After weeks of speculation, the ‘mystery’ of who bought the freehold of the Grand has been revealed.
It was a company, the Grand (Folkestone) Residents Ltd set up by a group of leaseholders in February this year, with the express intention of exercising their rights under the Housing Act when it became clear that the Grand was being put up for auction. This followed the former owners, Hallam Estates Ltd being put into administration for non-payment of maintenance charges for the building. Hallam was the vehicle set up in 1996 through which the now-bankrupt Michael Stainer ran his various businesses.
This right, known as the right of first refusal, makes it compulsory to advise lease holders of the intention to sell the freehold in which they own flats, and to allow them to take over any agreed purchase, whether by private sale, or as in this case, at auction.
Needless to say, many hoops had to be jumped through, including gaining the consent of a majority of leaseholders, and demonstrating that the commercial areas were less than 50% of the entire building. The process even survived two failed injunctions by Michael Stainer, first in the Canterbury County Court, and then in the High Court, to prevent the auction both of the freehold, and of the entire contents of the commercial areas.
With this process completed, and all prospective purchasers made aware of this right of first refusal, the Grand went into auction at Barnard Marcus on June 22nd and sold for £448,000. The identity of the original purchaser is not known, but what is certain is that the new company, with funds in place, took over the sale, and now owns the entire freehold of the Grand. Separately, a few days later, the garage complex to the rear of the Grand sold at auction for £675,000 – another part of the Stainer-owned domain, lost forever.
The sale of the contents by Eddisons, saw everything being carried out of the building, including the actual kitchen sink, plants, pictures and enough kit to equip a dozen kitchens. From what we understand, the commercial areas will have great difficulty in re-opening without massive investment, in what is one of the bleakest landscapes for the hospitality sector in memory.
So, who, or what is a leaseholder-owned company? This is actually a very familiar beast in the world of blocks of flats, as there are various routes by which leaseholders can take over a block. The leaseholders become shareholders, usually holding one share per flat, they can appoint directors (or remove them) and in fact operate like a ‘normal’ company. The chief difference with a ‘conventional’ company is that there is a clear and obviously shared motivation – to protect homes and enhance their value. The contrast with a block of flats owned by a third party is that here the profit motive prevails over the interests of leaseholders, as so many have discovered to their cost.
So, the future for the Grand is uncertain. Will the light blaze once more in the Palm Court? Will the banqueting rooms be full of wedding parties and Conservative Party dinners? Will Keppels host jazz evenings while guests relax on the lawns of Terlingham Gardens? And what of the staff, furloughed and now wondering who will pay their redundancy, their unpaid holiday pay, their missing NIC and PAYE payments?
August 12th might be the end of the Stainer saga, but a new story will unfold.
