Today the derelict former Portland Hotel casts a long shadow over Paragon Street, Hull, with an equally dark cloud hanging over its future. Its uncertain fate is bound up in a tangled web of companies, overseas buy-to-let investors and ongoing legal action.
Investment from Pakistan
At the centre of the web is a flamboyant property developer promoting £1bn-plus real estate investment plans in Pakistan.
However, Khalid Bhatti’s vision of creating resorts featuring luxury apartments, designer shopping malls and beauty spas contrasts sharply with the current state of the empty six-storey building in the city centre.
Interior damage to the Portland Hotel
According to one nearby shop owner, there is also significant water damage inside the property.
The business-owner told Yorkshire Bylines:
“There was water coming through into my shop [underneath the hotel]. At the time, there were some builders working on it and they took me right up to the top floor. I couldn’t believe what I saw. There were big holes in the roof [and] they were only covered with plastic bags.”
Internal flooding after recent heavy rain is also believed to behind the temporary closure of the adjacent Cooplands cafe and bakery in Paragon Street, although it’s not known whether the damage linked to the hotel.
The rebranding of The Portland Hotel
It’s all a far cry from the late 1960s when it opened as The Centre Hotel. At the time it was Hull’s first new-build city centre hotel since the end of the Second World War.
Subsequently re-branded as The Paragon Hotel, it was a popular spot in its heyday boasting over 100 rooms, a large restaurant and dining suite, conference facilities and its own ground floor bar. The development also included new shop units in Carr Lane and Paragon Street.
The venue finally closed in 2012 while trading as The Portland Hotel after administrators were appointed to take over its parent company The Lincoln Group.
Conversion into student rooms
In June 2013, planning permission was secured from Hull City Council to convert the hotel into a 126-bed student accommodation complex by a company called Crown Place Hull Ltd, directed by Rafik Patel.
A month later, the empty property was bought for £600,000 by Grif Student Grounds Rents Ltd. It is believed that the property was briefly used to house students with ensuite rooms, priced between £99 to £135 per week.
Khalid Bhatti’s investment plans to “build futures”
Then, in August 2018, Grif Student Ground Rents Limited granted a 999-year lease on the property to a new company, Daniel Johns Hull Limited, owned and chaired by Bhatti, in a £400,000 deal.
Accounts filed to Companies House show at various points that the company’s name has been changed six times while Bhatti himself is currently listed as having held 57 different directorships. Some are still active but most companies are either dissolved or liquidated.
Amid all this flurry of activity, the old hotel has remained shut.
Shortly before leasing the Hull property, Bhatti was busy elsewhere in Pakistan’s capital Islamabad, launching his vision of luxury real estate investment at a glitzy ceremony. He mapped out his plans to build a complex aimed at attracting overseas investors who would be able to use their apartments for holiday breaks.
To an audience of models, celebrities and TV stars, he said: “We don’t just build properties, we build futures.”
Unregulated collective investment schemes (UCIS)
However, investors in some of the Daniel Johns Group’s UK projects have recently spoken out about their unhappy experiences with the group. The Financial Conduct Authority has also warned that some investment schemes – known as unregulated collective investment schemes (UCIS) are being illegally promoted and sold to members of the public, who are at risk of losing money.
Our investigation has confirmed such deals could well have happened over rooms within the former hotel.
Official Land Registry documents reveal that legal action has been taken through Hull County Court resulting in vesting orders being granted in relation to 33 named investors, mostly believed to be from Hong Kong.
Neil Stockdale, a partner at top 100 UK law firm Hugh James, is reviewing a potential UCIS scheme where investors bought similar units in developments in London and Liverpool from the Daniel Jones Group.
In one case, a Hong Kong-based investor paid £62,000 for a unit in an office block in Liverpool that has yet to be built. He hasn’t received a single penny on what was billed as a guaranteed rental return.
Unlawful UCIS from Daniel Johns Group
Speaking about the Liverpool and London schemes, Stockdale said: “Our initial investigations lead us to believe that all these clients have been unlawfully sold a UCIS and that the lawyers who acted for them were negligent in a variety of ways.”
He said the situation surrounding the former Portland Hotel in Hull was unclear.
“We have looked into the title documents regarding this matter and it appears that the freehold owner has granted a long lease to Daniel Johns Hull Limited, who have subsequently granted an underlease to DJ Suites Hull Ltd.”
According to Dimsum Daily, the Daniel Johns Group’s sales office in the city recently closed. Hong Kong’s Estate Agents Authority are currently investigating complaints by investors involving at least 20 stalled development projects in the UK.
The fate of The Portland Hotel
Attempts to find out directly from the Daniel Johns Group about the fate of the former hotel have drawn a blank. However, the property’s ultimate owners Ground Rents Income Fund did respond with a comment.
A spokesperson said: “Daniel Johns, as the long leaseholder with a remaining term of 996 years, is responsible for the property’s current use as well as any decision on its future use.
“We do however keep in contact with the leaseholder to try and understand plans for the property and are broadly supportive of any regeneration initiatives, although no formal proposals have yet been presented to the landlord.”