Peverel Retirement up before the ARMA regulator before it can join ARMA-Q

A complaint about Peverel Retirement is being considered by ARMA regulator Keith Hill even before the trade body rules on whether it meets the criteria of ARMA-Q.

The complaint comes from Alex Ellison, whose mother lives in Mere Court, in Knutsford, Cheshire. It concerns Peverel’s ownership and disposal of house managers’ flats.

She has been informed today (January 14) by ARMA chief executive Michelle Banks:

“The [ARMA] council has referred the papers about Peverel Retirement that you sent us to our independent regulator, Keith Hill and has asked for advice from him, before determining their membership application.

“Peverel Retirement has agreed to co-operate with this approach.”

Keith Hill is a former Labour housing minister, whose rulings have already admonished a handful of ARMA managing agents.

Mrs Ellison became indignant when she discovered that Peverel proposed to hold a ballot of residents at Mere Court to end the in-house manager service. This would result in the sale of the house manager’s flat, which would have been to Peverel’s own financial gain.

But Peverel repeatedly told the residents in writing that the flat belonged to the freeholder Proxima, part of the Tchenguiz Family Trust.

In fact, the flat belonged to Peverel (via Peverel HMF limited) and it had a direct incentive to sell it off.

Residents were to be compensated with a £10,000 payment to the contingency fund.

A whole tranche of house managers’ flats were unaccountably assigned leases in Peverel’s name at retirement sites in 2009.

After the collapse of the Tchenguiz empire in March 2011 following the arrest of Vincent and Robert Tchenguiz by the Serious Fraud Office on mistaken evidence, some assets remained part of the Tchenguiz interests, but others ended up in the hands of Peverel.

It is believed the flats acted as security for a £25 million RBS loan that helped take Peverel out of administration in 2012.

But at least one senior figure in Peverel long suspected that its ownership of the flats could be challenged in law.

Peter Whalley, a former regional manager, wrote to a leaseholder in October 2013 concerning a proposed sale of a house manager’s flat:

“In doing this, both the landlord and Peverel accept that there is a commercial risk that doing this could be successfully challenged.

“To date, there had been no such challenge.

“If there was a successful challenge, Peverel or the landlord would have to purchase suitable accommodation and re-instate a resident house manager.”

Other retirement housing providers have followed Peverel’s example, including housing associations Hanover, which has sold 21 ex-house manager flats, and Anchor, which has sold six.

Even small-scale private investors in retirement freeholds have done the same.

Elderly residents are easily persuaded to accept the £10,000 – Hanover pays £15,000 – and the prospect of lower service charges that will be shared with another resident.

And the freeholder – or Peverel for some reason – gets to sell off a former communal asset worth ten or even 16 times as much.

Mrs Ellison is particularly indignant that the leases at Mere Court specifically exclude the assignment of a lease to the house manager’s flat.

In all 39 leases there is a clause on page two:

“the lessor has previously granted leases or intends hereafter to grant leases of the flats in the building other than the premises hereby demised and other than the House Manager’s flat.”

The in-house manager service continues at Mere Court, which was built 20 years ago – long before a lease was issued to Peverel for the house manager’s flat in 2009.

Lawyers consulted by  LKP believe that these assignments may be unlawful. We are also aware that criminal authorities have looked into this matter

Peverel’s possession and sale of house managers’ flats has been discussed twice in meetings between LKP and Janet Entwistle, Peverel CEO, hosted by MPs Sir Peter Bottomley and Jim Fitzpatrick.

She has stated that the flats legitimately belong to Peverel, which has not sold property that did not belong to the company.

Sebastian O’Kelly raised the issue on February 10 last year. The minutes read:

“SOK raised the issue of house manager flat sales and said that it was accepted by Peverel that its claim to ownership of these flats were open to challenge as some were owned by Peverel and some were not.

JE [Janet Entwistle] was confident that Peverel had only sold flats that lawfully belonged to them”

Martin Boyd returned to the subject at the meeting on October 10 and the minutes read:

MB: LKP have had a lot of enquiries on the sale of house manager’s flats and whether the sale is legal. Do Peverel have a legal right to sell these flats?

Janet Entwistle: Confirmed the position at the last meeting, she will repeat. It is straightforward and we have the right to sell them. They have leases for flats where there is a resident house manager who lives in the flat. When there is no further need for the house manager, or where a visiting house manager is preferred, the flat is sold and a voluntary contribution of £10k per flat is made to the resident’s contingency fund.

But LKP has repeatedly asked: why does Peverel own these flats in the first place?

They appear to be assets mined out of the freehold interest in the retirement sites, and then either sold, or borrowed against.

By raising the issue of the ownership and sale of house managers’ flats, Mrs Ellison has presented the ARMA regulator with a complaint that goes to the heart of retirement leasehold.

Mrs Ellison earlier complained to the Association of Retirement Housing Managers, but it only considered the process of Peverel’s consultation with the residents over the proposed flat sale, not the ownership of the flats.

In rejecting the complaint, the ARHM said “…on balance, we do not find that there is overwhelming evidence to suggest that Peverel were driving the option of a non-residential position to any extent, or to prejudice residents during the consultation and ballot process.”

It did say that Peverel’s communications with the residents “could have been improved”.

The concern remains that if Peverel, or rather freeholders, can lay claim to these flats, whose upkeep was paid for by the leaseholders, can they also assume ownership of other common areas such as reception areas, the communal lounge or the steps up to the front door?

With the OFT ruling in December 2013 that Peverel / Cirrus operated a price-fixing scam, ARMA may well feel that this particular organisation is altogether too complicated to join its ranks in ARMA-Q.