Lord Richard Best is investigating property management, leasehold and fleecehold, in a very broad inquiry which includes letting agents.
Here are a few – 22,000 words – of the responses that have been passed to us – yesterday!
They make ideal beside reading for anyone interested in improving the lot of leaseholders – and fleecehold freehold homeowners.
Lord Best has replied with the following copied note:
I have had a large number of these submissions today ( and before!) and am not going to be able to answer all these personally. So please forgive me if this reply is not specific to you. But rest assured that I am reading every one of the emails – and taking copious notes!
First, I really appreciate you taking the time to set out the difficulties you have faced. The quantity and quality of emails I am receiving clearly show that an awful lot of people have major problems with their leasehold arrangements. All these “case-studies” are more than helpful.
Second, to explain my role: I am chairing a Working Group which will advise the government on the regulation of property agents – including the agents that manage leasehold properties. This is obviously only one aspect of the issues here: sometimes the problem is with housebuilders (like Persimmon) who are accused of misselling and/or devising leases that severely disadvantage buyers; sometimes the complaint is against the solicitors; sometimes the freeholder; sometimes the local authority; etc. But we are limited to the problems with managing agents – where there is, I believe, a pretty universal view that more/better regulation is needed.
Third, as you may know, a more comprehensive policy review on these issues has just been carried out by the House of Commons Select Committee for Housing, Communities and Local Government and I strongly recommend their report. This covers the range of current concerns about leaseholds and I hope government will take its recommendations very seriously.
Finally, a number of people writing to me have posed the question “who can I turn to for advice on the problems I am having with the managing agents?” Since it will take time for government to pass legislation to implement the recommendations from my Working Group – assuming government accepts them – can I recommend any practical support in the meantime?
Advice is available from LEASE, which is government-backed but is an independent advisory body for leaseholders. And all agents have to belong to a dispute resolution scheme – mostly The Property Ombudsman (TPO) – so all leaseholders can take their complaints to an independent body. Both of these have useful websites.
In conclusion, it has been depressing to hear of the multiple problems being encountered by leaseholders. But, even though our Working Group is only tacking the issue of regulation of agents, I hope in due course our work will make a difference and raise standards in this sector.
Dear Lord Best, you asked what we thought of leasehold property management …
Over nine years, £500k was inappropriately spent by freeholder, but the tribunal cannot force him to repay us!
Dear Lord Best,
Regarding the reviewing of leasehold law etc. You really do need to take this very seriously and act very quickly. As it currently stands, people are being set up to have money stolen from them year after year with no mechanism of ever achieving real justice even if they ‘win’ tribunal applications.
Leaseholders are just long term rental tenants who have paid ALL the rent upfront.When are we going to get actual legislation to protect us from our Rogue Landlords and their appointed agents from stealing money from us through white collar crime?
The only way we have of challenging what we are being charged for service charges is through the tribunal courts. This process cannot even start until at least 18 months after we have paid our service charge money to an organisation over which we have no legal rights.
The Tribunal system can easily take another 12 months and by this time some people would have needed to sell their apartments so cannot be seen to be in any dispute with the freeholder so the freeholder gets away with stealing their money.
Also, the freeholder may have sold the freehold in the mean time, or the managing agent company has been dissolved and the money is still missing from the leaseholders service charge account.
Although it is said that service charge account monies are deemed to be held in a ‘TRUST’ account, it means absolutely nothing and gives no protection at all. This is due to the fact that the ‘deemed to be in Trust’ has not actually been enacted.
Apparently, these Freeholders/Managing Agents are not supposed to be able to ‘make a profit’ on the actual costs, so they just come to some ‘arrangements’ with the suppliers of goods and services or even award contracts to another of their own companies.
We have one freeholder who increased out buildings insurance alone from £9k per year to £23k which includes a 17% commission for them, for doing absolutely nothing and this will apply every year. Also, all the other costs were virtually doubled. I appreciate, maybe the original amounts we were paying were not sufficient but a doubling at the stroke of a pen with absolutely no consultation is just unacceptable.
Over 9 years and two blocks of apartments the tribunals determined that circa £500k of leaseholders money had been, invalidly, inappropriately or unreasonably spent on their behalf. However, There is no mechanism to enforce these rogue freeholders/managing agents to actually pay back the money they ‘stole’ through white collar crime, therefore, these thieves are laughing all the way to the bank.
I have recently been advised that the buildings insurance in a block of 93 apartments where I ‘own’ (am a tenant of) has been cancelled and further research implies that it is very unlikely that the Freeholder has been able to re-insure the building AND I CAN DO ABSOLUTELY NOTHING ABOUT IT. The freeholder and or his managing agent – two different companies, same person as the only director, has continually ignored all requests for information regarding the buildings insurance I have been advised that even if I gather together some or all of the leaseholders to contribute to the costs of the insurance policy we are not able to insure the building, because we do not OWN it.
It has recently come to light that this freeholder is using what is designated as a bicycle store and a basement passageway is being used to store items like mattresses, beds, office files and many other items which are of course a fire hazard, particularly as the bicycle store is not fitted with smoke detectors.
Last year, we were 6 weeks with a faulty fire alarm system because the contractor would not install the replacement control units for fear of not being paid. After a meeting with them they agreed they would install them and did so. It is to their credit, that they took the risk of not being paid. Their fear stemmed from the previous managing agent company being dissolved owing them lots of money and of course the new managing agent company had a different name, but, yes, you guessed it, the director is the same person who is the director of the new company and the freehold company.
In the case of these new(ish) housing developments, local authorities must be forced to take back the responsibility of the maintenance of ALL the public open spaces that sit outside the footprints of the land allocated to each property as shown in the plan registered at companies house. This is needed, because, again people are being set up to have money stolen from them year after year. In some cases they even have to pay for the electricity that supplies the street lighting. It is not unknown for the organisation who arranges the electricity supply to benefit from making the arrangement with the supplier.
If I was to tell my full story of the last 9 years you would have difficulty believing it. But one day when everything is settled I will tell my story.
I look forward to you communicating with me that you intend to give ALL matters relating to homeownership that comes with any costs outside that of council tax and any local authority planning application fees should a homeowner wish to make changes to THEIR property.
Pat Meyrick (Mrs)
Compulsory regulation and ‘robust enforcement is long overdue and absolutely necessary’
Dear Lord Best,
I understand that you and your working group are reviewing the question of regulating managing agents and I am writing to add a few of my own experiences with managing agents which I think make it clear that compulsory regulation by an independent regulator backed up by robust enforcement is long overdue and absolutely necessary.
I previously owned a leasehold flat for 6 years between 2006 and 2012 in Battersea at Plantation Wharf (there was a notorious case there a few years ago when a leaseholder, Dennis Jackson, faced forfeiture of his flat after the freeholder and managing agent sought to recover their huge legal costs following a court case over service charges).
In the 6 years that I owned the flat, we had 3 different managing agents. The first was incompetent and was probably stealing from us, the second was incompetent and dishonest, and the third was still in place when I sold the flat but I understand was also incompetent and was replaced shortly after I sold.
None of them had any fear of being held accountable for their incompetence or other shortcomings. I made one complaint to the Ombudsman about the second agent reneging on a written promise to take action against the first agent but that turned out to be thoroughly unsatisfactory.
The agent told the Ombudsman that he had decided not to take action against the first agent to recover our misspent monies and was instead taking action against the agent for the rest of the development (the block I lived in was managed separately) for those misspent monies (one example, which it took us a year to drag out of him, was £8,500 for 3 days’ cherry picker hire and 2 visits by roofers).
The Ombudsman was totally hoodwinked by this obvious nonsense (the agent for the rest of the development had nothing to do with the monies that our first agent had misspent) and settled for ordering the agent to give me a written apology for their complaints department mishandling my original complaint.
I subsequently found out that the agent had actually dropped the claim against the agent for the rest of the development even while he was using it as justification to the Ombudsman for not taking action against the first agent. By that time I had sold the flat and decided that life was too short to take any further action.
My wife and I bought another leasehold flat in Roehampton in November 2015, from a developer called Citystyle Living Limited which is a group company of One Housing Group (OHG), a housing association that Citystyle appointed as our managing agent (at least until we exercised our right to manage and replaced them on 1 April 2019).
One Housing Group proved to be incompetent, dishonest and unaccountable. They do not even provide the services expected of a managing agent in that they awarded the maintenance contract to another group company.
Victoria Musguin says she has suffered flooding and loss of hot water for weeks at a time at her newly built flat
To add insult to injury, One Direct then delegate most maintenance and repairs to equally incompetent subcontractors and add what they call a “workstream uplift” to the subcontractors’ invoices for purportedly managing them.
This can add as much as 50% to the subcontractors’ invoice (although OHG refuse to provide the original subcontractors’ invoices or a breakdown of the “workstream uplift” so it’s hard to get accurate figures). We think this is a scam, not least because whenever we ask for information about repairs from OHG or One Direct they have no idea what their subcontractors are doing.
For example, I reported a damaged drainpipe to OHG on 28 January via email attaching a photo of the drainpipe hanging off the wall (probably after being hit by a delivery van) and leaking water onto the ground.
OHG reported to me a couple of weeks later that their subcontractor had repaired it and that it was in “good working order”.
When I checked, it was still hanging off the wall. They sent the subcontractor out a second time when he re-attached it to the wall but did not fix the leak. This took until the handover to the new managing agent who will therefore have to send another contractor round to fix the leak that should have been fixed at the first attempt. It’s already almost 4 months since I reported the damage.
That is just a recent example and I could list many others. In 3 1/2 years I can’t think of a single repair that was carried out promptly or efficiently. A short list includes: 13 months and multiple attempts to partially repair a damaged bin store door, 7 months to provide a replacement fob for one resident; 8 months to provide information required for one resident to have her damaged balcony repaired; 2 months and 3 attempts to paint a door; 6 weeks and multiple attempts to repair the latest garage shutter breakdown; and so on.
Staff turnover is a huge problem, as even OHG have acknowledged. We are supposed to have one dedicated home ownership manager for our block but in 3 1/2 years we have had at least 20. Some only lasted a few days.
It’s impossible to get prompt or accurate responses from OHG to any enquiries, partly due to the almost constant handover process between home ownership managers mentioned above. But even long term members of staff don’t know what is going on and often either ignore our questions or fob us off with inaccurate information or false assurances. Deadlines for providing information or action are invariably missed.
Their accounting procedures in relation to the service charge are a complete shambles. The problems start with their inability to prepare even remotely accurate estimates at the start of each financial year. At the same time they are too arrogant to admit obvious errors, eg one year they failed to include an estimate for the communal electricity supply (approximately £2,500 per year) but when we pointed this out they ignored us.
This leads to an inevitable balancing charge at the end of each financial year. In 2015-16 (actually half a year since residents only started moving in half way through the financial year) it was £6,000. In 2016-17 it was £14,000. We (the residents’ association committee members) spend months inspecting these accounts at the end of each financial year and we invariably find a host of mistakes, including invoices for work that wasn’t done, invoices for work that was covered by warranties, invoices for work that we had been assured would not be recharged to us, basic accounting errors and so on. OHG do everything they can to delay and hamper our inspection, taking months to provide copies of invoices, refusing to provide receipts (in breach of the lease and the relevant legislation) and generally dragging the process out.
Due to the host of errors mentioned above, we reduced the 2015-16 half year balancing charge from £6,000 to £3,000 and the 2016-17 balancing charge from £14,000 to £3,000 (in round figures). We are still disputing the 2017-18 balancing charge although OHG have unilaterally decided to end our inspection despite our contention that there are still 3 outstanding issues:
OHG’s continuing refusal to provide receipts to support invoices (they flat out refuse to do so and have invited us to take action via the First Tier Tribunal which leads us to believe that there must be some loophole that helps them);
One Direct’s “workstream uplift” which, as stated above, we think is a scam and entirely unjustified; and
what we regard as OHG’s excessive management fee of circa £6,000 per year.
OHG’s internal complaints system is a joke. Even when residents’ complaints are upheld, nothing ever improves.
We asked Wandsworth Council to take action against OHG over their refusal to provide receipts as we understand that they have the power to do so however they apparently do not have the resources and took no action. Our MP contacted OHG a few times about various matters but they just fobbed her off with false assurances that they were addressing the specific matters and/or improving their “systems” however nothing ever improved and we finally undertook the complicated and potentially expensive RTM process.
OHG were thus, despite their utter incompetence and dishonesty, completely unaccountable and residents felt helpless. Some described their dealings with OHG as causing “despair” or making them “lose the will to live” (I am not exaggerating – after all, we’re talking about our homes). Some wanted to take legal action but the potential cost as well as the time and effort involved and uncertain outcome put us off – and also the possibility that OHG could recover their costs via the service charge, even if they lost.
I have read your working group’s terms of reference and I would urge you to advise that all of them should be implemented without delay. Most are long overdue.
This is a long email but it really only scratches the surface. If you have any questions, or if any further information would be useful to you, please do not hesitate to contact me.
LKP: OHG is invited publicly to comment on these observations.
‘I live in fear of the next (unnecessary) Section 20 … And the Leasehold Advisory Service ‘not fit for purpose as has been proved time and again’
Dear Lord Best,
Thank you for all the work you are doing on behalf of leaseholders who are suffering greatly, due to being financially abused for years. This issue leaves us feeling insecure, hopeless and afraid, as well as a financially uncertain future. We never know when the next overinflated demand or Section 20 will come through our door.
Many of us are suffering mental health issues due to years of fighting these abuses, often involving numerous court cases and harassment. It never ends.
There is no proper and meaningful regulation in place to protect us. We must be one of few group in society to be denied protection from bullying, financial and mental abuse.
This has been going on for years and years. It is not a new phenomenon. It has been discussed many times in Parliament. The government is well aware of the situation but still does nothing. Little has changed for us. We remain in despair at our lack of legal protection. As it has been said, “Death by Consultation!” When will meaningful changes in law actually happen?
In fact rather than being dealt with, the problem is escalating at an alarming rate. This is due to the new build/leasehold/fleecehold scandal.
Smaller freeholders are aware of the use of new build owners as income streams, viewing the “owners`” homes as * their * investments. They watch this happening across the UK and realise that they too, can find even more ways to extract money from their helpless victims. And lots of seminars to show them the way! I believe organisations like Lease showed a lovely presentation to Freeholders/Managing Agents, explaining how to obtain an even greater income stream from insurance policies from their leaseholders victims.
I use the word “victims” because the law has made us so.
There seems to be legal protection for most human abuses. In the past few years much new legislation has been passed to protect tenants rights. Coersive control is now viewed as a crime. Financial abuse likewise.
Where is our protection?
I won`t go into all the details of my own personal situation. I believe you have seen enough shocking evidence presented to you over the years. My own situation is echoed by many.
I live in fear of the next (unnecessary) Section 20.
The Freeholders have their own building company who do the work, collect the money from us and then liquidate the company.
The Freeholders have their own insurance brokers. We are on a multi block insurance. They are also a big provider of social housing i.e. riskier properties. We are private owners in a simple, converted block in a good area yet we subsidise them for greater risk (including evictions, loss of their rent from their tenants etc). My Freeholder was found guilty of running an unauthorised HMO. Our insurance rocketed that year.
My service charges are over inflated and often made up.
Here is one simple example of the financial abuse.
The leaseholders received a £900 electricity bill between nine of us, for two timed lightbulbs in the small entrance area which are on 30 second timers. No point in asking for invoices – they will charge us for the privilege and add it on elsewhere, where it will not be so easy to check. We do not have the right to have the accounts audited in our leases. Even if we did – we would pay dearly for the privilege as it would be added on to their service charges – with another overinflated bill as a punishment for daring to stand up to our abusers.
We are billed £5,500 for a small patch of grass in the front to be cut fortnightly over the summer.
We receive our service charge bills for works done over two years ago (or false dates are entered). This makes it impossible to prove what works were actually done, as so much time has elapsed before we know what we are actually being billed for.
On the rare occasion that leaseholders win a case against the Freeholder, they often (in my case too!) have to pay not only their own legal fees but also the inflated legal costs for the Freeholder through their service charges. In what other court would this unbalanced situation happen?
The FTT is not fit for purpose as has been proved time and again. I believe Sebastian O`Kelly, from the Leasehold Knowledge Partnership, wanted to be involved with the government Leasehold Advisory Service but was not allowed. Martin Boyd, trustee of LKP and chairman of the residents at Charter Quay was excluded from the annual Leasehold Advisory Service conference and only managed to attend as he was with Sir Peter Bottomley. Why is this?
So, the Leasehold Advisory Service is certainly not a safety net for leaseholders. Quite the opposite.
If, in despair, we decide that our only option is to sell our property, we are totally vulnerable yet again. Our Freeholder can prevent a sale going through in numerous ways, if we don`t quietly and voicelessly accept their abuse of us. They can delay answering solicitors` enquiries for months or refuse to answer them at all. They can falsely claim enormously expensive works are due to be done in the near future, thus totally devaluing our property.
Even if they do answer the enquiries, there is no legal time limit in which they have to do this, nor a cap on what they can charge us. They can (and do) charge exorbitant amounts because there is no law in place to protect us, and because we have no option but to give in to blackmail as we need this information in order to sell our home. Sometimes they put a time limit on this information stating it is valid for three months only so we are forced to pay again and again.
I will end this letter with some quotes from other leaseholders reflecting how their situation impacts on them.
Here are what my neighbours say:
“For me it’s anger (knowing you are being financially abused and knowing that they know you know!), helpless (no protection against the abuser because the law offers none), insecure (You don’t know what uncapped demand is going to be posted through your letterbox at any time or any day).”
“I am mentally exhausted. From having to constantly chase my MA for repairs and answers about their less-than-transparent service charges. They have no accountability, and left me often with lack of hot water so often that I even had a breakdown – anger and hopelessness. I also feel like I can never trust them, I constantly will have to examine all invoices year after year and challenge new estimates. It is a part time job, all year around about 20hrs a week. I know I live in a building full of construction defects and I am constantly worried about whether I will be tied in for the next 20 years in my mortgage and not able to sell the property. I am an EU national and if my status here is not approved, I will be stuck with a leasehold property with defects and unreasonable service charges, I might be in a difficult position not having money to relocate from the UK. This is giving me great anxiety and fear of the future”
“I`m with you regarding being angry, I also feel not in control of any decisions, frustrated at management agents incompetent actions, feel stupid that I bought a leasehold flat, I could go on. It’s the total lack of control I hate and the feeling of being screwed every time a service charge invoice arrives”.
“Varies, but highest emotion is fear – after working hard (only being unemployed for 3 weeks during my whole working life) & having paid my mortgage off thought I would be secure in my retirement, but I won’t be secure at all – won’t be able to afford to maintain this house & worried where I’ll end up. Angry – that Sheffield City Council, Adriatic Land & Keepmoat have jeopardised my retirement, as wanted retire early (due to health). Health deteriorated faster (heart attack last year) than should have. Despair – done everything by the book & have been shafted by the system – feels like everything I’ve worked for has been a waste of time.
Despondent – everything is such a fight & treated with disdain by all who benefit from my living in this nightmare”.
“Despair and resentment at fighting it and getting nowhere. Helplessness that I now chose to just pay up!
Defeated that I have now decided to forget about fighting it to save my sanity!”
“I don’t know where to start. How I would love to publish the letters I get through my door from my Freeholder. Out right bullying to try and get their way. I am about to try to sell the property for a second time after the Freeholder sabotaged the first by cutting off water supply (don’t ask!), making unlawful demands on the purchaser to install new independent services and claiming extortionate service charges to the tune of £11 – 12K, that they were not entitled and which a Tribunal later confirmed.. AWFUL. These individuals / companies need exposing and heavily fined at the very least.”
“Feel stressed and trapped the situation feel is hopeless. Can’t sleep . have had a leasehold flat for 25 years which now only has 46 years left on the lease. Remortgaged 3 years ago to use equity as a deposit for another flat as I couldn’t sell due to short lease. In that time the value has gone from £53k to £45k. The freeholder is charging around £20k to extend the freehold.”
“I’m not in the situation anymore but I felt scared and frightened by the aggressive, threatening letters from a certain managing agent in the style of a debt collector. I used to feel physically sick and get pains in the chest whenever the letters and emails arrived.”
Please help fight for widespread, meaningful changes in legislation for hundreds of thousands of leaseholders trapped in this unbalanced, unjust nightmare. It has gone on too long.
Michelle [real name withheld]
Pay up, said managers who had not even read the lease
I currently own two leasehold properties as investment properties. One of the properties I acquired has caused issues which I believe should be brought to your attention.
I acquired the property at auction in 2015. Prior to the auction I engaged solicitors to review the legal pack which included the lease. I spoke with a solicitor prior to the auction to confirm that I understood the rent position (RPI) and that there was no obligation to service charges. I was aware of an obligation to contribute to an accessway / pavement if such costs were incurred but the solicitor confirmed there was no other obligations. In March 2016 I transferred the property to a limited company (owned by myself).
In March 2018 I received an invoice for outstanding service charges, reserve fund contributions and administration fees going back over 5 years from the managing agents [name withheld].
I queried this and was told it was correct and payment must be made. I asked if they could point out where in the lease did it set out the obligation and was told they didn’t hold a copy of my lease (apparently they weren’t required to) but if I sent a copy to them they would tell me or they could obtain a copy for a fee.
During ongoing correspondence I was advised by the managing agents
-‘Your obligation will have been formed on upon the transfer of the property, the reference you will seek to this covenant will be found within the terms of your lease agreement’
– ‘Please be assured we are an accredited and reputable Managing Agents and these charges are entirely genuine’.
You are a member of the management company known as XXXXXXXX
You are liable to pay a service charge to contribute to the management and maintenance of the communal areas
These points were all proved to be incorrect.
Even when I sent a copy of the lease to the managing Agents they were either unable to ascertain that the fees had been incorrectly charged to me or they chose to ignore the facts and try to bully me to make payments. The facts were that I was not party to the management company, the lease did not require me to make service charges nor did it require me to make reserve fund payments and no reference was made to administration fees. Even more concerning was the reserve fund was allocated to an ‘Apartments reserve fund which my property did not relate to’.
Following an e-mail a ‘review’ was undertaken which they accepted most of the facts. However they continued to hound me for a contribution despite now being aware that my lease did not require this.
They now indicated I should pay under a ‘Burden and benefit’ principle. I pointed out the invoice dated 7th March 2018 was not in accordance with the lease (there is no obligation to pay anything other than that provided in the lease, demands should not be requested in advance, no requirement to contribute to a reserve fund and administration charges are not referred to in my lease) and I request this is credited if full. If there are any costs incurred within the last 18 months (a landlord must issue a demand within 18 months of his incurring the cost) that falls within my lease obligations will you please provide details and raise an appropriate invoice. If you do not agree with this will you please provide copies of the accounts covering all the years ended 31st December 2013, 31st December 2014 and 31st December 2015 (which form part of the costs) and also provide me with details of your complaints procedure. I am still awaiting the balance to be credited or details of their complaints procedure to be provided.
In this case the costs I was being charged for a parking space. It amounted to over £100 a year for the maintenance of a small strip of tarmac used by 20 spaces for which no work was evident.
It is extremely poor that the managing agents can demand contributions without sight of the lease and even when they receive a copy of it are either unable to understand it or chose to ignore the facts. The managing agents acted in a ‘bullying way’ to chase payment. I feel I understood enough to stand my ground but many would just pay.
If you would like any further information please get in touch.
I have 10 flats and this is how I am being ripped off …
Dear Lord Best,
I am a landlord of 16 years with 10 Buy-To-Lets, s and I deal with several management company, this is a summary of how mine and other management companies are defrauding the leaseholders.
The management company have their own gardeners and charge us per visit, so for example let’s say £115.00 per visit x 30 visits per year = £3450 per year. Now if The management company were to agree to get 3 other quotes from local Gardening contractors the quotes might all come in at say £120 per visit so you would see this and say well The management company are £5 per visit cheaper so let’s stay with The management company, but you would be wrong!
Recent findings elsewhere by myself revealed the truth, I got 3 quotes and they came in marginally lower The management company (Per visit) but not much, BUT the local Gardeners were quoting, let’s say for arguments sake £120 per visit, BUT they were all saying you need 20 visits per year, The management company do 30!
Why do they do 30 when other contractors say we need 20? The management company do more visits than is needed to create work for themselves that’s why, and 9 times out 10 they won’t spend a full 1 or 2 hours doing the gardening they will do 30 min because they know they are attending more often than is needed which is costing us £££££
£115 x 30 Visits = £3450
£120 x 20 visits = £2400
See the difference, ask the management company about this and they will say yes but we are £5 per visit cheaper. If you don’t know to ask/investigate the number of visits we actually need you would agree that the management company are cheaper, but they are not.
FYI our management company gardeners get paid £7.50 per hour! When the management company were questioned about this hourly rate compared to what we are charged the response from the MD at The management company was, I’ve just bought 20 new vans and our lawnmowers cost £1000.
It has also come to my attention that the gardening contract that they gave to themselves does not include trimming the hedges!!!!!!! So it only really covers cutting the grass!!!!!!! Trimming hedges will incur an extra charge that no one knows about and is then hidden in the budget as General maintenance. They also have their own cleaning company, same rules as above apply.
The management company claim to have access to the cheapest buildings insurance in the industry because they insure all of the developments they manage under what is called an Umbrella Policy, which is basically insuring every development they manage with the same insurer. The management company claim that because they insure everything, something like 200 developments with the same company they get preferential rates, this is a complete lie. I sacked this management company from another development 6 months ago (Which took me about 1 year to do!!!!!) and employed another management company who does not use umbrella policies and guess what, The insurance is cheaper than The original management company.
They use this umbrella policy with one insurer for 1 reason and 1 reason only, the insurer pays them a commission on every policy they take out, every year. And guess where this commission comes from? It’s added to our policy by the insurer making it more expensive for us.
Let’s say a tree falls down and damages the roof on a block of flats, this will go through the insurance, The management company will get out a contractor (From their preferred contractor list) and ask them to quote for the work, The contractor will quote say £5000 and this will be given to the insurance assessor to sign off and say ok that’s fine.
However the quote is overinflated, the work probably came in at £4200 but £800 will be added on for the management company’s “Commission” this inflates our premiums! I have been told this from one of their ex-employees!
Another example was a flood in a communal area, the management company got out their HANDYMAN to clear up and put in 3 dehumidifiers, the handyman was told to produce an invoice for £5000 when the actual cost of the clear up and dehumidifiers was £600!!!! The management company claimed the £5000 from the insurers and paid the handyman £600, so who got the £4400????? Hmm.
Preferred list of contractors
Decorating as a recent example, I and another Director have just had to literally force the management company into redecorating and recarpet a development in Reading after 15 years because it had never been done and looked shocking!
The management company got 3 quotes from their “Preferred list of contractors” these decorators where London based, quotes were coming in at 9-£10,000!! I got 3 quotes from local contractors at 3-£4000!
Decorating has now been completed for £4000. Why are their preferred contractors, who are London based quoting £10,000? You decide. See point 3.
This formula applies to most if not all works carried out from guttering, roofing, tree surgery, lift repairs etc….And the residents are all paying for it.
Using the service charge money for cash flow.
It has been made aware to me that the MD of a certain company has been using the service charge funds to fund his own interest free loans in order to buy freeholds and property, he will “Borrow” say £200k from the funds of 200+ developments to buy something and then re pay the money 6 months later after he has acquired a mortgage on the property.
This is why they never ever spent any of the service charge money on big ticket items like re carpeting and decoration because they want to keep the bank balance as high as possible to use themselves.
Conflicts of Interest.
Freeholders employ their own management company who employ their own gardeners, cleaners, handymen etc…. The Buildings insurance will also in some cases be taken out using their own insurance broker company!!
I was chatting to very well respected leasehold expert and he was telling me a story of a freeholder who owns the freeholds to about 5000 flats over various blocks, this freeholder employs a management company to do all the maintenance /service charge, ground rent collection etc… BUT He only agrees to give a management company a management contract on a block if they agree to pay him £10 per month commission (Back hander) per flat, the management company then just sticks this £10 per month per flat on the service charge as admin or whatever, so this freeholder is raking in £10 per month x 5000 from the management companies he employs, and the leaseholders are paying for it!!!!
A situation I was in recently a management company was managing a block of 14 flats and the MD of the management company owned one of the flats, he was also the sole director of the RMC (Residents management company) even though by law it should have been 2, so he has employed himself to do the management, cleaning, gardening etc.
He had a free run of things charging whatever he liked because there was no one to challenge him. I after a year managed to get myself and another resident appointed as a director of the RMC with the intention of voting him and his company out 2 votes to 1, but because the MD knew my intention was to sack them he brought in his mate to be a director who also owns a flat in the development to block it so the vote was 2 verses 2, he continues to manage the development today employing himself as managing agent and employing his own company gardeners and cleaners etc… any votes against him and his company just end up 2 v 2 so no changes can be made, this is a clear conflict of interest as he owns the management company!! I took legal advice because he refuses point blank to stand down as director of the RMC and I was told yes it is and I can get him removed as a director but it will cost approx £8000 in legal fees!
This entire management company sector is a fraud and the leaseholders pay for it, when exposing such things to these management companies I get threatened with the Police and solicitors, which I gladly challenge, to date I have never received correspondence from either. I have been branded a trouble maker and a disruptive director just for asking questions. Freeholders, management company’s and the insurers are all in this together like some sort of old boys club and they think they are untouchable, people need to go to prison for this behaviour.
FYI ARMA are a waste of space and it needs to be scrapped, they are looking after the interests of the management company and even run courses on how to do it!!! If just one management company that manages say 200 developments applies all of the above can you imagine the scale of the fraud we are talking about here when this sort of thing is being carried out Nationwide by 1000,s of different freeholders and Management Company’s??? And who pays THE LEASEHOLDERS!!
I could stand in front of a judge and explain all this but do you know what, even though we all know it’s going on WE CANT PROVE A THING!!!!! SO THEY CONTINUE TO GET AWAY WITH IT!!!!![name withheld]
‘Shared ownership is not affordable and not ownership’
Dear Lord Best
I hope you find my email of interest and that you can act on it appropriately.
i am on the shared ownership scheme sold as low cost housing and a way onto the property ladder. unfortunately as with leasehold in general, it weighs heavily in the landlord/ha’s favour and needs to be rebalanced
Shared ownership is not affordable and not ownership.
*lease extensions are a cheap, easy way for a h/a to profiteer. Our housing association, Guinness Partnership, will charge 100% of the premium to extend. We own 30%. This is NOT fair.
It should be based on the percentage so if £10k to extend, you own 50%: 5k.
Why should such a profit be passed onto the h/a three times and not once to the person paying for the extension?
Once for lease extension premium, again with a free property increase thanks to ‘tenant’ and third with future buying/selling of the house. a shared owner will not see the same profit as a ordinary leasehold for extending since paying 100% when you only own 30.
However, it is a nasty double edged sword. if you dont extend lose your financial stake in property and be unable to sell/move on.
It seems to me the government suggests you must staircase by the time 80 years is on the lease but how is this always possible?
And hasn’t government figures shown that perhaps staircasing rarely happens because it is so expensive and hard to do. how has a government backed scheme got so low where this becomes a case? a scheme where the ftb loses out while the h/a sits pretty. its not just the case of lease extensions its the case of selling being so expensive, the admin fees are ridiculous £350+. staircasing is expensive and instead of it being easy and pay 20k here and there it is a extensive long process. staircasing also is disencouraged with the fact that you could financially lose out. with lease extensions not even being guaranteed and being at the mercy of whatever your landlord chooses its open to abuse and is abused by them.
shared ownership could be true ownership and truly fair if the following was addressed:
lease extensions guaranteed for all at a ‘affordable’ rate (isnt shared ownership supposed to be affordable?) you pay your % to extend and no more
admin fees should be abolished in all cases (selling, staircasing, lease extensions)
rent needs to be addressed increasing rent at rpi does not help staircasing. rpi is onerous and high.
housing associations should have a degree of responsibility to the house as well – please remember they sit and profit off the back of the tennant who has to do all essential repairs -making sure the house is ‘living home standard’ could they not contribute toward essential repairs?
landlords must no longer profiteer off their tennants or so-called shared owners. they really do sit there while the tennant/shared owner sits with all the financial burden of the property yet when it comes to staircasing/selling they take some of that profit. I believe this is also why shared owners now attach ‘premiums’ onto their properties when selling because they have lost so much money into these essential repairs whilst again, the h/a sits very pretty and heavily profiteering of the owner.
us on the shared ownership scheme are being treated as 2nd class leaseholders when it comes to any legal rights – lease extensions for example. but conveniently when it comes to the financial burden of the property / upkeep / maintenance we are then treated as ordinary leaseholders. Just because we are young and couldnt afford a property on the open market because the open market is broken does not mean we are not as good – we are trying – and trying really hard to succeed. please support us. how can we afford to raise a 2nd deposit (when it comes to funding this 100% leasehold premium) and staircase? its all stacked against us.
i would really appreciate a reply.
shared ownership cannot be forgotten.
Our freeholder and manager are the same
Good evening Lord Best.
Thankyou for the tireless work you do to help Leaseholders trapped by the managing agents that we pay to service the flats we live in.
We are managed by [name withheld] who has a director on the company books that is also a director for our freeholder.
As you can imagine we pay very dearly,and are unable to challenge or change agents.
Please can you help change this current dreadfull situation ,and help us get redress,transparency and above all fairness.
Kindest regards [name withheld]