On the southern edges of Bristol, there is a sprawling former supermarket HQ. For some, it stands as a sad testament to a decade of austerity, deregulation and rising homelessness.
The building has been gutted and turned into hundreds of tiny flats, which are being filled with homeless families and rough sleepers taken in during the coronavirus pandemic.
Some are being let on the open market.
There is seemingly little to connect the mothers with pushchairs, older disabled men and young couples spilling out of security gates on to the busy dual carriageway with the world of offshore funds and high finance – let alone the upper reaches of the BBC. Yet the trail from those living in accommodation described by critics as substandard to the new chair of the corporation, Richard Sharp, begins in places such as this.
The building, which has been rebranded as Imperial Apartments, is the latest office conversion by Caridon Group, a property company with a long track record of turning former office blocks into flats under relaxed planning laws introduced in 2013 to boost housing supply. It is thought to be the largest conversion carried out under these changes, which were tightened by ministers in September to stop developers building small homes.
Analysis by the Guardian of the building’s planning documents shows that all but one of its 259 studio flats fall below the government’s minimum space standards, with most between 18 square metres and 25 square metres, smaller than a standard shipping container. The vast majority of the two-bedroom flats in the development are below the minimum, too.
While they might be small, they generate significant returns. Bristol city council, which has signed a deal with Caridon, estimates the 266 flats it has reserved will generate £1.9m a year in rent for the company. Many of these people are claiming the housing element of universal credit, an important part of Caridon’s business.
According to information gleaned from freedom of information requests, Caridon appears to be the largest recipient of universal credit housing payments in the country, collecting more than £3.6m from its tenants since April 2019.
While benefits may cover some of the rent charged by Caridon, some residents still struggle.
Julie Dempster, the director of Bristol Outreach Services for the Homeless, described the experience of some former rough sleepers: “They were saying that they have either cut back on food or heating. You can’t expect people to live like that and it not to affect their mental health. If they are stressing about the finances, crammed in a small room and isolated, it will be very lonely and could have some tragic consequences.”
Caridon said its developments had allowed it to help councils and charities in need of housing and that without them more people could be on the streets.
Bristol council’s risk assessment for its deal with Caridon said vulnerable people’s mental health could be impacted by the “small private living space”, potentially escalating household tensions. It added that concentrating large numbers of people with high needs in one building, away from their usual support networks, could lead to increases in substance abuse, crime and antisocial behaviour.
Since Imperial Apartments opened in October, Avon and Somerset police have been called out 12 times to the building and recorded nine offences, including eight violent and sexual offences. One man living in a studio flat in the block, a former rough sleeper who did not want to give his name, claimed police cars were often outside the building.
“There has been a lot of blue light activity,” he said. “There was someone selling spice. There are people who are overly drunk. There is arguing.” He said he worried about his children visiting.
According to documents filed with Companies House, all but one of Caridon’s office conversions, including Imperial Apartments, have been financed with a £50m loan facility from a Guernsey-based investment fund managed by RoundShield Partners. This is where Sharp appears in the picture.
Until last week, he co-owned RoundShield Partners, which, according to its own website, manages more than £1.9bn of capital on behalf of pension funds, endowments and other investors. Sharp chaired its investment committee until last April.
The deal with Caridon was struck a year after Sharp joined RoundShield in 2014 – the £50m loan appears to be the single largest from a Luxembourg company that is part of the RoundShield group. Caridon told investors at the time that the loan facility would “kickstart” the expansion of its property portfolio.
This was no idle brag: the money from RoundShield’s Guernsey funds enabled the group to transform towns such as Harlow in Essex and Crawley in West Sussex, which, it is claimed, have had sudden influxes of homeless people into cramped accommodation, frequently far from family and friends.
Caridon’s business has boomed over the last decade as thousands of low-income families, driven from their homes by rising rents and austerity-era benefit cuts, have sought help from local authorities. The number of households placed in temporary accommodation in England has increased by more than 80% since 2010.
The firm’s turnover has risen sharply over the same period, by just over 80% since 2015. Caridon has paid back the money borrowed from RoundShield’s funds at a 15% interest rate.
Accounts filed at Companies House show RoundShield’s funds paid a £12m management fee to RoundShield Partners, which shared with its then seven owners, including Sharp, profits worth £3.1m. It is not known how much of that sum – if any – went to Sharp. Since 2015 the company has shared profits worth more than £10m with its owners – though again it is unclear what money Sharp received, if any.
He declined to comment to the Guardian.
The impact of Caridon’s conversions is still being felt in Harlow and Crawley. Figures obtained from Essex police show officers received 846 calls and recorded 382 crimes – including 262 violent, 31 public order and 18 sexual offences – in the firm’s two developments in Harlow between 2019 and 2020.
Mark Ingall, the Labour leader of Harlow council, said he believed Caridon’s conversions had caused hardship in the town, driving up crime and putting pressure on local services. “Many of the residents have been shipped in from elsewhere and have not been supported. We’ve seen overcrowding in schools and trouble on the streets,” he said. “It has also been devastating for the people that have been moved here. It is frankly disgusting that mothers are being housed in rooms where babies have so little space they are not learning to crawl or walk.”
Ingall accused Caridon and RoundShield of benefiting from people’s misery, describing it as “morally repugnant”. “It is also repugnant that so little is spent on providing this accommodation and so much is charged to the taxpayer,” he said.
Ingall said councils, if properly resourced by the government, could provide decent housing for less money. “Caridon charges over £700 a month for a 3.5-metre by 5-metre room but we can provide a two-bedroom council house for £416 a month.”
Caridon said: “We recognise the challenges with having a high concentration of vulnerable people in one place. However, these are outweighed by the greater good of helping and housing individuals and families in need.”
In Crawley, where Caridon began converting office blocks with funds from RoundShield in 2015, there have been claims of antisocial behaviour. Peter Smith, Crawley council’s Labour deputy leader, said: “They don’t get the help they need and so the police are coming and going all the time.”
Smith accused the companies and investors involved in the conversions of preying on the poor. “They are making their profits from the least well-off – most of whom are financed by the public purse at the end of the day,” he said.
Research by Dr Ben Clifford, who co-authored a government review into the quality of homes produced by its planning changes, shows the vast majority of the flats in Caridon’s blocks in Harlow and Crawley fall below government space standards, with some of the smallest measuring 15 sq metres and 16 sq metres. Clifford claimed the buildings would leave behind a damaging legacy for decades to come. “We should not be housing people in this way in the 21st century,” he said.
Bristol city council acknowledged initial concerns about Imperial Apartments but has said the development is an opportunity to reduce homelessness in the city. It said it was only placing people there who needed little or no support, and rents were within local benefit limits. “Working alongside Caridon, we are determined to make this development a success and thriving community in which to live,” said Helen Godwin, Bristol’s Labour cabinet member for homes.
The Guardian put a number of detailed questions to RoundShield, Caridon, the BBC and Sharp. RoundShield did not provide answers to any of the questions. It suggested some of the Guardian’s analysis was inaccurate, but declined to give details.
In a statement, it said Sharp had not been actively involved with its funds since April 2020. “As always intended, he has formally resigned from RoundShield and is ceding his partnership interests ahead of becoming the non-executive chairman of the BBC,” it said.
The company said it was a construction lender with no involvement in the management of Caridon’s properties. It said Caridon had capital outstanding against one property.
Caridon defended its business. It said it did not have control over “soaring rents” or benefit cuts but that permitted developments had allowed many to be saved from homelessness by increasing the provision of accommodation.
Caridon considered the mental health of referrals and all tenants were budget-assessed to ensure they were able to live independently, it said, partnering with local charities and networks to offer targeted support. It said it provided housing for working professionals and developed purpose-built apartments as well as converting offices. “We are an honest, hard-working and successful family business and make no excuses for running an organisation which has helped thousands of people,” it said.
Sharp did not respond to any questions. The BBC declined to comment on his behalf.