How skyscrapper developer Renaker managed to shape Manchester city centre and its ongoing legal battle

Great Jackson Street, next to Mancunian Way, is home to seven Renaker-built skyscrapers, and five more have planning permission.

Four more are eyed for Trinity Islands, next to Regent Road.

But how Renaker managed to shape the city is now subject to an ongoing legal battle.

Andy Burnham has been accused of loaning hundreds of millions of pounds to the developer amid claims his office holds a ‘cosy relationship’ with its owner, Daren Whitaker.

His firm has received £615m from the Greater Manchester Housing Investment Loans Fund (GMHILF). That’s around half of the total lending from the fund set up in 2015 to finance housing projects.

Aubery Weis, a rival property mogul who owns land next to Renaker’s tallest towers, is now suing Mr Burnham’s office over two loans worth £120m, claiming the interest rates agreed were too low, creating an ‘unlevel playing field’.

The Greater Manchester Combined Authority (GMCA) denies claims these loans were signed off with ‘no lawful or proper process’.

In court last month, Weis’s lawyer also accused Renaker of using ‘different figures’ to avoid having to build affordable housing.

He alleged that Mr Whitaker told Manchester council that his schemes have a ‘very low profit margin’ to argue — successfully — for an exemption from council policy which states that one-fifth of his flats must be ‘affordable’.

Many developers argue their projects do not meet a 20pc profit margin, which according to government guidelines means they don’t have to build any affordable housing.

But when Renaker applied for loans at ‘modest rates’ from the GMCA, the same schemes were pitched as ‘high profit’, the court heard.

Renaker, which, in lieu of any affordable housing contributions, has built a new primary school at Deansgate Square and is set to open a new riverside park at its Trinity Island development off Regent Road, declined to comment while legal proceedings are ongoing.

The £300m GMHILF was created by the Tory government in 2015 to finance 10,000 new homes. Around £1bn was handed out and all the loans have been repaid so far while, surplus income made from interest helped fund other housing initiatives in the region.

The fund, which closed in March as planned, will now be re-opened after the government announced a 10-year extension this week.

The announcement comes as the GMCA waits for the outcome of the case brought by Mr Weis to the Competition Appeal Tribunal.

In court Hodge Malek KC, who is presiding over the legal proceedings, said: “It’s a serious judicial review that requires serious consideration. At the end of the day, it may be right or it may be wrong but we’ve got to do that work and analysis.”

The case against the GMCA

Broadly, Mr Weis argues the total sum loaned to Renaker ‘distorts’ Manchester’s property market. But his claim focuses on two loans in particular for schemes called Trinity and Jackson in court.

Originally worth around £140m, the final value of the loans which were signed off by the GMCA last November was around £120m.

Both developments, marketed as Trinity Islands and Contour are under construction, but Renaker has yet to draw the loans.

Representing Mr Weis, Joseph Barrett KC told the court the pricing of the loans, which were approved in principle by the GMCA last March at a meeting Mr Burnham chairs, was agreed ‘by two gentlemen sitting in a room’ a month earlier with ‘no lawful or proper process’.

He told the court that elected officials approving the loans were given no advice as to whether they reflected the ‘market rate’.

The GMCA said the final interest rates agreed last November were 8.95pc for Trinity and 8.65pc for Contour.

Mr Barrett argued the GMCA arrived at these rates based on an analysis of another company owned by Mr Whitaker which has since been dissolved, and if its calculation was applied correctly, the interest rates would have been three percentage points higher.

Mr Barrett later revealed that Renaker had previously received loans from a private company with interest rates that were ‘roughly double’ the GMCA’s price. But the GMCA says these loans are ‘not comparable’.

The GMCA said it used now-liquidated XQ Developments Limited as a ‘proxy’ to show the level of funding available in the ‘Renaker group’. But ‘there is no Renaker group’, the GMCA also found, and it is actually made up of smaller companies each owned by Mr Whitaker.

The claimant argues, in light of this, due diligence should have been carried out into Mr Whitaker and his personal financial position.

How has the GMCA responded?

While the GMCA accepted it had ‘no personal guarantee’ from Mr Whitaker on the loans, throughout the legal proceedings, which began last summer, it has maintained Renaker’s applications went through a rigorous process.

That included the bids being assessed by ‘independent panel members’, Aidan Robertson KC, representing the GMCA, told the court.

“It has been explained to them, if they think it’s way below market rates, you can expect them to say so,” he said.

Mr Robertson added the panel could highlight a ‘favourable’ interest rate that didn’t give the GMCA a good deal.

He continued: “Their role is to provide independent scrutiny and say to the authority ‘we are not getting value for money’. We do not see that in the minutes because it is not what happened.

“If the authority was having the wool pulled over its eyes by Renaker, [the panel’s] function was to call that out. That is in the governance guidance.”

The GMCA also rejected Mr Weis’ suggestion the interest rates charged were 3pc below market rates, saying it disagreed with how his legal team came to this figure.

Before hearings concluded, a GMCA spokesperson added: “In the past nine years we have not turned down a single viable scheme which met these criteria.

“The fund has helped unlock around 11,000 new homes across the city-region, supported a wide variety of developers and projects – including through 38 small loans offered to SME developers – and has enabled the regeneration of brownfield sites at no cost to the taxpayer.

“We refute any suggestion that the loans from the Housing Investment Loans Fund have been given at less than market rate or on preferential terms.”

Why this matters

Mr Weis claims that the vast sums of public money loaned to Renaker at ‘favourable’ interest rates constituted a ‘subsidy’. The GMCA denies this.

Mr Weis also argues Renaker was able to secure the loans by proposing ‘different figures’ to Andy Burnham’s office and Manchester council.

The figures presented to the GMCA showed the schemes have a ‘high profit margin’, Mr Barrett said, whereas figures shown to Manchester council have a ‘very low profit margin’ which meant it was exempt from making 20pc of a development’s homes available to renters and buyers at affordable rates, he added.

The GMCA is not involved in affordable housing ‘viability assessments’, and Manchester council negotiated a multi-million-pound payment in lieu of the cheaper flats, called a section 106 agreement for the projects concerned.

“The council is aware of the allegation that is currently being heard through the courts and while the council’s jurisdiction is with the planning process only, it would be inappropriate to comment further while legal proceedings are ongoing,” a spokesperson said.

While the section 106 money has been used to establish much-needed community facilities, like a new city centre primary school, the cash does not solve a Mancunian crisis.

Nearly 10,000 are waiting for a council home, with around 2,500 homeless in temporary accommodation. Housing demand is outstripping supply at every price-point in Manchester.

But a council report last year found ‘many’ new built-to-rent ‘homes are increasingly priced towards the top of the market’, which includes Renaker’s west and north towers at Deansgate Square that also received backing from GMHILF, although those loans are not part of the ongoing legal action.

It added: “Whilst we remain undersupplied across the full extent of the market, this can result in the perverse impact of new supply ostensibly adding to the inflationary pressures in parts of the city where new development has been most intense.”

In effect, the report’s suggestion is city centre towers are driving rent prices up at a time when more and more affordable housing is needed.

And Mr Weis’ suggestion in court is that it happened, in part, because one developer had preferential treatment. The GMCA refutes this.

When the decision is delivered later this month, it could have a major impact on the way Renaker and Andy Burnham’s office operate and how Manchester’s skyline looks.