LKP told the BBC R4 You and Yours consumer affairs programme today that professional self-regulation by property managers does not work.
This was why former Labour minister Sally Keeble resigned as the ARMA regulator – a role that has been scrapped.
In part this is an economy measure, as the organisation was also beset with legal costs leaving a £160,000 hole in the accounts after an ARMA member disputed the regulatory regime.
You and Yours ran an interview with leaseholders at Blythe Court, facing £8,000 a year ground rents thanks to leasehold gameplayer Martin Paine (who was not named by the BBC).
Sebastian O’Kelly, trustee of the Leasehold Knowledge Partnership, told You and Yours presenter Winifred Robinson:
“Billions of pounds of other people’s money – money belonging to leaseholders – are looked after by people under no supervision whatsoever.
“You could literally set up as a managing agent tomorrow.
“As Sajid Javid said you just need to put on a suit and print some business cards.
“Then you could be looking after hundreds of thousands of pounds of contingency funds that belongs to other people.
“But regulations will not change the fundamental problem of leasehold, unique to England and Wales, which is that you have this third party landlord, the freeholder.
“It is he would appoints the managing agent. It is he who, ultimately, looks after the service charge money and the contingency funds.
“Everywhere else in the world such as continental Europe or North America or Australia the residents themselves employ a professional to look after their money and sack them if they don’t do a good job.
“For some reason this is regarded as anomalous in England and Wales, and it is completely wrong.
“There are a few sites that self-manage and Sajid Javid spoke today about improving right to manage [the process by which leaseholders take over control of a block of flats].
“But he was very strong on criticising the leasehold property management business. He referred to cowboys. He referred to people charging for a five-star service and providing a
Rackman budget version.
“It is a complete money spinner. And you are completely at the mercy of these people.
“Your example of Blythe Court could not be a more egregious example of ordinary flat owners just trying to go about their normal lives being right royally legged over.
“We will being saying that the government must now protect these funds. It is ridiculous to try to pretend that self-regulation by these professionals, whether in ARMA or RICS, can work.
“You have just had a former Labour minister Sally Keeble resign as the regulator of one of these organisations saying it does not work.
“It really does need government to protect this money. There is a lot of it.”