Union insider says there will be ‘much disquiet’ over payment of £417,000 for leader’s apartment under equity share deal

Unite the union has contributed more than £400,000 towards the purchase of a £700,000 central London flat for its leader, Len McCluskey, Land Registry documents show.

McCluskey, who has been described as Labour’s kingmaker, became the owner of the two-bedroom apartment near Borough market just south of the river Thames in February this year.



'I was politicised by the docks': the rise of Len McCluskey Read more

Unite put forward 60% of the cost of the flat – amounting to £417,000 – after signing an agreement with McCluskey.



The disclosure comes at a time when many of Unite’s members are struggling. One union insider said there would be “much disquiet” over the arrangement.



The union said the purchase agreement was not a loan but an equity share arrangement. It added that this type of equitable agreement was commonly used to help general secretaries buy homes in London and insisted the agreement would raise more money for its members when the property was eventually sold.

Howard Beckett, executive director for legal services at Unite, added that the full agreement signed with McCluskey, which has not been disclosed, ensured that the union would not lose out. He said the agreement records that at the time of purchase the Union’s equitable interest in the property was 60%; that the property must be sold 12 months after the employment finishes, and that the union’s entire equity interest in the property must be repaid at the time of sale and will reflect any increase in price.



Beckett said: “The agreement is extraordinarily commonplace. Unions have put such measures in place for senior officers for decades. The intention is to best facilitate the performance of roles that are London-based whilst ensuring the union’s finances are best invested and receive a return on the properties concerned. This is commonplace across the entire union movement and, frankly, if parliament adopted a similar approach to MPs we would all have avoided the expenses scandal.”



McCluskey, 66, is at the centre of the fight for the future of the Labour movement. Unite is the Labour party’s biggest donor and McCluskey is backing Jeremy Corbyn’s campaign to defeat Owen Smith for the leadership.



Facebook Twitter Pinterest Len McCluskey is backing Jeremy Corbyn in the Labour leadership election. Photograph: Gareth Fuller/PA

The flat is just south of the Thames near London Bridge, a five-minute walk from the Shard skyscraper and the bustling Borough food market. From a balcony in the flat’s living room, residents can see the London Eye.



According to Land Registry documents, Leonard McCluskey became the registered owner of the £695,500 flat in February. Unite paid £417,300 towards the flat and signed the agreement with McCluskey.



There does not appear to have been any mention of the flat’s purchase in recent national executive meetings going back to September last year. However, the union says the deal was completed with “full authority” of its executive council.



The decision to live in Borough means that McCluskey is a two-mile drive from his office in Holborn. According to the property website Zoopla, the property has increased in value since it was bought and is now worth £723,000.



The union has previously helped to fund its general secretaries’ homes. Derek Simpson, a former joint general secretary of Unite, has a deal to remain in an £800,000 house in Berkhamsted, Hertfordshire.

Other leaders have fallen out with their unions over so-called grace and favour flats.



McCluskey, who is paid a little more than £130,000 a year, has lived in a number of properties in Liverpool, Newcastle and central London, but Land Registry documents show that in February he lived in Walworth, south-east London. That property is owned by Janet Woodley, the wife of Tony Woodley, another former Unite joint general secretary.



Unite represents some of the UK’s lowest-paid workers and has successfully campaigned this year on poor tips for waiters, the ill-treatment of workers at Sports Direct and for cleaner air for British Airways workers. McCluskey has been the general secretary of Unite since 2011.



Last week, some union officials took the unusual step of defying the union’s position and coming out in support of Smith. McCluskey is thought to be mulling over whether to stand again as general secretary in internal elections in 2018.



Disclosure of the agreement over the flat will raise questions over whether it would have been possible for McCluskey to raise money through a mortgage. David Hollingworth, an associate director at the mortgage brokers London & Country, said that some 66-year-old men on equivalent salaries could still, under certain circumstances, obtain mortgages.



“Lenders will consider lending beyond retirement age where it can be shown that it would remain affordable, for example where there is a large pension,” Hollingworth said.

“But most lenders have imposed a maximum age cap at the end of the mortgage term of 70 or 75, typically.

“Some small building societies will go up to 85 or even beyond.

“If a borrower anticipates retiring in two years, inevitably, the question will be: what will the income be beyond retirement?”

A Unite spokesman said: “Unite’s shared ownership is fully protected in that it is secured against the property. The property must be sold at market valuation within 12 months of McCluskey leaving office as general secretary at which time the union’s equitable share of the property will be realised. It is expected, having due regard to the London property market, that the union’s investment will have increased in value as at the point of sale. The arrangement has the full authority of Unite’s executive council.”