Civil servants meet property managers who work for leaseholders … which makes a change from trade bodies, compromised quango chairmen, housebuilders working the leasehold opportunities, big freehold interests (frequently owned offshore) and the terracotta army of professionals whose livelihood depends on English flat-ownership being absurdly complex and unbalanced
Four senior managing agents met officials at the Department of Communities and Local Government on Tuesday to urge changes to the leasehold sector.
Leases should be of indefinite length, ground rents should be abolished or minimal and the hundreds of millions of pounds controlled by managing agents need protection. They should also not be owned or controlled by the freeholder.
These were the messages delivered by Rob Plumb, CEO HML Holdings plc, Alan Coates, former MD of HML Andertons, Steve Wylie, of City-based Urban Owners and Cherry Jones, of Swindon managing agent Home from Home.
Cherry Jones bluntly states in her submission: ‘the incentive to remain an honest managing agent gets less with each passing year’.
All but Urban Owners are accredited to the Leasehold Knowledge Partnership, which organised the meeting.
The managing agents all have track records of serving the interests of leaseholders.
Rob Plumb, of HML Holdings, which manages 60,000 flats, has presented to MPs at LKP roundtables, and Alan Coates, of HML Andertons – the largest part of the HML Holdings group – has given hours of his time helping leaseholders who have contacted LKP with complex management issues. Eighty per cent of HML’s business comes from leaseholder controlled blocks.
Steve Wylie’s Urban Owners has created more than 400 RTM companies, of which around 2 per cent have been contested in tribunal. This is an astonishingly high figure, given that there are only around 4,500 RTM companies in the country.
It means that Urban Owners may be the largest single provider of RTM in the country.
Cherry Jones, of Home from Home, singlehandedly challenged housebuilders in Swindon to hand over residents management companies that had been stalled for years … and got the two local MPs to back her efforts.
This resulted in Bovis sacking managing agent Countrywide from all its sites across the UK
Rob Pumb, an accountant and former CEO of a bank, said: ““Leasehold is an inheritance from a feudal past: that we cannot climb out of it is a huge frustration to me.
“Leases should always be written so that the leaseholders are in charge of their building.
“Instead, leases continue to be written with clauses empowering freehold landlords with the ability to make decisions that financially reward the freeholder but are paid for by leaseholders through a service without the leaseholders having the ability to contest those charges
“Freeholders are able to earn insurance commissions on the placing of insurance without providing any services at all (e.g. work related to underwriting information, premium collection or claims management).
“No qualification or accreditation is required to practice as a managing agent, who hold – sometimes significant amounts of- client monies in trust.
“This is an uncompetitive environment for those managing agents who pay for the control infrastructure to protect their clients’ interests – versus unregulated managing agents who do not abide by any professional code of practice
“As a former banker I am astonished at the sums of money controlled in a sector where there is not a disciplined profession of property managers.
“It is a miracle that there have not been more problems with millions of pounds of clients’ money.”
These issues were reinforced by Alan Coates, of HML Andertons, who also referenced “Three party leases where there is no clear and simple removal of manager clause”.
This has recently been an issue concerning embedded management companies owned by Chainbow property management at prime London Taylor Wimpey sites.
The issue has added seriousness as Chainbow is owned by Roger Southam, who is also the current chairman of the Leasehold Advisory Service, the quango that was set up to protect leaseholders.
Steve Wylie analysed the state of right to manage under sections The Good, the Bad and the Ugly.
The Good referred to RTM broadly working with far fewer issues than in blocks controlled by freeholders. This was a finding of the CMA.
The Bad concerned qualifying buildings: the confusion over multiblock RTMs following the Triplerose Court of Appeal case; the arbitrary 25 per cent commercial property excluding RTM; the exclusion of leasehold houses from the right to manage.
The Ugly concerned freeholders’ lawyers repeatedly seeking to derail RTMs with the same quibbling issues concerning the application.
This wastes the tribunal’s time, and taxpayers’ money.
Mr Wylie asked: “Potentially have a list of precedents maintained by the Tribunal such that if a freeholder uses such a reason in a counter claim and takes it to tribunal, the freeholder will be penalised with extra costs.”
Older leases also hinder effective management as they move to leaseholder control concerning the lack of reserve funds and chasing payments from late payers.
Mr Wylie said: “Potentially have new legislation that allows ‘override’ clauses to be defined in statutory instruments, that override clauses in a lease… slowly move lease management to a set structure like commonhold by incrementally adding to the ‘override’ clauses in the statutory instrument.”
Cherry Jones, of Home from Home, told the civil servants: “It seems clear to us over the last 30 years that many leases are designed for no other reason than to benefit the developer and freeholder working with a complicit agent.
“The lack of regulation seems to have allowed many aspects of the lease to become systematically oriented to expanding the profits through increased ground rents, limiting and more importantly delaying the rights to take over the RMC.”
Mrs Jones said: “There is an urgent need to evaluate the wide range of leasehold legislation and limit the many incentives that make unfair profits from the leasehold sector.”
She echoed the sentiments of Steve Wylie concerning the frustration of right to manage by gameplaying lawyers.
The managing agents also addressed the trade body the Association of Residential Managing Agents.
HML Holdings plc is a member and it believed: “ARMA Q’s new standards are to some extent, publicising the need for professional conduct in the leasehold market.”
Urban Owners is not a member, while Mrs Jones highlighted the trade body in her presentation.
“To date we have refused to join ARMA as we do not accept they have had the desire or ability to self-regulate the sector.
“We are also of the view that ARMA is mostly funded by the very large agents who make their money from working very closely with developers often to the detriment of leaseholders.
“As a small company we regularly see our larger competitors make offers to buy us out and we regularly see them buy out the competition.
“These purchased companies may keep their original trading name to give the illusion of customer choice.”
Mrs Jones added: “Because leasehold law is so complex and provides so many opportunities to impose costs and fees on leaseholders … the incentive to remain an honest agent gets less with each passing year”.
The full presentations from the managing agents is below:
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Well done LKP and all concerned. This should put paid to the egregious lies about leasehold working well told by Grant Shapps, the Prime Minister’s former fund raiser and housing minister who accepted six figure donations from a landlord whose companies were found to have engaged in fraud and deception. The corruption in leasehold goes right to the top of the establishment. No mention of the fact that leasehold has been abolished in every country that inherited it from English common law?
Yes, well done yet again LKP and all others involved. I totally agree with Paul’s comments
Well done LKP for this brilliant article. I will be contacting my MP to demand her input in our fight to get Peverel/Firstport off our estate. As a leasehold freeholder I fall under the bad while my fellow leaseholders continue to be fobbed off with references to the Lease. We all are deliberately being cheated and continue to face countless tactics by the entire gameplaying staff who have and continue to treat us with contempt because of an archaic law .
It is sad this has been allowed to continue still. There is no hope in future if the law is not changed.
So well written and so well thought out.
A change from leasehold to common hold, or in the meantime a change that gave an automatic right for leaseholders to appoint managing agents would be of great assistance.
May i also suggest a change in the rules of RTM.?
I would like to see a system in that at present a RTM application is made and if rejected is contested at great expense at the Upper Tribunal. What would make the system fairer is that if the RTM is contested,, the grounds must be stated and the RMC has an opportunity to address the contested grounds. If this is done, the RTM goes ahead without the need to go to the Upper Tribunal.
If it can’t be done, then it does go to the Upper Tribunal, but crucially, only the grounds that have been contested can be brought before the Upper tribunal., .
Turning to ARMA,
ARMA-Q clearly was an attempt to raise standards in property management, which was basically brought in as a last chance attempt to show the industry could self regulate.
If we look at the typical membership, we can see it is dominated by the super sized groups without which if they were not members, ARMA could not survive financially.
We then have a group of managing agents that genuinely want to improve their standards and see ARMA-Q as an opportunity to do this.
There is also a group, whose standards always exceeded ARMA-Q, have maintained an excellent reputation, but feel the need to join on the basis that” everyone else has”
Some have not joined ARMA for the reasons given by Urban Owners, a view incidentally I share.
Clearly, some kind of regularity board is needed. it should be backed by statute. I would introduce a financial bond (such as with ABTA) so that funds are available to reimburse residents for managing agent failings.
I would also make it a condition of membership for ARMA that service charge funds cannot be amalgamated with other service charge accounts, All bulk purchase discounts must be fully declared. Service charge funds must be held in banks that do not finance the managing agent.
Contacts to manage should be readily available to leaseholders and no contract shall be for more than 3 years before renewal.
Some very good suggestions there Michael, but I doubt ARMA will take note. . I e..mailed them some time ago about the Financial Bond idea (like ABTA), but got no response.
I fact in the last year I have e.mailed them around 20 times, sometimes critical and sometimes constructively. Never get a reply, they are just not interested in the Leaseholders point of view.
And to think we originally put our faith in them, such a shame.
Michael Hollands,
I admire your determination in trying to get a reply from ARMA.
They have now had 20 months to decide on Firstport Retirement, even though their sister companies were readily admitted to ARMA-Q.
There is no point in asking Keith Hill, Head of the independent ARMA regularity board.
The coffee has been made, he has smelt it and exited stage left!
As things are, anyone can set up as a ‘managing agent’ company. There is a plethora of small unregulated “management” companies, which are little more than money laundering schemes. A freeholder can impose any number of those to unsuspecting leaseholders, charging for substandard services and harassing them to oblivion. Something which is happening right now.
Further to the breaking news that Keith Hill is leaving ARMA, it must be acknowledged that he was in a complete no-win situation.
He has spent an extraordinary amount of time on the Firstport Retirement question.
Firstport Retirement are desperate to gain ARMA-Q accreditation, as their competitors seize an increasing amount of their development management contracts.
For their part, ARMA really wanted Firstport Retirement to be admitted even if only as associate members. ARMA are finding it very difficult to justify a position when they accredit some Firstport companies , but not others, given they are run by the same people.
And yet, if Firstport companies are not part of ARMA, the income loss to ARMA will threaten their survival. Keith Hill is a decent man. No wonder he is going!
It is a pity that Keith Hill has been unable to sort out the First Port Retirement application before his retirement.
Yes, he is a very fair and decent man, he must have had his “hands tied”.
To me it is simple and should not take twenty months plus..
To earn ARMA Q, First Port must completely reform and pay full compensation for past deeds.
That includes Price Fixing, Sale of Managers Flats, unjustified commissions dodgy tendering.etc, etc.
I think I may apply for the vacant post, I think I could sort it in a couple of weeks.
Does anyone else fancy a go?
,
It is not just past deeds that Firstport need to put right.
Look at all the roof surveys they have been carrying out lately. One survey carried out by a company with a net worth of 143 pounds identified a need for 34, 000 pounds of work on the roof, yet an independent surveyor appointed by the residents found the roof was in excellent condition.. faced with this the area manager apologised for “The confusion”
As much as I think you would do a great job, Michael, I fear if you expelled the managing agents that were members of ARMA-Q but fell well short of ARMA_Q standards, ARMA would cease to exist!
Are you suggesting that if I got the job we would finish up with ARMAgeddon.
Michael,
Which company was named regarding the survey carried out by a company with a net worth of £143 identified a need for £34,000 worth of work on the roof, where the independent surveyor appointed by the residents found the roof was in excellent condition. The Area Manager apologised for “The confusion” surely not just an apology was given, which development and which Area Manager, can they be named?
The company in question was S Curtis &Son.
Is there any information made public as to how many complaints the ARMA Regulatory Board actually considered and what disciplinary action was taken.
They meet on average for two days a month, so surely they have not spent two days x 20 months scratching their heads over Peverel/ First Port..
I think the next Regulatory Chairman needs to be a strong character who can really give the system a big shake up. It could work with the right person in charge who is not being encouraged to sympathise with ARMA members or prospective ones.
Go for it ARMA
Thus far I have found three complaints that were in part upheld by the ARMA Regularity Board..
Following a conviction after being prosecuted by the Kent Fire Brigade,in 2013 Bridgeford were fined by ARMA.
In 2014, Y&Y were issued with a letter of admonishment, and also in 2014 Urban Bubble were given notice that their conduct would be considered in any future complaint.
And that folks appears to be all!
Yes, ME, your comments tie in with the About Peverel article, this is one of the lines taken from it – “From around 300 complaints a year ARMA Regulatory Panel only review cases at the rate of 6 in the last reported year …”.
Just an absolute disgrace to me, and a total waste of time and money.
A challenge to ARMA/ARMA Q members – If you are 100% honest, transparent and truthful, , resign your memberships and apply for LKP accreditation.
After all, if anybody had an actual real choice, would they approach a member of ARMA/ARMAQ to manage for them. I certainly would not.
I think there are some very fair comments about ARMA/ARMA-Q and Keith Hill posted up on the “About Peverel” site in the Comments Section titled “Toothless Regulation” posted by Ed Watch
Knight Square (parent company of Firstport Retirement) have just published their 2015 accounts.
Whilst their 2014 accounts set great store by their application to ARMA-Q, the 2015 accounts do not even mention ARMA..
On 24 September 2014 Janet Entwistle stated that Peverel/First Port fully supported the work of ARMA and ARMA Q, and that Peverel /First Port Retirement would soon become part of it.
Did she really believe that?
I think that ARMA have the duty to explain to their Resisidents why they have been refused.
It must be something fairly serious and whatever it is it needs sorting quick.
I notice on the First Port website, they state that Managing Director Sue Petri has paid a crucial role in the development of ARMA Q.
Sue is the Managing Director of two First Port companies but not the Retirement one.
Is she unable to encourage First PortRetirement to make the necessary changes to qualify or has she encouraged ARMA to set the standards too high for First Port Retirement to meet.
Or does it beg the question as to how two of the Firstport companies achieved ARMA-Q accreditation?
How many management companies applying for ARMA-Q accreditation were not only showing a provision of 8m pounds in their accounts to resolve legacy issues, but in a note to their accounts state they will defend any claims vigorously?