The Stainer Mortgage Crisis

M sTAINER

Every so often, Xmas comes early for those who believe in casting light into dark places. One such dark place is how Michael Stainer (pictured) has financed his activities over the years, and in particular, the complex mortgage arrangements spread over his 20 property assets. Now we are able to cast some light, thanks to his and his wife’s bankruptcy. What we have found raises some very serious questions about both Stainer the borrower, and his various lenders.

Bear in mind two key factors and remember who the various authorities are dealing with:

  • As bankrupts, regardless of their discharge, the Stainer properties are now vested in the Trustees in Bankruptcy. They are required to seize and sell them for the benefit of creditors such as HMRC (owed £763,000) and the building maintenance account of the Grand (owed £330,000). This is a slow and laborious process and long way removed from the smash and grab repossessions we see in “Can’t Pay? We’ll Take It Away!” on Channel Five. To date, 15 months after they were declared bankrupt, not one lock has been changed, not one property has been repossessed, not one penny collected

  • In addition to the Trustees, the mortgage lenders have the absolute right to seize these properties as secured creditors under the Law of Property Act 1925. They too seem paralysed into inaction

These assets consist of 19 flats and the garage complex to the rear of the Grand, and everyone is mortgaged, sometimes way above their current valuation. This applies in particular to the infamous and invisible Grand Suite located within Keppels Bar.

All of the mortgages bar two were taken out post-2000 when Stainer returned as a director of Hallam Estates Ltd having emerged from his Individual Voluntary Arrangement. This

IVA was set up after the repossession of the Grand in 1995 by Barclays Bank and its resale to Hallam Estates Ltd in 1996 for £148,000. Even then, the residents’ building maintenance fund was owed some £130,000 by Stainer.

So how much do the Stainers now owe the various mortgage lenders? As of late 2019, the total was £2.4 million. As to the repayments on this debt, and we must assume they are still being made, at an annual interest rate of 5%, the interest comes to £120,000 per annum — £10,000 per month. On a capital and interest basis, the monthly figure rockets to over £25,000 per month.

There is a more serious issue here. It is clear to everyone, without exception, that 15 months after bankruptcy, the Stainers still have total control of their flats, and enjoy the income generated by the 18 holiday lets and the garage complex, estimated to be between £300,000 to £400,000 per annum. One client alone, according to Stainer’s former solicitor, pays around £40,000 per annum.

The mortgage lenders of the flats and the garage complex are clearly turning a blind eye to their obligations as responsible lenders and they are certainly fully aware of the situation. Notwithstanding, they are continuing to accept mortgage payments from the Stainers, knowing full well that this money should be flowing to the Trustees in Bankruptcy to pay creditors. They are, it would appear, conniving at what could be offences under the Insolvency Act. To put it simply, they are receiving money to which they are not entitled. Their “offences” are worse still. They know there are massive building maintenance arrears on these flats, one flat alone ‘owes’ £40,000, and have refused to pay them or cooperate with recovery.

So, who are these ‘delinquent’ lenders who show such blatant disregard for the insolvency regulations and legitimate creditors? The mainstream lenders amongst this group include Birmingham Midshires, Bank of Ireland and NatWest, all respectable household names. They have a lot to answer for!

There are lots of unanswered questions here:

  • Have the lenders been recklessly lending? Certainly, the pre-2008 lending climate was overheated as lenders fought each other to lend and this, of course, led to the great crash of 2008.

  • Were, and are, the lenders aware of the commercial usage of the flats as holiday lets or were they told they were for residential use?

  • How did the Stainers raise 19 mortgages so easily, including one on a non-existent flat?

  • Is this holiday-let business VAT registered? That one is easy — no.

  • Is there a black cloud of negative equity hovering over these flats, aside from the heavily mortgaged fake flat?

And let’s not forget, the building maintenance charges for these flats were never paid and today’s arrears debt stands at over £330,000. So, the forty or so residential leaseholders have propped up very fabric of the Grand which houses Stainer’s commercial property

business, while these lenders have been happily trousering the interest payments and ignoring requests to settle this service charge debt.

Scandal? Hardly a strong enough word… depending on your perspective, there are issues here that demand investigation by, among others, the Financial Conduct Authority, the Council of Mortgage Lenders , HMRC (again!), the Insolvency Service and who knows who else!

The Shepwayvox Team

The Velvet Voices Of Dissent

About shepwayvox (1140 Articles)
Our sole motive is to inform the residents of Shepway - and beyond -as to that which is done in their name. email: shepwayvox@riseup.net

8 Comments on The Stainer Mortgage Crisis

  1. Corruption , corruption and corruption…
    It seems that this “Coronavirus“ has been widely spread within financial sectors long before it happened in Wuhan , China .

  2. Obviously, there are number of sharks benefitting from maintaining this unsatisfactory situation to the lose of the leaseholders at The Grand. Now it’s the time to catch all those who support Mr Shark financially !

  3. As far as the mortgages go the situation is even worse. There is the old water tank room on the top floor mortgaged by Natwest for £10k. It actually has a lease! Both the local branch and HQ were notified by two leaseholders with no response. Then there are the G and H floor holiday lets all of which have their bathrooms vented into a closed area. The Hs will need extensive work to make them salable while the Gs can only be accessed from the commercial area or Turlingham gardens. The Radnor estate might have a problem with that.
    Of course all of these developments were approved by the assiduous Shepway DC.
    The negative equity situation is even worse than outlined above.

  4. As a former Grand resident, I am speechless!!! This man has destroyed the building he claims to love, bled it, and its residents dry. Prances around town without a care in the world, hobnobbing with his Tory chums, earning thousands from while refusing to pay taxes or penny to maintain the Grand. He even has his loyal defenders who are happy to lie and slander on his behalf,

  5. doggerbank56 // February 17, 2020 at 17:52 // Reply

    Even before Michael and Doris Stainer became bankrupt their mortgage lenders would have been able (subject to the terms of each mortgage) been able to ensure that the service charge on each flat/garage was paid. One can but wonder why each lender took no action. Ultimately, a building in a state of serious disrepair will undermine the value of the flats/garages on which they have lent money.

    https://www.mortgagefinancegazette.com/legal-news/what-lenders-need-to-know-about-unpaid-leasehold-property-charges-06-12-2013/

    https://www.fpra.org.uk/qa/deal-service-charge-arrears

  6. Who are the trustees in bankruptcy in this situation?

  7. Because section 146 notices can only be served by the freeholder AKA Michael Stainer

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