A bank in the majority taxpayer-owned RBS group lent money to property speculators for a deal that will see dozens of families evicted from their homes, it has emerged, prompting condemnation from the local MP and residents.
NatWest has defended its decision to lend millions of pounds to the firm that bought 63 flats on a London estate so it could evict long-standing tenants and re-sell the homes for a profit, saying its only responsibility was to the customer who took out the loan.
Stella Creasy, the Labour MP for Walthamstow who has campaigned stop the eviction of residents on the Butterfields estate in north-east London, said this made no sense.
“For NatWest to try to wash their hands of this doesn’t stack up,” she said. “We bailed out NatWest and they promised us we could now trust them to do the right thing. The right thing here is for NatWest to use their power to stop these evictions so we can get to the bottom of just what kind of deal has been done, which means the Butterfields residents are being made homeless.”
For decades, the homes were owned by a local charity, Glasspool Trust, which makes grants to households in poverty. While not a housing charity it historically offered reduced rents, and many of the flats were occupied long-term by vulnerable families.
But late last year the charity sold all its flats to a property developers without telling tenants, who only learned when the new owners began serving eviction notices in January. The developers, called Butterfields E17 Ltd, have since re-sold some of the flats for a profit.
Companies House records show the firm took mortgages with NatWest against all 63 flats to buy them, and that the bank must approve any re-sale.
A spokesman for the bank said he could not discuss individual cases but confirmed that it would be normal when a company is being lent a significant sum for it to talk the bank through the business plan for repaying the sum. Butterfields E17 Ltd has told the Guardian its plan is to evict the tenants from all 63 flats over time and seek to sell the properties for a profit.
The spokesman said it was not up to the bank to take a moral view on such plans. He added: “Our defined responsibilities are to the customer who took these loans. These responsibilities do not extend to the day-to-day management of their property portfolio.”
The fact the bank must approve any resale is a standard mortgage measure to ensure this was used to repay the mortgage, he added.
The RBS group has a public sustainability and ethics policy, mainly connected to areas such as the environment and armaments. However, the policy says RBS tries not to make loans “which could damage the bank’s reputation”.
Its executives have also talked repeatedly about seeking to be an ethical bank in the light of its 2008 takeover by the government, which still owns a majority of RBS shares.
One of the Butterfields residents facing eviction, Nicole Holgate, called the NatWest justification “kind of pathetic”.
“If they claim to have any wider social and ethical responsibility then it’s a horrendous move if a load of people are decamped from an area where they were making a perfectly reasonable living,” she said. “They’re going to potentially have to get housing benefit wherever they end up, or a few people are eligible for council help.”
Holgate, 28, lives with a flatmate, saying they were unusual among the dozen or so households currently facing eviction, with almost all the others having children.
“This is a huge problem for them,” she said. “They’re in local schools, going to local churches and playgroups. They have really solid lives here and the societal cost of what an upheaval like this does to children is massive.
“It’s all just going to become more of a bill for everyone paying taxes.”
The decision by Glasspool to sell the flats has prompted considerable local opposition. Creasy met the chair of the charity, Keith Nunn, at the Commons last month to seek an explanation for the deal. The meeting ended with the MP asking a policeman to escort Nunn out of parliament after, by her account, he said of the impact on tenants: “It happens.”
The directors of Butterfields E17, listed as Jasbir Singh Jhumat and Pardeep Singh Jhumat, have declined to comment throughout. However, another staff member told the Guardian they planned to evict more of the families and sell their flats in the future, depending on how well the properties sold.
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