A £1.5m London property held by the Official Custodian for Charities has been released back to Waltham Forest Islamic Association (WFIA) following a 16-month Charity Commission inquiry.

The Commission took custody of the property after acting trustees who were not validly appointed exchanged contracts for 119-121 Grove Road, Walthamstow (pictured) in December 2008 without holding the authority to do so.

But despite welcoming the release, WFIA, under a new board of trustees, has told Civil Society that the building is “not usable” and a failed planning application to turn the building into a girl’s school has left the charity in serious debt and unable to sell the property.

Raja Mohammed Ilyas, trustee at WFIA, said: “The Association can not afford (the building). The building is running under heavy loan. The previous committee took out a £1m mortgage. It’s not possible for us to leave the building like this – we’re paying a lot of interest. It was our priority to change it into a school, or a nursery so that we can generate income. Now we’re stuck.”

The Charity Commission inquiry report, released yesterday, stated that the Commission, which had been in communication with the charity since October 2007 with regards to the non-validity of its trustees, were tipped off about the property purchase by a member of the public.

A spokesperson for the Commission said: “The Commission had repeatedly advised this group that their term of office had ended and they were not validly appointed trustees. As this acting committee did not have any authority to purchase a property using a significant amount of the charity's funds, the inquiry's focus was to protect and ensure the proper use of the charity's assets.”

Waltham Forest Islamic Association is entirely funded by donations and its primary purpose is the running of Lea Bridge Road Mosque (also known as Walthamstow Mosque).

In November 2008 a non-refundable deposit of £150,000, amounting to 80 per cent of the charity’s annual income, was placed before contracts were exchanged on the property a month later. 

The charity had committed to using £500,000 of the charity’s funds with a £1m mortgage. The inquiry into the transaction began in February 2009 and the Commission chose to allow the purchase of the property to continue due to the substantial deposit but immediately vested the property in the care of the Official Custodian for Charities.

Following the appointment of a new valid trustee board the Commission released the building which is currently maintained by a caretaker and being used infrequently by Association members for small meetings of less than 50 people.

Ilyas advised that the charity would be consulting with the community on how to go forward, clearly dismayed at the actions of the non-valid trustees.

"The previous committee did everything," said Ilyas. "The Charity Commission clearly stated that the committee was invalid. I don’t know why they did this but as the new committee it’s our responsibility to fix this."