'I beat bullying managing agents on excessive charges': Retirement home owners fight for fairness as prices fall
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Britain's 2.5 million leasehold homeowners should be given new safeguards by the Government, according to MPs, property experts, charities and homeowner representatives.
Leasehold status is often thought of as an issue affecting mainly London or other big-city properties, but this controversial form of ownership embraces tens of thousands of developments nationwide.
It also includes 100,000 specialist retirement flats built for the over-50s, mostly in smaller towns and villages.
Justice: Mary Smith won a battle over charges at Strand Court
Last month, Financial Mail reported
how prices of this type of property were crashing, largely due to
problems with lease terms and because some freeholders and managing
agents exploit residents with excessive charges and poor service.
The issue is moving up the political
agenda. Experts, including solicitor Chris Paterson of think tank
CentreForum, who estimates leaseholders spend a total of £2.5 billion a
year on service charges, have been briefing MPs about wide-ranging
problems for residents.
Service charges are squandered by managing agents on exorbitant insurance or other services not competitively sourced, he says.
Paterson cites the case of residents
in one block who paid insurance premiums of three times the ‘reasonable
price’. Complaints about management charges, made through the current,
inadequate system, have risen 400 per cent in a decade, he says.
Lobby group the Campaign Against
Retirement Leasehold Exploitation (carlex.co) has worked to raise MPs’
awareness of residents’ difficulties in sacking managing agents or
contesting charges. Persistence has paid off, with millions in excessive
charges being refunded to residents who are prepared to fight.
Former Environment Secretary Caroline Spelman, Tory MP for Meriden, West Midlands, is among many MPs whose constituents have brought problems to her surgery.
‘There are repeated problems where
elderly leaseholders are concerned,’ she says. ‘Many of these people are
not well enough informed or capable of asserting themselves.’
Spelman talks of ‘sinister’ and ‘threatening’ elements involving elderly residents, some of whom were ‘afraid to complain’ because they had daily contact with their live-in manager. These managers are employed by the agent – and their loyalty often lies there.
She says: ‘Bullying does go on.’
Strand Court: Residents won a notable legal victory in May
Mary Smith, 65, was among the
residents of Strand Court, a complex of 49 retirement flats in Rye, East
Sussex, who won a notable legal victory in May against one of Britain’s
biggest managing agents, Peverel.
A valuation tribunal heard how
Peverel paid excessively for insurance and security services, making
payments to firms related to Peverel itself, although they had different
names.
The tribunal demanded that Peverel
repay £11,475 to residents and said it had shown ‘arrogance’ and
‘intentionally hidden’ information from residents. In a wider warning
against rogue managers, the tribunal warned agents’ rights would be
‘adversely affected’ where they ‘furtively and secretly employed a
fellow company’.
Although victory was sweet, the fight
had been tough. Mary, whose flat is now up for sale – ‘I want to have
my own front door again’ – says Peverel continually resisted residents’
requests for information. It also threatened residents with large legal
bills, engaging lawyers at £200 an hour to fight the freeholder’s case –
and then billing residents.
Mary says: ‘In theory, residents have
the right to sack their managing agent and employ their own, but our
case shows how difficult that is in practice.
‘Agents have all sorts of opportunities to profit and I’m sorry to say that elderly people are viewed as easy prey.’
Peverel has a new chief executive,
Janet Entwistle, who says the company is turning over a new leaf. It has
established a charter in which it promises to ‘publish a list of
companies within Peverel that currently use each others’ services and
explain why’.
She says: ‘We will improve our
communications and become more consultative. Through a lack of
transparency, we’ve engendered huge mistrust.’
Of the 200,000 properties managed by
Peverel, about half have the same, ultimate freeholder – the family
trust of the Tchenguiz property dynasty.
Entwistle sees no conflict between the agent’s duty to residents and freeholders.
‘We are here for our customers, and they are the people who live in the properties we manage,’ she says.
Why managing agents need to be policed
- Managing agents collect, safeguard and spend a total of £2.5 billion a year maintaining Britain’s leasehold housing – yet they are not regulated by the Financial Services Authority or any other watchdog, and anyone can set up as a managing agent.
- They are mostly appointed by the freeholder and tend to act in the freeholder’s interests, which can be in direct conflict with those of the leaseholding residents.
- The agents frequently employ related firms to carry out work (see above) resulting in uncompetitive or inflated costs to residents.
- If residents want to sack their management agent, they face an uphill struggle under today’s ‘right to manage’ procedures and may be threatened with huge legal bills.
- One in three leaseholders is retired. These owners may be more vulnerable than the wider home-owning public.
We have been asked to make clear that many residents of Strand Court, Rye, were involved in a campaign which won an £11,475 refund of excessive charges from managing agents. The case was presented by retired solicitor Archie White.
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Another scam is the secret creation of a lease on the HM flat. Unbeknown to us Peverel did this in the name of Peverel Operations PD Ltd in 2009. presumably it is now owned by the notorious Tchenguiz brothers for the purpose of increasing on paper their collateral to raise a massive bank loan. No management charges are set against it. However we since then we have continued to be charged for all repairs and refurbishments. The land registry tell us that they were not informed that this is an HM flat with all the attached conditions stated in our lease or they would not have granted the lease. Peverel gave then a fictitious flat number so they assumed it was just an ordinary flat. The HM flat hasd never been numbered. We tried to get this lease annulled but no progress so far. no-one seems to want the trouble.
- Shark Attack , Rye, 16/12/2012 09:33
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