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  • Landlords in Distress

    Freshstart Living : Charlie Cunningham : Andrew Camilleri

    Troubles mount for developer FreshStart - special report - by James Graham (thebusinessdesk)

    DEVELOPER FreshStart Living has broken planning and fire safety rules at a residential scheme in Stockport, as problems mount across the group.

    Stockport Council issued a planning contravention notice last month over breaches at Mac Court in St Thomas's Place while Greater Manchester Fire and Rescue Service has separately issued an enforcement notice over fire safety issues.

    The latest action comes as the company faces a winding-up petition over a scheme in Nottingham and has five county court judgements outstanding worth a total of £31,400. Its Trafford Press development is now in administration and several subsidiaries have been wound up this year following legal action.

    In an interview with TheBusinessDesk.com, FreshStart's chief executive Charlie Cunningham said the root cause of the group's problems stemmed from issues with the Trafford Press development in Manchester and claimed a law firm had made mistakes with contracts that led to sales falling through. This caused funding problems and drained cash from the parent company, Empirical Property Group, said Mr Cunningham.

    Administrators at accountancy firm Leonard Curtis have now been appointed to the subsidiary that owns the Trafford Press, FSL Properties Trafford Press, and FreshStart is suing its former lawyers.

    Mr Cunningham, who would not name either the firm he has instructed or the firm he is pursuing, said he hoped to win the case and restart the scheme with the proceeds. He also expects creditors to be repaid at Trafford Press and at other schemes.

    Trafford Press is one of several Fresh Start schemes where investors have been trying to get their money back. Elsewhere tenants have complained of unfinished buildings and non-existent maintenance. In Stockport around 20 residents at Mac Court, a converted mill, complain it was never properly finished. They say windows leak, communal areas are not completed, the lift shaft is boarded up and there is a vermin infestation.

    They compiled a dossier with a list of 35 faults and problems which prompted the intervention by the authorities. The residents are now seeking to form their own management company to replace a FreshStart subsidiary and are questioning how the building was signed off by the local council.

    One of the residents, former FreshStart employee Lauren Dean, said: "All we want is some communication from them to advise us what's happening. There is a smell of sewage because there are drainage issues, they've known for a year, but don't do anything. They don't reply to emails, there's no maintenance, no update, nothing. All we want is to be able to live in peace in a building that's finished, that's not leaking and where the fire alarms work."

    FreshStart launched a number of schemes across the country several years ago, marketing them cheaply to buy-to-let investors and promising good returns. Many were advertised as "student pods" - a student room for under £30,000 with guaranteed rental income for several years.

    The action in Stockport follows a case in Manchester where people who had bought FreshStart student rooms at Montgomery House in Whalley Range took charge of the building's management and sued a FreshStart vehicle over unpaid rent. Elsewhere disgruntled investors have taken legal action against the company over the failure to return deposits at schemes where work did not start, or was never completed. In at least one case deposits were taken for a property FreshStart did not own.

    The business was set up in 2009 by Salford-based Andrew Camilleri who was declared bankrupt in 2011 over property loans totalling £9m, including interest. FreshStart is owned by Empirical Property whose majority shareholder is Alan Pierce, one of Mr Camilleri's relatives. Mr Cunningham holds 10% of the shares. He has a background as a City broker and was drafted in last year to prepare FreshStart for a stock market flotation. He is an Empirical director along with construction chief Phillip Wright, and Christian Yates who works as an adviser at City investment firm Shore Capital.

    Referring to the problems at Mac Court, Mr Cunningham said: "It is finished apart from two basement conversions. The space next door is being developed but we haven't be able to embark on any new developments because we haven't had the funding to do so.
    "We've had a serious blow with Trafford Press. We're cash restrained and we've cut costs. We're operating with a smaller staff and trying to make sure everyone's looked after.

    "The group has been putting cash into Trafford Press, over £1m without any return. That has affected other companies within the group and we will be seeking arrangements with creditors to protect those companies. An offer will be made and any offer will be the full sum. We're not looking for any creditors to get a reduced sum."

    He added: "We've sold over 1,000 units in the last couple of years. Yes, there are people complaining and bits haven't been done properly, but 98% of people are happy with their investment and have done well out of it. Anyone who bought a unit will be getting a decent return and will make money if they sell."

    The problems associated with some of FreshStart's schemes are listed below.
    Trafford Press

    Trafford Press was a high profile FreshStart scheme which involved converting the former buildings of the Veno drug company and the Trafford Press on Chester Road. In 2011 the plan was for around 116 apartments across old and new buildings. Some renovation work has taken place on the original buildings and there are tenants, but building work stalled, leaving just the steel frame of the new buildings.

    A FreshStart vehicle, Trafford Press Construction, is now in liquidation after a successful winding-up petition by the Wetherby-based insulation firm Encon. Investors who paid deposits but have not seen their flats materialise are now understood to be preparing legal action against the company.

    Mr Cunningham said he expects all creditors to be repaid in full, either from the proceeds of FreshStart's legal action against its lawyer, or if the administrators find a buyer for the building. But a lender called SKPB Services holds a charge against the site and as a result will be paid first.

    He said: "If the administrator decides to sell what's left and raises enough money to pay back creditors, everyone will get paid out of that. What we're working towards is getting a settlement to take the company out of administration and pay people, and continue the build."
    Empress Mill

    Empress Mill, a stone's throw from Trafford Press, was taken on by FreshStart in 2011 which planned to develop 100 apartments across two blocks, a converted mill and a new six-storey building next door.

    It was expected to be complete by this year but the conversion is unfinished and the new block was not built. However, some of the flats are occupied. One investor won a £5,000 county court judgement against the firm in the summer over a deposit that was not returned.

    Victoria House Halls, Nottingham

    FreshStart announced it had bought a 30,000 sq ft office building in centralNottingham from Capital Shopping Centres in 2011 which it planned to convert into 157 "student pods". Work on the project was due to start in January 2012 with completion expected in September in time for the start of the 2012-2013 academic year.

    Pods were sold to investors who placed deposits of around £2,000 on each room, but FreshStart did not own the building and had no planning consent. Capital Shopping Centres, now called Intu Properties, confirmed it exchanged on the sale subject to planning consent earlier this year. Plans were submitted in April, but later withdrawn. Last month FreshStart's chief executive Charlie Cunningham told TheBusinessDesk, "It's taken much longer than we hoped it would but there's no question of the scheme not going ahead".

    But investors are trying to get their money back. One, London-based Roger Walters has issued a winding-up petition against FreshStart over a £20,000 deposit. Chinese investor Rosa Wong has been to FreshStart's Salford office several times to recover £15,000. On one occasion she went with a Chinese estate agent who was owed £4,000 in commission for marketing FreshStart properties overseas. He recovered the debt but Ms Wong was told the scheme was still going ahead. In search of help she went to Salford City Council, the police, Trading Standards and The Property Ombudsman and felt she was "kicked around like a ball". She has now issued civil proceedings.

    She said: "I planned to invest in the real estate market in the UK, but after the issue with FSL and the experience of complaining to different official departments I changed my mind and put most of my money in the States. Many real estate agencies in my city never trusted British companies again because they lost money and didn't get commission from doing business with FSL. They have turned to the property markets in other countries, just as I did."

    Last week Mr Cunningham admitted it had been a "difficult" scheme because of the building's layout. He said the planning application had been withdrawn because it required amendments, "but we're doing our best to get it through".
    Montgomery House, Manchester

    FreshStart bought Montgomery House, a former YMCA building in Whalley Range, south Manchester, in 2011 to turn it into 240 student pods. The work went ahead but investors sued FreshStart over unpaid rents which were guaranteed for a set period as part of the deal. They claimed £200,000 but settled for £131,000 which FreshStart's parent, Empirical Property, paid in April.

    Last year FreshStart sold the freehold to Stratford-upon-Avon-based property group Marden Ltd for £930,000 and its management company was wound up following a separate action by investors.

    TheBusinessDesk understands another case is being prepared against FreshStart by investors whose student pods were turned into communal kitchens in order for the block to comply with Manchester City Council's HMO (House in Multiple Occupation) rules. One investor lost three apartments in this way, for which she paid a total of £72,000. Mr Cunningham would not comment on this situation due to the pending legal action.

    On the matter of guaranteed rents Mr Cunningham said there had been "delays", but he didn't think, "many people were behind on rental guarantee payments".
    Colonnade House, Bradford

    This FreshStart student scheme at Provident Financial's former headquarters inSunbridge Road, Bradford, was shut down in November for breaching fire regulations.

    West Yorkshire Fire Service issued a prohibition notice saying the fire escapes and alarms were inadequate. The notice has since been lifted.

    FreshStart acquired the nine-storey 1960s building in 2011 and was converting it into 200 student rooms. At the time of the inspection only the top three floors had been completed and were occupied by up to 70 students who were forced to move out. In the summer Bradford University and the students' union warned students not to take rooms at the building for the 2013-14 academic year, but retracted a statement after protests from FreshStart.

    Last week Mr Cunningham said the scheme was "practically complete". Earlier this month the Paisley Daily Express reported that a FreshStart student scheme in the Scottish town had been shut down for breaching fire regulations and building laws. In an echo of Colonnade House, fire safety officials evicted tenants following an inspection and only the second of five floors had been completed.

    Bispham House, Liverpool

    This 1960s block in Lace Street close to the city transferred from council ownership in the 1990s. It was previously the subject of a renovation by FM Developments which went into administration in 2009 before the work was finished. FreshStart acquired the site from administrators and sold 78 apartments to investors. But as with Mac Court the building was not completed and guaranteed rents have not been paid.

    FreshStart has now sold its freehold interest and investors have ousted FreshStart management company, opting for one of their choice in the same way as investors at Montgomery House in Manchester. A source told TheBusinessDesk: "Landlords have paid more to bring it up to standard and they have not receved irents. FreshStart always said it would be completed and it never was."

    Just seen this posting on the moneysavingexpert website

    The One Show on the BBC are doing an exposé very soon and will be filming in Manchester THIS FRIDAY. If you have been a victim and lost money to Fresh Start Living please contact the BBC One Show and help protect further victims by raising awareness.

    BBC Contact: mark.rainsforth@bbc.co.uk

    Although FSL now claim to be at 7 Empress Street, Old Trafford, Manchester, M27 8FF, I could find no sign of them there. The telephone number is 0845 259 1904. Email: contact@empiricalproperty.com Or you can get them at urbanblox on 0845 653 1029. Email: contact@urbanblox.co.uk

    MANCHESTER property developer FreshStart Living is to be wound up after a successful petition by an investor.

    It comes days after the firm's business practices and track record were put under the spotlight in a high profile report on the BBC's The One Show.

    The business, set up in 2009 and groomed for a stock market flotation 18 months ago, has been dogged by complaints from tenants and legal action by investors.
    It was the main trading company of a group which typically holds property assets in special purpose vehicles. Its parent, Empirical Property Group, is still trading. Director Charlie Cunningham said a company voluntary arrangement deal (CVA) was rejected by creditors, but it hinged on the outcome of a potential legal case.

    Roger Walters, chief executive of Supercity UK which operates three aparthotels in London, took action against FreshStart over a £20,000 deposit he paid on 10 flats at a proposed FreshStart student scheme in Nottingham.

    The company was planning to convert a 30,000 sq ft office building at the Victoria Shopping Centre into 157 student apartments in time for the 2012-13 academic year, but it has still not completed the deal to buy the building.

    Capital Shopping Centres, now called Intu Properties, did exchange subject to planning consent, but FreshStart's application was withdrawn earlier this year.

    Mr Walters told TheBusinesDesk.com he does not expect to recover any cash from the action which concluded in London yesterday. The most recent abbreviated accounts for the year to July 2012 show the company had net assets of £264,000.

    He said: "There's not a chance in hell of recovering money but I wasn't going to let these guys carry on. My next aim is [parent company] Empirical Property."

    FreshStart launched a number of schemes across the country several years ago, marketing them cheaply to buy-to-let investors and promising good returns. Many were advertised as "student pods" - a student room for under £30,000 with guaranteed rental income for several years.

    TheBusinessDesk.com has previously reported on problems at other Freshstart schemes, with the fire service intervening on safety grounds in Bradford, Stockport and Paisley in Scotland. Investors have previously sued over the failure to return deposits at schemes where work did not start, or was never completed.

    A recently-filed report by administrators of FSL Properties Trafford Press, the FreshStart vehicle which owned the Trafford Press scheme in Manchester, revealed how 22 tenants were living in a building with no mains electricty or permament water supply. They were evacuated by the administrators who also said there were inadequate fire and safety measures, exposed electric wires, "severe problems" with the roof, defective window frames and no building regulations approvals for common areas.

    FreshStart was set up by Salford-based Andrew Camilleri who was declared bankrupt in 2011 over property loans totalling £9m, including interest. One of his relatives, Alan Pierce, holds most of the shares in parent company Empirical.

    FreshStart's sole director is Charlie Cunningham who also holds 10% of the Empirical shares. He has a background as a City broker and was drafted in last year to prepare FreshStart for a stock market flotation. He is also an Empirical director along with construction chief Phillip Wright, and Christian Yates who works as an adviser at City investment firm Shore Capital.

    Mr Cunningham told TheBusinessDesk.com in September that the root cause of the group's problems stemmed from issues with the Trafford Press, and claimed a law firm had made mistakes with contracts that led to sales falling through. He said this caused funding problems and drained cash from Empirical, which put £1.3m into the Trafford scheme. Leonard Curtis has instructed Irwin Mitchell to look at a £5m legal action against the law firm which has not yet been named.

    In a statement Mr Cunningham said: "Fresh Start Living Ltd was the administration centre for the Fresh Start group of companies but came under significant financial pressure as a result of the failure of the Trafford Press development which is now subject to a multi-million pound professional negligence claim.

    "The major creditors are HMRC and the Empirical Property Group. The directors of Fresh Start Living Ltd made a CVA proposal to creditors of 100p in the £1 to be paid on the successful conclusion of the professional negligence claim.

    "This proposal was approved by 71% of creditors but was rejected by HMRC and therefore the CVA was rejected. As a result, the directors were unable to prevent the winding up of the company and will now work with the liquidators to achieve the best possible result for all creditors."

    by James Graham thebusinessdesk.com northwest

    This all looks depressingly familiar. I would be interested to find out how the scheme worked. Presumably investors did not have their own solicitors but instead relied on the Company's solicitors? Does anyone know?


    Partner, Anthony Gold Solicitors Dispute Resolution team

    The only surprising thing is how FSL lasted so long!

    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    Just sent this - made me laugh

    After the collapse of Freshstart Living -
    Now their buildings are falling apart (Empress Mill)


    Now a lot of the old Freshstart Living projects seem to be marketed by a company called Absolute Living Developments Ltd. Does anyone know if they are connected?
    In Daily Mirror Today - 14 May 2015 - Penman Investigates - Page 29

    Developers behind a new apartment block called The White House say they can guarantee an annual rental return to investors of 10%.

    They describe the project in Runcorn, Cheshire, as “high yielding, reliable and secure”. But there’s a snag – the flats are so new they don’t exist.

    Halton Borough Council has rejected plans to convert an empty office block into the flats, citing “overwhelming opposition”.

    There’s been an unhappy history to this saga. A previous company behind this scheme was Fresh Start Living, which I exposed in 2013. It was run by Charles Cunningham, an Eton contemporary of Prince William, and promised 9% returns, insisting that it was “one of the only safe investments available”.

    Fresh Start was put into compulsory liquidation by a furious investor who discovered that it did not even own the building where its flats were supposed to be.

    Now the Runcorn block is in the hands of Absolute Living Developments, which is part of US company Arem Pacific Corp. But when I emailed them my questions were answered by Singapore property entrepreneur Yong Yit Lee of Era Realty Network.

    Posing as a potential investor I asked if he has planning permission to convert the office to flats.

    “It is a retrofitting project from an existing building, it is targeted to be completed in first quarter 2016,” replied Yong.

    Which wasn’t an answer to the question, so I asked again. This time he replied: “Planning permission has been obtained for its change of use to residential apartments. Retrofitting work is in progress.”

    Back to Halton council, where a spokesman confirmed: “The application was refused and is currently at appeal.”

    Developers Link To Failed Firm

    A company behind a controversial bid to turn a derelict government building in Runcorn into flats has distanced itself from another firm that went bust under a cloud of anger from investors and the Advertising Standards Agency in 2013.

    Absolute Living Developments (ALD) has applied to convert East Lane House next to Runcorn Shopping Centre into 448 studio and single-bedroom flats.

    On Friday, it confirmed to the Weekly News that it had taken over some part-completed developments from Fresh Start Living (FSL), which went into liquidation in 2013.

    The company’s statement came after the Weekly News found loan documents lodged with Government business website Companies House relating to third party lender DS7 Ltd.

    The forms showed that DS7 had loaned cash to ALD for the East Lane House project, with the terms of the contract granting DS7 Ltd power to appoint one of its officers as a receiver in the event that ALD goes into receivership.

    The contract also gives DS7 Ltd the power to ‘take possession’ of the flats in the case of ALD’s demise.

    Another form lists the recipient on a forwarding address for DS7 Ltd as ‘for the attention of Charles Cunningham’.

    The Weekly News asked ALD whether this was linked to former Fresh Start Living director Charles Alexander Clunie Cunningham, who was the subject of a critical article by Daily Mirror investigative report Andrew Penman in September 2013.

    Further documents on Companies House showed that a former Fresh Start Living director, Philip Wright, had been a director at ‘Absolute Living Developments (Orchid Point)’ – another company with a loan from DS7 Ltd.

    ALD’s spokeswoman said Philip Wright had been on the board of a ‘vehicle’ that owned a FSL development site acquired by ALD.

    He was replaced after the acquisition.

    She said there was ‘no relation’ between ALD and DS7 Ltd.

    Fresh Start Living went into liquidation in 2013.

    Andrew Penman, of the Daily Mirror, said the firm had left investors fuming after they alleged they were left out of pocket having pumped thousands of pounds into properties renovated by FSL.

    FSL was also investigated by the Advertising Standards Authority (ASA) after a complaint was made over the firm’s claim to have made a £4m profit. The ASA upheld the grievance.

    The Business Desk reported in September 2013 that Stockport Council and Greater Manchester Fire And Rescue Service were taking separate actions over safety breaches.

    An ALD spokeswoman said: “Absolute Living Developments have acquired a number of developments around the country.

    “Some of these were part-completed developments from Fresh Start Living which were acquired when it went into administration, one being Orchid Point whereby Absolute Living Developments acquired the vehicle that owned the site.

    “Philip Wright was on the board of the vehicle and was replaced when the acquisition completed – there is no other connection between Absolute Living Developments and Fresh Start Living.

    "DS7 Limited is a lender to Absolute Living Developments on certain developments.”

    The Weekly News tried to contact DS7 Ltd for comment.

    The scheme has been blasted as ‘barmy’ by Halton Lea ward’s Cllr Dave Thompson.

    ALD insists it will attract young professionals and key workers.

    'Slums of the future' given go-ahead in Runcorn

    Planning inspector quashes councillors' decision and paves way for firm to turn asbestos eyesore East Lane House into 448 flats

    A flats project in Runcorn described as the 'worst scheme ever seen' by a Halton councillor has been given the go-ahead.

    Mark Caine, of the Planning Inspectorate, found in favour of property firm Absolute Living Developments, paving the way for it to convert East Lane House into 448 one-bedroom flats.

    Of these units, 394 of them will be ‘studio apartments’ derided as ‘bedsits’ by critics of the project.

    Mr Caine’s decision overturns a refusal by elected Halton councillors to reject the scheme.

    Opponents to the project have argued that the building will become a ‘slum’, and will cause to parking and traffic problems in the vicinity and neighbouring areas.

    Some have said the building also contains asbestos.

    Due to a change in the law during the last Parliament, the only factors that could be used to stop converting a building into homes were flood risk, contamination and highways impact.

    At first developers planned to provide 60 parking spaces, but increased this to 157 following an outcry.

    The planning inspector said that the secretary of state’s comments about homes needing enough places to park vehicles had limited weight in this instance because the flats would not be family homes.

    Mr Caine dismissed there being any relevant highways, flood risk or contamination impact.

    Critics of the scheme have included Cllr Alan Lowe who said the scheme would create the 'slums of the future' and Cllr Dave Thompson, who called the project 'barmy' and the 'worst he had ever seen'.

    In his decision report, published on Wednesday, Mr Caine said: “Local residents and councillors have also raised a number of other objections.

    “These include concerns regarding the proposed mix and tenure, the lack of amenities in the area, the levels of asbestos, the amount of previous fires at the appeal building, anti-social behaviour and noise and disturbance.

    “I have also been referred to a previous application at Grosvenor House, and the proposal’s effect on the conservation area and the regeneration of the area have also been put forward.

    “However, prior approval applications only allow consideration of specific matters which are in regard to highways impact, contamination and flood risk.

    “The matters raised above are therefore not relevant to the proposal and do not form a basis for dismissing the appeal.”

    Source: Liverpool Echo, Oliver Clay