The Department of Communities and Local Government has rejected a complaint by LKP that leasehold sector professional Roger Southam is conflicted as the chairman of the Leasehold Advisory Service.
Mr Southam was “appointed on merit” and “LEASE is totally separate from his private business”, the DCLG said.
LKP raised concerns in November, but the issue has relevance after the Leasehold Advisory Service was told to change direction at its humiliating annual conference earlier this month.
Housing minister Gavin Barwell felt it necessary to remind the taxpayer-funded agency that it was “to be solely, and unapologetically, on their [the leaseholders’] side”.
Additional funding was promised to end dependence on commercialising ventures – such as the annual conference, where leasehold sector insiders (including ground rent game-player Martin Paine) pay £350 a head to attend.
“In recent years we have encouraged them [LEASE] to act more commercially, selling their services to others in the leasehold markets, including freeholders and managing agents, “ Mr Barwell told the conference.
“I am announcing today that the DCLG will ensure LEASE receives sufficient on-going funding to concentrate solely on advising the growing number of leaseholders.”
The change of policy marks a reversal of the commercialising agenda that Mr Southam and the LEASE board had been pursuing.
Indeed, a board position is now being filled where the first task mentioned is for a candidate to help provide “strategic direction … including in respect of its commercial activities and achieving commercial outcomes”.
Until last year, Mr Southam was the owner of property manager Chainbow, which he has since sold to Savills.
His advertising pledged freeholders a service of “maximising ground rent opportunities”.
The LKP complaint arose after leaseholders at Taylor Wimpey London sites claimed that they were reluctant to contact LEASE because management companies in tripartite leases at their sites were owned by Mr Southam’s Chainbow.
One dispute over wrongly obtained insurance commissions by Chainbow at Mulberry Mews in Highbury, north London, was resolved after the opinion of LEASE was sought.
Barnaby Clark, chairman of residents at Mulberry Mews, said:
“It is utterly contradictory that our management was owned by the chairman of LEASE. The conflict of interest is blatant.
“I am also extremely surprised that the DCLG did not choose to contact us about this complaint.”
After LKP took up the issue of the embedded management companies, Mr Southam’s first response was to urge its MP patrons Sir Peter Bottomley and Jim Fitzpatrick to suppress publication of the article.
The MPs did nothing of the sort.
In the event, after months of work by LKP and Taylor Wimpey London the leases were re-worked and Chainbow was ejected from ownership of the management companies at the sites.
These have now been handed into the ownership of the leaseholders, which is what Taylor Wimpey now claims was originally intended all along.
At Mulberry Mews, Savills took over management of the site from Chainbow after buying the company, but is to be ejected from the site later this week and replaced with the LKP-accredited Rynew.
In rejecting LKP’s complaint against Mr Southam, the DCLG said:“Roger Southam was appointed on merit following a fair and open competition process … The Department has investigated the concerns you have raised …
“This review confirms that Roger Southam’s role as Chair of LEASE is totally separate from his private business.
“Therefore any requests sent to him in his capacity as Chair of LEASE are distinct and separate from those relating to matters
of his personal business. Roger Southam has not done anything in his private business that impinges upon his role as Chair of LEASE.
“As you are already aware, in the summer the whole of Chainbow transferred to Savills and l understand that Mr Southam’s remit is on business development, not day to day management which further minimises any room for perceived conflict of interest.
“The Minister for Housing and Planning welcomes the Leasehold Knowledge Partnership raising these issues contained in your letter and LKP should continue to feel free to raise concerns with the Department.”
The DCLG also rejected the proposition that the Leasehold Advisory Service was effectively privatised by having the target of being self-financing by 2020.
“The DCLG agreed that LEASE should work towards a fully self-funding position by the end of this Parliament, which the government believes represents a realistic transition period.
“LEASE will maintain its core free service offer to leaseholders and is implementing its new approach and ways of working, so it can maximise its potential for income generation to provide free and independent advice for leaseholders.”
I have nothing to add to the DCLG response you received which I sincerely hope you will fairly and accurately record.