Built on a foundation of philanthropy, the New Era flats in Hoxton are now in the hands of a profit-focused private equity firm

For more than 80 years, the Lever family have run the New Era housing estate in east London as a philanthropic concern, enabling teaching assistants, NHS staff and construction workers to live near their places of work while paying affordable rents.

Now the grandson of Arthur Barsht, the man who built the 93-flat estate, has defended his family’s decision to sell the properties to an American private equity company. He has, he suggested, little sympathy for the families who could be evicted before Christmas.

The plight of the tight-knit community living in a small corner of London has links that stretch across the Atlantic to American firefighters, teachers and police; and far beyond, to international property deals in Munich, Paris and Tokyo.

The entire community’s homes were bought from underneath them in March by Westbrook Partners with the help of Richard Benyon, the Conservative MP whose multimillion-pound family estate was a partner on the deal. Now Westbrook plans to raise rents sky-high, forcing residents – most of whom have leases with a break clause of just two weeks – into homelessness.

Facebook Twitter Pinterest Russell Brand joins the protest to save social housing at the New Era estate earlier this month. Photograph: Jules Annan/Barcroft Media

The families say they may have to leave London, swapping their tight-knit familiar community for towns and cities where they know no one. Wherever they end up, however, the British taxpayer will have to foot the bill to house many of them – indirectly contributing to Westbrook’s profits.

“I don’t have any particular views on what Westbrook has decided to do with the property – good, bad or indifferent – and I don’t regard the residents as being in a difficult situation,” said Robert Lever, from his £1.2m, five-bedroom, detached home in a leafy road of Northwood, Middlesex.

Although Meg Hillier, the estate’s local Labour MP, has said that local housing associations tried to buy the properties, Lever maintained: “The common thread among everybody [who wanted to buy the estate] was that they would raise rents.”

He added: “We spoke to a number of interested parties and Westbrook, together with Edward Benyon [brother of Richard] – who took an active part in the bidding – appeared to us to be the best, not just in terms of price but how the properties would be looked after, after they were sold.”

Five days after public outrage shamed the Benyon brothers into pulling out of the deal last week, Westbrook informed the council – which had to break the news to residents – that its previous intention to increase rents to market values in 2016, spiralling from £600 a month for a two-bed flat to something closer to £2,400, was to be accelerated.

Having previously pressured residents to sign new contracts that ended in summer 2016, Westbrook said it no longer planned to honour those agreements. Instead, the privately owned real estate investment management firm, which claims to have raised and invested about $10bn (£6.3bn) of equity in $40bn of real estate transactions, said it would “refurbish the current estate in its entirety and then rent all the properties without secure tenancies at market rent levels, with no affordable housing”.

Westbrook invests money from public and private pension funds, endowments, foundations, and financial institutions, mainly based in America – and largely in Texas. These include investments on behalf of many lower-paid workers including firefighters, teachers and other public sector employees. The Texas Permanent School Fund, the nation’s largest education endowment, has committed $375m to Westbrook over the last six years, while the Teacher Retirement System of Texas has invested $150m.

The New York State Teachers Retirement System and the Pennsylvania State Employees Retirement System have invested $50m and $30m respectively. The Ohio Police & Fire have committed $30m.

No one from Westbrook’s London office, however, has ever been to the Hoxton estate at the heart of the current controversy to talk to residents. Instead, Westbrook’s managing principal in London, Mark Donnor, finally agreed to meet senior London politicians on Wednesday – a day after Hackney council demanded the company abandon its plans and sell the estate to a registered social landlord so it could remain as affordable housing.

Facebook Twitter Pinterest Local MP Meg Hillier. Photograph: Jonathan Goldberg/Rex

Donnor met Hillier and later held talks with the mayor of Hackney, Jules Pipe. Hackney and Hillier said they urged Donnor to talk to residents but conceded the meetings resulted in “no solution”. Then on Thursday, after the London mayor, Boris Johnson, said he wanted the tenants to stay in their homes, Donnor met Richard Blakeway, the deputy mayor responsible for housing.

It is understood that Blakeway found Westbrook was keen to engage and gave signs of willingness to explore options, but that the chances of success still appear fragile.

New Era is the second residential property Westbrook has bought in the UK. Its behaviour over the first residential acquisition, Dolphin Square near the Thames in Pimlico, was similarly controversial and acrimonious.

In 2005, Westbrook bought the £190m head lease for Dolphin Square, once the largest block of flats in the world with a colourful list of former residents, including more than 70 MPs, at least 10 Lords and a number of intelligence agency personnel.

Immediately, the company sought to take advantage of the 2002 leasehold reforms under which the owners of leases of more than 21 years have the right to buy their freehold, subject to no single leaseholder owning more than two flats.

Unusually, the 1,229-flat Dolphin Square had no existing leaseholders, just tenants on assured short-hold and short-term leases. Westbrook created 612 Jersey-listed companies and sold each of those companies one or two Dolphin Square flats on 26-year leases. In 2007, it served a notice to enfranchise the building, offering to pay £111.7m.

After the housing market crash, Westbrook withdrew its notice but, biding its time, made a second claim in 2010. The freeholder, Friends Life, challenged Westbrook’s entitlement to enfranchise. It appeared to have won the fight when the courts ruled that it was an abuse of judicial process for Westbrook bring a second claim.

Westbrook, however, was not to be deterred. It appealed against the judgment and in July 2014, the court of appeal overturned the previous ruling, paving the way – subject to any future appeal by Friends Life – for them to purchase the freehold. The price paid for the flats is expected to be anything up to £200m: by far the largest premium ever paid under the Leasehold Reform, Housing and Urban Development Act 1993.

While the fight was going on, a tenant, Elka Raine, took Westbrook to court claiming the firm had criminally harassed her to secure her eviction. A district court judge cleared Westbrook of criminal harassment but found some of its behaviour “unreasonable and oppressive”.

Westbrook has not, however, allowed the battle over Dolphin Square to slow its acquisitions in Britain. In September this year, it was reported to be preparing to use £200m of assets to create a portfolio of 15-plus shopping centres, retail parks, industrial spaces and offices in south-east England, all within 40 miles of London.

The London directors

Westbrook Europe (London) Limited has two directors: Diego Ernesto Rico and Kashif Zahid Sheikh, who is also the company secretary. Sheikh, 42, who has dual US and UK citizenship, joined Westbrook almost 10 years ago. The lawyer is the director or secretary of 20 companies, 19 of which are registered to two addresses, in Berkeley Square, London and New York.

According to companycheck.co.uk, the combined cash at bank value for all businesses where Sheikh holds a current appointment equals £2,932,932, with a combined total current assets value of £7,494,405 and total current liabilities of £6,951,799.

Rico, a 49-year-old US citizen, joined Westbrook in 2009. He holds 14 appointments at 14 active companies, has resigned from six companies and held four appointments at four dissolved companies: his longest appointment was five years and nine months at Dolphin Square Limited.

Westbrook Partners has 10 employees in London, including:

• Mark Donnor, a 40-year-old chartered surveyor, educated at the University of the West of England with an interest in racing classic cars.

• David Collard, a 38-year-old barrister and expert in investment management, educated at Oxford University.

• Giles Morse, who has worked at Kenmore Property Group in Edinburgh and CB Richard Ellis, the world’s largest commercial real estate services and investment firm, headquartered in Los Angeles.

• Zubin Irani, managing principal at Westbrook, worked previously at Goldman Sachs.

• Ruben Herrmann, educated at University College London.

• William Neale, studied agriculture at Harper Adams University College.

• Andrew John Gummer, a 41-year-old principal at Westbrook.

In May 2014, Sheikh and Rico joined Collard, Donnor and Gummer on the board of Hoxton Regeneration Limited, the company which bought the New Era estate. Collard, Donnor and Gummer resigned from the company on 13 November 2014.

• This article was amended on 26 November 2014. An earlier version said that Hackney council would have no responsibility to rehouse families that had been evicted from private properties on private land. That is not the case, although those evicted from private housing would have to meet the criteria for social housing.