The annual conference of the main leasehold property managers trade body ARMA (Association of Residential Managing Agents) took place on 5th November. It was maybe appropriate that this year’s meeting took place at the prestigious Methodist Central Hall in Westminster with some agents soon to be excommunicated as sinners and others still in need of redemption.
This was also ARMA’s largest ever conference and the last before those members who cannot, or have chosen not to, meet the now obligatory ARMA-Q accreditation standard are required to leave the organisation. While ARMA still has a long way to go before all agents comply with the spirit as well as the letter of the ARMA-Q, it is a big step forward from their previous less than rigorous bye-laws. Leaseholders can hopefully also have confidence that former Labour Housing Minister Keith Hill is the ARMA chief regulator. (LKP Note: We are aware Keith Hill is overseeing a number of important cases at the moment and we will report on these when his decisions are announced.)
Of the various speakers the chief economist for RICS, Simon Rubinsohn, predicted buoyant property prices over at least the next few years. The one potential problem he highlighted was the private rental sector following recent changes made by the Chancellor regarding mortgage interest. Simon did not talk specifically about leasehold property values so his comments do not reflect the whole market. (LKP Note: As readers will know there is extreme variation in the value of leasehold properties. Those with short leases or in some parts of the retirement sector continue to heavily underperform the rest of the market.)
Karl Arden from the ARMA technical team ran through a number of the updates to their technical guides. These guides are regarded as one of the most useful services provided by ARMA for its members enabling agents to keep up with an ever changing set of rules and regulations. (LKP Note: As well as guides for managing agents a number of very useful guides for leaseholders are produced. The guides are free to access and can be found HERE.)
From the social sector Steve Michaux, Chair of the National Leaseholder Group and director of leasehold services for A2 Dominion, along with Katie Bond, director of Notting Hill Housing, talked through a number of issues in their sector and its growth over the years. They also talked about working with private sector managing agents. They explained that in London the social sector providers now represent almost a third of new build, a growing proportion of which is sold directly into the private sector.
Steve Michaux explained that the current right to buy proposals may add as many as 500,000 leaseholds to the sector over the coming years. (LKP Note: The government still appears not to have fully understood the implications of the leasehold sector magically growing from 2-2.5 million to 4.1 million last year after we helped demonstrate that the previous figures were fundamentally flawed. The addition of a further 500,000 homes places an even bigger strain on the systems which are meant to support leasehold tenure.)
After lunch the audience listened to specialist leasehold barrister Justin Bates and solicitor Cassandra Zanelli, who ran through a series of cases which might cause managing agents concern. For both RMCs and RTMs there are potentially some interesting VAT issues at the moment.
At the end of the talk Justin explained a little more about the recent court of appeal decision (which can be read HERE) which overturned the lower tribunal’s decision to allow a single RTM to run multiple blocks. In each of the three cases considered in the appeal the court found that the law required a single RTM to run a single block. Mr Bates of course agreed with the court of appeal decision which was perhaps inevitable, having been part of the landlord’s legal team led by Philip Rainey QC. (LKP Note: Our view is that the court of appeal decision is deeply flawed for a number of practical rather than legal reasons and hopefully the decision will force government to consider amending the law to make RTM work more effectively.)
The question asked by a number of managing agents was ‘what should existing multi block RTMs do now’? The answer, Justin Bates suggested, is that nobody is sure at the moment. He explained that he had already advised both landlords and RTMs on the matter. His general view for existing multi block RTMs seemed to be that it probably depended on whether the RTM had been awarded following a determination by the tribunal or had just been agreed directly with the landlord.
In the case of a Tribunal decided existing multi block RTM Justin Bates felt they would be in a stronger position regarding their continued existence in their current form. However for those that had been created voluntarily with the landlord he suggested that the leaseholders might be in a slightly more difficult position if their status were now to be challenged by the landlord. He suggested such sites might now want to agree with the landlord to allow the creation of a new RTM for each block, and for the landlord to continue to agree not to dispute the right of an RTM to run the site. (LKP Note: We are happy for Justin or other specialist counsel or solicitors to comment further on the legal points of this issue. Others who speculate on the law or tout for business may have their comments redacted.)
The tone of the conference has certainly changed over recent years. The good news is that each year seems to see rather fewer criticisms directed at leaseholders. Each year those who believe in customer service seem to have a slightly stronger voice and each year there seems to be a little more acceptance that delivering good service might actually be a better way to grow a business. The bad news is that ARMA still has a rump of managing agents where bad practice is all too common. It will take a year or two to know whether the ARMA audit process is going to expose these agents.
Despite the sector asking to be formally regulated for years the government still insists that managing agents should somehow police themselves. ARMA-Q is that policeman. However, what ARMA cannot do is to force agents to either join ARMA or regulate those agents who choose not to belong to any regulatory group or scheme. Soon ARMA will also no longer regulate those agents who are choosing leave rather than meet the ARMA-Q standard. At the moment Countrywide is high on the list of agents who have dropped to “Associate” status and so are due to be leaving at the end of December. (LKP Note: In a meeting with Sir Peter Bottomley MP and LKP earlier this year Countrywide made it clear that they were still thinking about their continued ARMA membership although no clear explanation was given as to why they might now be choosing not to meet the ARMA-Q standard.)
One final and important development this year is that social hosing groups can now apply to become ARMA members. This seems a positive move and one which LKP supports. Too many social housing groups have too many problems with their leasehold tenants.
Related posts:
What does LKP think of ARMA reforms, we were asked. As the annual conference begins in London today, here we go …
ARMA-Q reformers get strong backing at annual conference
Managing agent Joseph Gurvits named in Commons – an hour after MP attends ARMA round-table conference on tougher ethical standards
Why we resigned from ARMA, by LKP managing agent
Feeble talk from CMA at ARMA conference
Was there any news about the ARMA Boards judgement on First Port’s application to join ARMA Q ?
I say application, although I am informed by First Port that have not actually applied yet.
It is difficult to follow what actually is going on there
I notice that the ARMA website and Twitter account is full of congratulations and self praise, from the organisation itself and from its members.
Although ARMA Q is a step forward it is still only self regulation and only as good as the member companies are willing to let it be.
No company is going to self regulate to its own disadvantage, and the ARMA organisation has no means of enforcing their own standards. Nor are they intending to take up and resolve leaseholders complaints against members.
So leaseholders will still have to rely on the integrity of ARMA members.
There will be many member companies who operate good practise, but not all . And with the ARMA Boards long winded consideration of disputes ( eg. The First Port situation) it will take an age to get justice done, if at all.
I think everyone (including ARMA ) recognises this. Only the Government has other ideas.
I have had an interesting e.mail from Noella Morton, Head of Operations at ARMA.
It came as a reply to my request for them to publish a summary of the speeches at their Annual Conference, particularly anything that would give encouragement to Retired Leaseholders..
She states the following.
1 That the Conference is for Members and guests only and ARMA do not make information available to leaseholders. If leaseholders want this they have to buy the News on the Block Magasine or similar who may have an article on it.
2 That the ARMA Conference does not concern itself with Retirement Housing and if I want any information on this subject I should contact the ARHM who specialise in Leasehold Retirement.
This reply really astounds and disappoints me.
It shows a complete lack of interest in the elderly leaseholders and ignorance of the unfair conditions they suffer.
The final insult is to direct us towards the ARHM , an already discredited organisation in the way it deals with retired leaseholders.
I had some hope that ARMA might be able to make some difference, but this is rapidly fading.
I hope it does not become just another ARHM, acting solely for the benefit of its own members. Just another branch of the Pall Mall Gentlemans Club.
,
Michael,
As a trade body for managing agents which charged £330 for members to attend their annual conference I guess they might get into trouble if they just started handing out the notes for free. LKP gets invited so we can report on some of the issues. at no cost to you.
It’s also right to say ARMA has no specific experience of the retirement market as that is left to ARHM and ARCO. Its also why we have both a Campaign against retirement leasehold exploitation and LKP site. We will be writing up the launch of the ARCO code soon on the Campaign against retirement leasehold exploitation site. So far we have never been invited to an ARHM conference.
At least they could release a summary, and if there is good news for leaseholders it would be a chance to demonstrate they are making a difference.
I am surprised that you say ARMA have little experience and are leaving it to the ARHM. They already have one of the major retirement companies(M&S) as members and are considering an application from the largest to join ARMA Q. Their previous MD gave interviews on the BBC and had a lot to say about leasehold retirement.
Heaven forbid if they are going to set their standards on the ARHM performance
At the very least – It should be made compulsory to be a member if you are a ‘managing agent’ acting on behalf of a freeholder. Ours isn’t, and I don’t expect him to join any time soon. Honestly, people have no idea of the corruption, non uk reg companies, tax evasion and other scams that go on, in the leasehold section.
Rest assured we have made government very aware of some of the problems caused by landlords owning managing agents. The difficulty is getting someone to do something about it.
The off shore problems and other scams are also known about. Maybe that’s why a senior member of the serious fraud office sometimes comes along to the parliamentary round table meetings?
I have also contacted my MP about it, with specific details and I urge every leaseholder out there to do the same. The problem so often is that, the freeholder tends to limit his fleecing of leaseholders to relatively small (but constant) amounts, which makes challenging them extremely time consuming and expensive. So in general most leaseholders don’t do anything about it until it’s too late.
I have written to my MP David Burrowes and to Peter Bottomley regarding licences for managing agents and other issues and did not receive a reply from either of them.
With due respect to Sir Peter Bottomley, Jim Fitzpatrick, and others including LKP, waiting for leasehold reform is like Waiting for Godot. However, as Government launches its much heralded building programme,, at least one cancerous growth in this unregulated sector could easily be removed., and waiting for Godot might then become liveable with!
Leaseholder in his comment highlights the muddy and murky existence of managing agents acting for freeholders. In fact, as Martin points out, the existence of wholly owned subsidiary companies of freeholders who describe themselves as “managing agents” (and certainly not members of ARMA, “Q” or otherwise) are the root cancer in this corrupt body. Leaseholder points out that “…the freeholder tends to limit his fleecing of leaseholders to relatively small (but constant) amounts”. Actually the amounts involved are not that small, and when the target of one such freeholder can run into 1000’s, the “constant” amounts involved can and do run into annual millions.
Martin states LKP has “…made government aware of some of the problems caused by landlords owning managing agents”, and goes on to state that “… a senior member of the serious fraud office comes along to the parliamentary round table meetings”. I am sure those who possess documentary evidence of the corrupt practices and scams involved in this field would be willing to hand this evidence over to a senior member of the SFO.. This particular scribe certainly would and I would thank Martin to check with the SFO and post full contact details with appropriate reference on the LKP site for this purpose.
The government already has more than enough information but it is choosing not to regulate.
Partly it’s because it’s idealogically opposed to what it likes to call “red tape”. Partly because the Conservative Party is the recipient of large sums of money extracted from leaseholders and paid over to wealthy landlords who would prefer the status quo. Partly because some of those landlords are part of the Conservative establishment. David Cameron, after all, married into the Astor family, one of the UK’s largest freeholders. George Osborne is the heir to a baronetcy in Ireland and his family fortune was founded on renting Irish land back to the native Irish from whom it was taken. The Conservatives are the party of the titled, the entitled and the would-bes.
Plans for leasehold reform would be a sign that it is intent on modernisation. It is not. The clue is in the name: Conservative. Change will be admitted gradually and only to the extent necessary to see off a revolution. The party has an interest in slowing and preventing change that would be disadvantageous to its most prominent supporters and members. Sweeteners like £1,000/day consultancies for former chancellors paid by the likes of Vincent Tchenquiz help ensure that a revolution will, in fact, be required. The Conservative’s shamelessness (and the supine, feeble nature of the opposition) is illustrated in their candidate for mayor of London: Mr Zach Goldsmith. His homes in London and abroad are owned nominally by offshore trusts worth hundreds of millions. Their benevolence is remarkable and can only be compared with that of Londoners who vote for more of the same because the alternatives offered to them are, somehow, even worse.
It’s going to take a sustained campaign (by The Guardian?) akin to that by The Telegraph on MP’s expenses to bring about any change. The Tory press isn’t going to do it. It’s far too busy ranting about whether Jeremy Corbyn knelt in front of the Queen, kissed her hand, sung the national anthem, nodded properly at the cenotaph, or is soft on terror.
To further illustrate the Conservative ethos consider:
The £6million property Thatcher lived in for more than 20 years was owned since 1991 by Bakeland Property Limited, based in the British Virgin Islands. That in turn subleased the property from Bakeland Property Limited, based in Jersey. The shares for Bakeland Property Limited based in Jersey are held by two Jersey individuals (Leonard Day and Hugh Thurston) who are the Thatcher family’s financial advisers. They are ‘acting as nominees for a trust with concealed beneficiaries’ located in Liechtenstein. That arrangement avoided £100,000 stamp duty and £900,000 inheritance tax.
Dennis Thatcher, born in New Zealand, could have been a non-dom according to some.
‘There is no prouder word in our history than “freeholder”‘ said Mrs Thatcher on 8 October, 1982 (Source: Source: http://www.margaretthatcher.org/document/105032).
I’d have thought patriot was a good word for someone who didn’t resort to offshore entities to avoid paying their dues.