higher Education. “The selection process is on track and we’ll be providing an update in the near future,” says a uni spokesperson. Do tell us if you know who is on the list.
🦖 Stan, the famous Tyrannosaurus rex at Manchester Museum will be getting into the festive spirit. The museum has acquired a giant, custom-made Santa hat for him to wear between 5-8 December to support their charity gift appeal, Stan’s Secret Santa. “We’re encouraging the public to come by and leave donations with Stan that will then be passed on to Manchester-based charities Barnabus and Mustard Tree,” the museum says.
Our weekend to do list
Friday
🪩 Have YES discovered the precise chemical to cure your winter blues? We’ll let you, the reader, decide. But we think left-of-field disco, jungle and trance in their glorious Pink Room is never a bad idea. Tickets are currently £6.
🧵 Material Power is a new exhibition that just opened at the Whitworth which pays tribute to the cultural importance of embroidery and textiles in Palestinian history. It’s showing until 7 April and it’s free to visit.
Saturday
🎭 Why Shouldn’t I Go? is a distinctive one-act play performed by three Irish women, telling individual stories about their lives. It’s showing at Birch Community Centre for one night only, get tickets here.
🧑🎄 There are still four weeks to go until Christmas, but if you have impatient little ones, Factory International is putting on a series of festive arts and crafts workshops aimed at kids. It’s free.
Sunday
🎁 On that topic, a great place to get ahead on Christmas shopping is the makers market at Track Taproom, near Piccadilly. Look out for Stockport Funghi, an urban mushroom farm who specialise in fine funghi. If not that’s not your thing, there’s always A Good Shag — a local rug dealer. More here.
🎷 Finally, finish off the weekend at the Carlton Club’s free weekly jazz night. This week features solo musician Neil Yates — while he doesn’t like to blow his own trumpet, the event description says he “is one of the Northwest’s foremost trumpet players”. More here
Mill Investigation: How housing for the vulnerable became a ‘lucrative opportunity’ for property investors
By Joshi Herrmann
Earlier this year, a Mill reader was shopping around for investment opportunities. He had just sold his company and he knew that if he didn’t invest the money, it would soon be chipped away by inflation.
That’s when he stumbled across a flat in Biwater House in Heywood — a drab former office complex just off Manchester Road that has recently been converted into apartments. He was interested. He didn’t want to live in Biwater House, but that wasn’t what was being offered anyway. The flat was being marketed as an investment opportunity which would earn him 10% returns per year.
Oh, and the returns would be guaranteed for 25 years. How? An agent explained via email that the flat would be leased by a company called Yale Housing Association, which would use it to house vulnerable people, “diagnosed by the NHS for mental health.”
Initially, our reader found the offer hard to believe. But when he looked up Yale Housing Association online, he was reassured. Its founder Julie Thompson was a former mental health nurse who says she set up the company — which is now a non-profit — “to offer the most vulnerable people within our society a practical and safe place to call home.”
And then came more reassurance: one of the directors listed on Yale’s Companies House filing was the well-known lawyer Nazir Afzal, a man who used to be the head of the Crown Prosecution Service in the North West, best known for prosecuting the Rochdale Grooming gangs. Afzal is now the Chancellor of the University of Manchester and regularly appears on shows like BBC Question Time — his name conferred trust.
“When you see someone like Nazir attached to it, you think it can’t be a scam,” the reader remembers thinking. To be clear, there is no suggestion that what Yale is doing is a scam, but as our reader continued to exchange emails with the agent advertising the flat in Biwater House, he began to have more questions. He dropped Afzal an email to ask about Yale. “I was always hopeful that I would find a way that this was both moral and legit,” he recalls. But he didn’t hear back.
Afzal might not have been communicative (he told The Mill this week that he didn’t receive the email) but the agent selling the flat — working for a Liverpool-based company called Elite Realty Invest — was selling hard. “Investing in social housing can be an incredibly impactful and lucrative opportunity, with a guarantee for total returns of up to £325,000 over a 25-year period,” he wrote in one email. “You can feel good about making a difference in the lives of those in need, while also enjoying the stable, long-term returns.” Initially, a figure of 8.5% annual returns had been mentioned, but a different agent from Elite later said: “10% yield is guaranteed as a minimum.”
The message was clear: you buy this flat and it will act as a money-making machine for a very long time because of the long lease with Yale. This lease would be backed by the Department for Work and Pensions, which pays Yale to house vulnerable people. “I have attached some information, along with some figures below, so you can see clearly the bespoke gains which our investors are already receiving!” the agent wrote.
Around the same time, our reader noticed a similar-sounding opportunity, this time on Chapel Street in Salford. Again it was a flat, and again an agent was offering 25-year returns (8.5% this time) backed by a lease with Yale Housing. After he had enquired about these kinds of properties, his phone was suddenly abuzz with agents selling the Yale-linked flats. “They called me all the time,” he recalls. “They were very very insistent.”
When he asked to view one of the flats — the one in Biwater House — he was told that wasn’t possible. “We don’t normally have viewings for Social Housing Developments as they are already Tenanted with extremely vulnerable adults who suffer from mental health conditions,” an agent from Elite told him.
That made sense. But one thing didn’t seem to check out: one of the agents had described Yale as a housing association that “manages the entire building”. But soon he found a listing on Rightmove renting out a flat for £700 a month. When he called up to enquire about the rental, an agent looking after a number of properties in the building on behalf of a private investor said they didn’t know about the property being used to house vulnerable people. And they had never heard of Yale Housing Association.
The reader was confused and decided to get in touch with us. When we visited Biwater House earlier this month, we spoke to four tenants — all of whom were young professionals (including an artist, a social worker and an employee of Barclays) renting their flats privately for around £700 a month. They had plenty of complaints about the grotty state of the building, but again: none of them were renting their flats via Yale.
The fleeting director
One person we thought might be able to tell us more about Yale was Nazir Afzal, the man who succeeded poet Lemn Sissay as the chancellor of the university last year. Afzal has spoken to us before about his role in bringing the Rochdale grooming gangs to justice and he was quick to reply to our questions about this story. “I am not involved in Yale Housing and have never been remunerated by them,” he told us. He says a friend of his was involved with the company and invited him to work with them. He agreed to become a director but soon “realised it wasn’t for me.”
On Companies House, Afzal is listed as a director between 2018 and 2020, in the period before Yale converted from being a regular limited company to a not-for-profit Community Benefit Society. But he says his two-year tenure as a director doesn’t reflect his level of involvement. “They were quick to get me registered with Companies House and very slow (significant chasing from me) to get me off the register,” he told us via email.
Afzal says he got involved because he thought Yale was using social housing “to lift many people out of poor accommodation.” But then he realised the company’s objectives “didn’t align with mine.” What does he mean by that? “I don’t know what they’ve done since but it was evident that it was driven by profit and that’s not my values,” he says. “I also believe that they were going to use my credibility (whatever that is) to attract investors and that was against my values too.”
We asked Yale to respond to these claims and others, but — via a lawyer — they said the two working days we offered them didn’t give them enough time. The lawyer marked their correspondence with us as NOT FOR PUBLICATION, but they said that Yale provides safe, accessible, quality accommodation and support services that are tailored to meet the individual needs and desires of each resident, helping residents to lead independent and fulfilling lives.
The one email we did get from Yale described the details in this story as “alarming false allegations” and said the company’s founder Julie Thompson is away on holiday.
Based on her public statements, it’s fair to say Thompson doesn’t share Afzal’s suspicion of profit. In an interview with a property website in April, Thompson said that in order to provide accommodation for vulnerable people with the right amount of care from “qualified specialists”, you need the right kind of housing. Those vulnerable people are what she calls “protected demographics” who qualify for secured tenancies funded by the government and protected by law, including people with mental health conditions, young people leaving care and adults with learning disabilities.
The rent from the government “protects the tenants but also investors that help provide the funding to build these specialist units, as they know that there will be secure income generated,” Thompson said. She was asked if private investors could play a bigger part in helping to house vulnerable people, and she agreed they should. “Private investors can and will play a huge role in delivering the multi-unit developments we need and I firmly believe it is the only way we will be able to truly meet demand,” Thompson replied. “I don’t believe profit is a dirty word and this is what will be enticing for some but there is also the chance to be behind something that really makes a difference.”
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