Leaseholders escape paying out thousands as tribunal case collapses
Leaseholders have won an important section 20 victory against social landlord Circle Housing Merton Priory (CHMP) which was demanding £22,000 from each leaseholder.
In the event, the leaseholders will pay less than half that sum.
Circle Housing Merton Priory wanted to remove roofs and windows, remove asbestos and carry out major electrical work at the Watermeads Estate in Octavia Close, Mitcham, South West London.
But it over-inflated the charges drastically.
Valerie Watson’s son Ryan bought a flat at the Merton Priory site in July 2015 with financial help from his family and a pay-out following a motorcycle accident.
Within months Circle Housing Merton Priory was demanding £22,000 for major works improvements, even though CHMP had told the conveyancing solicitors no major works were planned.
“I don’t think CHMP deliberately misled us,” says Mrs Watson in her witness statement.
“I just think it was a mistake which they wouldn’t admit to, and this has been my experience of them ever since.
“They put little thought or consideration into what they do or how their actions affect the lives of the people who live in their properties.
“They just seem to want to take the easy option and don’t care what it costs them, their tenants or their leaseholders.”
The issue was taken up by the Wimbledon Guardian newspaper and local councillors.
Frustrated estate residents fighting £22,000 bill for repairs by housing association Circle Housing Merton Priory
Frustrated residents of a Mitcham estate, pictured below, are fighting bills topping £22,000 each for major work they feel is unnecessary and too expensive, leaving their homes uninhabitable while work is underway. Circle Housing Merton Priory (CHMP) plan to remove roofs and windows, remove asbestos and carry out major electrical work on the Watermeads Estate in Octavia Close, Mitcham.
The residents association commissioned their own reports on the needed works, which proved some were unnecessary.
When the issue seemed set for the tribunal earlier this summer, Circle Housing Merton Priory became conciliatory and mediation was proposed.
“At the meeting we showed them examples of the electrical overcharging, such as charging £82.81 for a £8 padlock and £331.69 for an earth bar that is under £5 to buy and takes 10 minutes to fit,” says Mrs Watson.
“I explained to Circle Housing Merton Priory that it wasn’t just us 27 leaseholders who were being overcharged: they were also being overcharged for their 63 tenanted flats.”
Shambolic cost control by Circle Housing had already prompted a fraud inquiry concerning £170,000 overcharging involving Keepmoat:
Fraud inquiry: Housing group overcharged £170,000 by contractors for repairs to Merton homes
An independent fraud investigation into a 9,500-home housing group has uncovered repairs overcharging of more than £170,000, nearly a year after a whistleblower alleged wrongdoing to the Wimbledon Guardian.
At the hearing Mrs Watson was introduced to Circle Housing Merton Priory’s barrister, Justin Bates.
“He shook my hand and said ‘I can only apologise’. He then went on to say that he wasn’t sure how things had gone so wrong and would like to ask the judges to give us a few hours to discuss things and try and work out an agreement.”
The upshot was that each leaseholder would pay £3,500 for the works, although any who had had windows replaced would pay an additional £3,200.
Circle Housing undertook to sort out the electrical works itself.
Mrs Watson adds: “Our local councillor, who had come with us, asked for a payment to be made to me and the head of the residents’ association in recognition of the time and effort that we had put into the case.
“This was again, agreed without hesitation.”
LKP has no idea what this involved, but hopes it was substantial.
“I left the court feeling a mixture of shock and elation but most of all a sense of relief that it was all over.
“That however, was a bit naive of me.
“I’m currently in a battle with them over service charges. Of the 13 items on my son’s last service charge bill, I’ve had 6 removed and I’m still arguing over 4 of them. I also discovered that they add a 15% admin charge to every repair invoice amount.”
LKP warmly congratulates the leaseholders at Circle Housing Merton Priory.
Even by social housing standards, Circle Housing appears to have been feckless and inept, loading unwarranted charges on homeowners while allowing itself to be right royally ripped off by contractors.
LKP believes Ryan should feel very proud of his mum.
CircleHousingLeaseholdersStatementofCase
CircleHousingMertonPriorySettlement
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Ha ha ha Quel Suprise – NOT!!! Thieves who operate in Residential Management must come to the realisation that not all leaseholders will be cowed and take it up wahoozi without protest.
I have a managing agent who is attempting to snaffle 108,000 for works that will cost no more than between 30-35,000 ( on a good day)
I say- Good luck with that Luv!! You know who you are and tune in regularly to this site , don’t you?
Incidentally, why haven’t ‘Circle Housing operatives be arrested and charged with exploitation? I think the leasholders should get together and forensically inspect all invoices including Insurance payments. It is utterly shocking what spivs working in the “Industry ” attempt to get away with.
PREDATORY behaviour is unacceptable in any industry including Residential Property.
ENOUGH IS ENOUGH! Good result for ‘ Merton Priory’ residents. BRAVO! ????????????
Clarification of above post. ‘Watermeads estate’ residents- BRAVO ! ????????????
As long as managing agents in this country are not chosen /kicked out by those who pay them over-charging , commission, brokerage scams will continue. Why are our MPs not introducing bills to ensure managing agents can ONLY be appointed by those who pay them flat owners/residents. Instead we have cynical pieces of legislation such as “right to manage” procedure; how about a legislation and procedures for the “right to breathe”? The entire residential property legislation is designed to attract the worst type of profiteers.
Well said! What a simple solution- the result of clarity of thought, which can only be brought about by those with no legal training.
As stated here before, managing agents and freeholders have NO incentive in well managed buildings. The real money is in commissions, redeveloping the reversions and devalue the long leases, do they can be picked up cheap.
Somehow though the establishment likes to pretend that the benevolent freeholder looks after the flock of sheep ????… it’s an insult really, free market economy when it suits them only.
Cat, Here’s a scenario:
1.A leaseholder has shared Freehold. ( 7 flats) The property has been self managed for 20+ yrs and has been very well maintained at ‘ reasonable’ cost.
2. 3yrs ago a managing agent was appointed/ correct due diligence. by the company directors was not carried out and the result i believe is catastrophic.
3. The 3 times directors are ‘ Lambs to the slaughter’ .& 3 x non director leaseholders can’t be bothered to engage.
4. That leaves 1x leaseholder who has refused to contribute to the ‘Major works fund for the past 3 yrs as it was ‘ unreasonable’ e.g. the agent was asking for 36,000 per annum in addition to a ‘ general reserve’ and running costs of the Victorian conversion property……?? 400% hike in service charge costs.
Conclusion;
The Managing Agent Co in question is run by directors who have got more form the ‘ Red Rum’. The directors of the Freehold Co are as savvy and competent as a retarded slug!!
Shared Freehold although preferable to the alternative means all or nothing at all if one has eejits as ‘ co- sharers’ ( commonhold)? or ‘ shared Freehold”.
I honestly believe that the directors of the company mentioned in the scenario have been told by the agent that the works that fall to the responsibility of the lessee e.g. Windows , balcony steps to gardens etc will be paid for by the lessor when the major works are due in April 2018, even thought the lease states otherwise. Only this form of inducement can explain their inexplicable ill judged conduct.
Managing Agents must be Strictly Regulated . This will protect leaseholders whether they be ‘ shared Freehold’ of other , from this Insidious ‘ “You scratch my back I’ll scratch yours” conduct that clearly goes on between Agents and leaseholders who ” Own” the Freehold.. it is shocking.
Please sign and share the petition if you have not already done so.
Thank you
Kim, the scenario is of course your very own live scenario. Clarify something for me. The lessor is the freeholder, in this instance all 7 freeholders. You are suggesting that the managing agent has very probably done a deal with the 3 active freeholders to complete work on their apartments using money intended for common areas, and from the budget contributions of all 7 freeholders?
David, you might say that. I couldn’t possibly comment….
David, hell yeah, I have racked my not inconsiderable brain over these past 3 years and that is the conclusion I have arrived at.
Nothing surprises me these days, and if there are three passive freeholders and one distant from the property – you are not living there now? Then very easy to visualise such arrangements being made.
Cat makes a huge point.
The whole basis of residential leasehold is an invitation to fleece home owners.
Managing agents are appointed by freeholders (landlords, ha ha) but these ‘landlords’ are not as the world normally understands the term and pay nothing. The agents decide how much to charge and have many ways of exploiting their power to decide.
The leaseholders are at the end of the food chain and pay everything. Like plankton slime?
Even exercising RTM does not remove the need for these charlatans, unless the estate is small.
Reading submissions to Squire Javid from the likes of RICS, the solution appears to be to require agents to be accredited and trained.
Really? I’ve lived under six of the shower, all with one or other form of accreditation or letters after their name. All failed the basic standards you’d expect or require in any other walk of life. At least an RTMC can sack them, but they don’t seem to care at this, just go out and find new suckers for a few years?
Whether agents are all incompetent or know what they should be doing and just don’t care, I can’t say.
A simple enough reform would be for all service charge accounts to be held in a trust account in the name of the estate, with mandated control of the trust bank account in the name of elected officers of a statutory residents association (i.e an ‘STA’ and not the farcical RTA system that gets ignored).
At present even RTMCs cannot run their own bank account if they appoint an agent, as agents will not work like this. They just love those pooled accounts and having total control.
Banks are happy to accept authorised mandates from resident associations with evidence of the constitution and valid elections, so the STA officers could simply mandate/ delegate day to day management of the bank account down to their agent – but retain rights to the bank statements etc.
None of this RICS code cap-in-hand nonsense where you have to beg for financial data even as an instructing RTM client, and still don’t get it.
Point is, these appalling agents (Ive yet to hear of a good one) would not have free rein over any estate’s funds and the STA would have real oversight.
Same thing with spending decisions. Why do agents get to decide? Or the stand-off landlords who put no money into the caper?
It is a failure of will to reform areas that could be reformed.
Never kid yourself there are not simple enough reforms available to solve some of the worst abuses.
David. Yup! However I am not a fool or a pushover. In a way I rather welcome this unpalatable occurrence simply because it’s turned me into a campaigner!!
Had I not experienced the venality, nefariousness and down right Fraud ( I have evidence m’ lud) of our ‘ Managing Agent’ then I would not have believed it possible. Sounds naive but true. I mean, there practices are like something out of the ‘ ‘Sopranos’. Extraordinary!!! You multiply what they scam from each property and it’s a very nice little earner. These folks need to be nicked and charged with theft- It’s the only language they understand.
David, incidentally the 3x passive leaseholders also live away from the property and let their flats.
Got you, that makes even more sense. House with seven flats, four of which are rented out, that leaves room for the three live-in owners to play with managing agent.
I am sure you have had words with the other three individuals who have rented out their flats, but had no joy?
Apathy Apathy and more apathy, which is of course meat and drink to crooked Agents et al.
Let’s see what the Tribunal hearing brings….. I am armed to the teeth.
This was yet another case that arrived on the doorstep of LKP after the leaseholders had been given poor advice from the government funded leasehold advisory service. An organisation that much like the social housing groups has no problem in producing dubious customer satisfaction reports saying how the vast majority of people find them a fantastic organisation. LKP does not have the time to produce such nonsense.
As far as Circle are concerned when LKP approached them we were assured repeatedly that they had done nothing wrong that the charges to the leaseholders were fair and that there was no failure when Mrs Walton and her son were not told about the major works expenditure when they purchased their flat
We should also make clear Circle is now part of Clariion Housing
In December 2016 the Social Housing Regulator found that
“Circle Housing, which forms part of 125,000-home landlord Clarion Group, had ‘risked serious detriment to its tenants’ after failing to address ‘hundreds’ of repair issues and tenant complaints.”
In the PC world of housing there is no harsher criticism that saying the social landlord “risked serious determent to its tenants'”
Ironically Clarion is part of the DCLG review team looking at s20 major works. Perhaps DLCG should note this article with some interest. Had the Walton family not been willing to spend their time money and effort fighting for their rights Clarion would have squashed them.
Abosutely shocking! I shall personally be writing to the DCLG review team requesting why Clarion ‘ is a party go their team in light of this utterly scandalous and ill judged conduct by the ‘Clarion group’. I shall also mention the freeholder of a block of flats in Shepherd’s Bush Green who In my opinion should be being investigated by the Police.. VERY DODGEY behaviour,
I shall be in Florence for a week decorating a divine duplex but upon my return I shall get to business. ENOUGH IS ENOUGH!
This behaviour is unacceptable.The mouse has roared – The ‘ little people’ ( Leaseholders) have risen like lions from
slumber ( Hi Ollie)… get those signatures in.
.
Reform must include stronger measures and penalties to deter the criminal element in this unregulated industry and facilitate enforcement of EXISTING legislation provided by the LTA 87 (as amended Housing Act 1996), Leasehold Reform 1993, (to prevent informal lease extensions) and enacted parts of the Commonhold and Leasehold Reform Act 2002.
And all matters requiring enforcement must without exception be brought within the remit of the FTT-Property.
Hi Alec. Can you clarify something for me please. Are you saying that the offer of an ‘informal lease extension’ is illegal? Or are you saying that the 1993 Act ought to be reformed and strengthened in order to prevent the practice of offering an informal lease extension?
In my case, I received two offers from a professionally qualified valuation expert to extend the lease: (a) one was an offer with peppercorn rental and (b) the other was what I later learned (thanks to the info on this website) to be an ‘informal offer’ with a new ground rent agreement that doubled every 25 years.
In view of the valuation expert’s professional accreditation, I viewed the ‘informal’ second offer as unethical and for what it is worth I have given my two pennies worth in my reply to the government consultation but I was not aware that it was illegal. In fact, I complained to an officer of the freeholder’s limited company and the hardnosed and indifferent defence was that both offers were perfectly legal. I was not impressed and lost all faith and trust in the unbiased professionalism of the so-called valuation expert who happens also to be our managing agent and is engaging in another form of gamesmanship over the costs and timings of some ‘major works’ but that is a story that is for another time!
If the informal offer was illegal then I may need to raise the stakes and report the freeholder’s valuation expert to the authorities. Appreciate clarity. Thanks.
Fleeced leaseholder, the Modus operandi of your freeholder/ Agent sounds rather familiar.
Who are they? Can you not say? Ask admin for my details – Ifs it who I think it might be then I have some Information about this discredited outfit that you may find rather helpful.
Knowledge Is power!
Alec I shall filch your comment to include in my email to the DCLG questioning its decision to include ‘Clarion’ as part of its review team on s20 Major Works , when ‘Clarion’ thinks it appropriate to have an outfit like ‘Circle Housing’ which was castigated by the the social housing regulator in 2016? HOW Is that acceptable?
Why did the DCLG not think that it might be a constructive idea to invite some leaseholders onto the review panel?
I honestly believe that The Residential property Industry is as murky as Hollywood and its enablers e.g. shady solicitors, crooked surveyors et al are the equivalent of the ‘Agents’ who sent young actresses like lambs to the slaughter.
Clarification-“Clarion thinks it acceptable to have an outfit like ‘Cicle Housing’ under it’s umbrella’ therefore ‘ Clarion’ Is an unacceptable outfit to be included on the team reviewing s20 Major work” . Simples!