Self-regulation of the scandal-prone residential property management sector is in disarray after an ARMA member threatened to sue the trade body for tens of thousands of pounds.
Separately, former Labour MP Sally Keeble has stepped down as the ARMA regulator having only accepted the post a year ago.
Reports are reaching LKP that ARMA has lost a considerable amount of money after a member of the trade organisation took legal action over its disciplinary process.
The dispute has been settled without going to court and is closed down with a “non-disclosure agreement” (NDA).
ARMA has been approached for a statement, but it has declined to comment at this time.
The regulatory system of ARMA is there to reassure the public, and particularly leaseholders, that the scandal-prone residential property management sector is capable of some degree of self-regulation.
It is not reassuring that an ARMA member, or ex-member, has threatened to sue the organisation, racking up costs, and that ARMA and / or the other party have attempted to hush this up with an NDA.
ARMA and LKP agree that self-regulation of the residential property management sector is inadequate.
The imbalance of power in the leasehold sector means that it attracts more than its fair share of rogues. Hence, the Office of Fair Trading investigations and numerous court cases.
Millions of pounds of leaseholders’ service charge funds are under the control of property management companies which have no statutory regulation.
Kim
Well, well ,well! Who’d have thunk it?
STATUTORTY REGULATION FOR MANAGING AGENTS- NOW!!!!
Chris C
Regulation is needed, businesses cannot be trusted it’s as simple as that
Kim
In my personal experience and listening to others I have concluded that a majority of Managing Agents in Residential Property behave in ways that causes serious harassment to individual tenants and sometimes whole communities. I have crystal clear evidence of acts of fraud being committed by an RICS Agent.
This behaviour cannot be allowed to continue without the Government introducing proper forms of legal discipline and serious financial penalties for those who perpetrate such ill judged practices.
BRING IN FORMAL REGULATION FOR MANAGING AGENTS.
ollie
Estate Agents , Chartered Surveyors and Solicitors are already regulated the MoneyLaudering Act .
Since Managing Agents have custody and administration of the Service Charge money belonging to leaseholders in Residential Property , they should be regulated under the UK Fraud Act 2006..
Paddy
Funny old caper leasehold managing agents.
True story still unfolding… duff duff duff(EastEnders style).
After years of exploitation, we went RTM years ago.
On the sainted date of acquisition, our high profile “friend of RTMCs” agents blandly informed us they could not legally issue service charge invoices as we had passed the start date of the financial year. They had decided the acquisition date, mind.
We naturally asked what they would do without any money for five months. Ah, your members will gave to pay for everything, innit.
We took independent advice (while still paying the ‘friendly’ agent) and found the legal truth. An RTMC can issue invoices for its service charges as the previoius agent (working for the landlord) cannot charge beyond the acquisition date. In our case the outgoing regime had issued no invoices for the part year but would later demand their running costs up to the date of handover.
So our RTMC prepared s47/s48 invoices and issued them directly, along with pre-filled bank mandates and our agent bank detials. We sent copies to the ‘Friendly’ agent. They did not give a rebate for us doing their job.
Naturally our invoices were pro-rated to the portion of the year we took over as RTMCs cannot charge for prior to the acquisition date. This is crystal clear in the 2002 act.
Our agents waited a few months and made their next ‘friendly’ move. They cancelled our invoices by crediting flats and instead recharged for the full year, throwing everyone into arrears as this contradicted the first invoices and bank mandates.
Not content with this they then started to threaten legal action to members who were paying in full per their landlord’s mandates – mandates that the agent had received along with the pro-rated RTM budget for the year.
Tears flowed as flat owners feared the threats. Our “RTM friendly” agent refused to budge. The budget was now in stone.
Next they went over their client’s head and agent contract and instructed their own accountants for the first RTM part year accounts. They refused to amend these accounts to the correct budget. In the end they merely agreed to add an unusual statement to the accounts that the accounts did not necessarily refer to a full year charged. Years later, still trying to work that sentence out.
Therewas mich more – and might have made us insolvent but luckily we moved on just in time – now ‘shadowing’ everything ourelves. We selected a full RICs/ARMA agent. What could go wrong?Especially as we issued a bespoke list of contract specifications to nail them down.
They agreed to everything. Before they took over.
To cut that story short, they ignored instructions, failed to supply book keeping records, spent money without authorisation, so finally we terminated them too.
Current agent is now six months into their contract and we still await opening balances for 25 March to be entered onto the cashbook records. On the other hand, they are being respectful as to spending authority and we at last have access to online accounting records, even if not yet up to date.
But we are advising them and sweeping up behind them.
If it were not for the catch 22 Michael Epstein mentioned in his recent article, we would self manage entirely.
But for goodness sake, Is there not a single competent leasehold managing agent out there?
Reform of leasehold will achieve nothing with the industry as poor as it seems to be.
Kim
Oh Paddy I feel your pain.
As I mentioned in a previous post, I have shared Freehold in a conversion of 7 flats.
Since 2014 we have had directors of our Freehold co who collectively in my view have the intelligence of a retarted slug. Couple that with a venal Managing Agent and the result is-
1. Spend 12,000 on “Stooge” solicitors to sue me for Irrecoverable and unnecessary sums.
2. Close our Company bank account which we have had for 20+ yrs and transfer all responsibility for our cash into the Agents grasp. ( oh dear I did warn them)
3. Allow the Agent to cancel our very good insurance policy with X to place it with Y and to the detriment of leaseholders. Why oh why????
I could go on and on. A bit like Celine Dion!
Here’s the thing- Even with shared Freehold which is supposedly the ‘Holy Grail- ‘ if you have idiotic naive directors at the helm then one is #*#*|##d
I haven’t been sent the ‘budget’ or service charge demands for 2017 despite repeated requests. The “Stooge”? Solicitor has told my lawyer that as I am being sued with a view to forfeiture then they do not have to send me the aforementioned. HUH?
My theory is that the Managing Agent is committing fraud and spending the thousands of pounds of my fellow leaseholders cash that they have paid into the sinking fund for the major works to be carried out in 2018.
As I stated in a previous post- the works should cost no more than between 32-35,000 Including an independent surveyors fee of 11% to oversee the works.
Our venal agent budgeted for £108,000. They must have about 80,000 in the sink fund.
I cannot pity my fellow leaseholders if the money is , how shall I put this? Misappropriated. I have warned them for almost 3yrsthat our Agent us ‘ On the make and on the take’ . Ya can’t learn em!!!!
THE GOVERNMENT MUST INTRODUCE REGULATION OF MANAGING AGENTS- WITHOUT DELAY!
Michael Epstein
Kim, It is a very well known tactic employed by the less scrupulous managing agents to increase contributions towards a sinking fund well in advance of a major work project that may not be needed or if it is is vastly overcharged. It is easier for them to get away with this, if they don’t have to ask residents for extra funds at the time of the project. Human nature being what it is, if a leaseholder is asked for £300, they will ask some serious questions. But if the extra has already been paid and comes out of the reserve funds, it takes the heat out of the situation.
Remember the analogy of the frog in boiling water (Please do not do this!) IF you place a frog in boiling water it will hop out. If you place the frog in cold water and slowly heat it, the frog doesn’t notice until it is too late.and he is toad (typo, I meant toast!)
One very controversial, high profile managing agent actually has a job description for a property manager ” Must be able to drive revenue growth by maximising project values”
Kim
I hear you Master Epstein. Well, this particular Agent has picked on the wrong gal As stated in a previous post, my fellow leaseholders including of course the numpty directors have been paying exorbitant sums into the sinking fund for the 2018 ‘Major works’ and have stated” We’ll get a refund if there is a surplus”- Ahhhh, the poor wee lambs…
The Agent has attempted to play both ends against the middle – you know, the old ‘divide and rule’ game. The naive company directors are now agin me and have spent £12,000 +of leaseholders money on 2x lawyers in an attempt to sue me for irrecoverable sums. ( My lease clearly states ‘Reasonable’ sums) I cannot help but wonder what the Agent promised them in the Major Works- New Dormer window perhaps on the Freehold company cash perhaps? Windows etc are the leaseholders responsibility apart from the ‘replacing of Frame. Something doesn’t feel right….
Anyhoo, I can produce estimates from highly respected independent building contractors that are more than 60% less of the Agents dishonest estimate and includes every conceivable necessary / unnecessary ‘Major Work’ that could be carried out to the property. I will of course present these to ‘M’ learned friend as and when!!
I am slightly puzzled at their refusal to
1. Allow me access to invoices receipts etc year ending 2016
2.Send me a budget or service charge demands for 2017- how are the running the building without my contribution?
I have my suspicions…. Answers on a post please.
Love the Frog analogy. As ever you get the bullseye.
The upside of this grubby affair is that it has most certainly turned me into a campaigner for the abolition of leasehold and Regulation of Managing Agents. I shall repeat something I wrote in a previous post-
It is my intention that this unscrupulous Managing Agent will feel like a “horse that has been ridden well and put away wet” by the time I have finished with it. I dont like threats, especially from the likes of shyster Agents and solicitors!
Michael Epstein
For the record and to be fair to Firstport, my description for a Firstport job was an illustration that made a point.
It is but right for me to publish the exact words used in the job description:
DRIVE REVENUE THROUGH MAJOR WORKS PROJECTS AND OTHER RELEVANT AREAS(ASSET MANAGEMENT &TECHNICAL SURVEYS), WORKING ACROSS TEAMS TO BUILD REVENUE.
LEAD PROFITABILITY REVIEWS WITH PROPERTY MANAGERS TO ENSURE SCHEMES REMAIN PROFITABLE.
LEAD AND SUPPORT PROPERTY MANAGER ACTION PLANS FOR “AT RISK” SCHEMES ENSURING PREVENTATIVE MEASURES ARE IN PLACE FOR THOSE THAT ARE AT RISK.
Michael Hollands
Correct me if I am wrong, but I would interpret the Job Description (I assume for an Area Manager), as follows.
Carry out as many major works as possible with big. profit margins to increase our bank balance.
Keep on top of local Property Managers to make sure this happens.
Make sure the Local Property Managers have a system in place to prevent Leaseholders removing FirstPort.
Kim
Our current Managing Agent spent 10 + yrs as Area/ Regional manager at that bastion of mismanagement that was ‘PEVEREL’.
She/ he ” Learn good grasshopper “.
Leaseholder
???? now I know what intensively farmed animals feel… leaseholders are just like battery hens..
Kim
Oops, I meant ‘Retarded slug’ . The devil is always in the detail.
To clarify, there must be approximately £95 000 of my fellow leaseholders cash in the hot hands of our Managing Agent.
All this for cyclical works on a building that has been maintaned to an exemplary standard over the years. One can only question what the invertebrates who are the current directors agreed to this ridiculous arbitrary figure- what’s in it for them??
My fellow non directors presumably have ‘cash to flash’ or are just not bothered.
I say – ‘Good luck with that’!!!
Michael Epstein
All these problems for ARMA? And they still have to decide as to whether they can admit Firstport Retirement? How many years has it taken thus far i wonder?
Michael Hollands
This is a strange situation. I did in fact apply for that Regulators job when it was advertised last year after Keith Hill resigned. I offered if appointed to give ARMA a big shake up and look further into the Peverel price fixing situation.
Disappointingly I was never called for an interview and Sally was given the position.
After which I did have some correspondence with her and she appeared to be very happy with ARMA. She was impressed with the organisation and was looking forward to help improve the Leasehold situation and was well aware of difficulties faced by the elderly Leaseholders in Retirement complexes.
I feel sure she was a good appointment.
So something drastic must have happened for this situation to have come about, and it would be advisable for ARMA to come up with an explanation.
I hope the next appointment they make will be someone who is prepared to make a big difference to the Leasehold situation over a prolonged period.
So far the Government, ARMA, ARHM and the rest have proved either ineffective or useless.
Had it not been for Carlex/LKP and their supporters over the past 10 years, and more recently the Leasehold Facebook campaigns and some supportive MPs, this awful Leasehold situation would have dragged on forever.
Kim
Pressure must be put on ARMA and Ms Keeble to inform the Millions of leaseholders who are being exploited by so called ‘Professional’ Managing Agents including ARMA members on a daily basis;
1. Which member sued them and why?
2. Why ARMA decided to settle out of court with an NDA?
3. Why Ms Keeble chose to resign after only a short time in post?
Until these questions have been addressed I shall conclude that “something is rotten in the state of Denmark”.
INTRODUCE STRICT REGULATION OF MANAGING AGENTS WITHOUT DELAY!
I have always believed that a fish rots from the head down.
Lesley Newnham
Well well,well (as you say Kim!) perhaps ARMA is really going to get its come uppance at last!!!
No mention of course on their website of such difficulties only the advert for the usual ‘jolly’ held each year known as the Annual Conference!
Also under ‘news’ section ” How to gain ( and maintain ) trust in your organisation” by Nigel Scourfield MD of First Port Property Services!!!
I personally would NEVER, EVER and I mean NEVER trust an ARMA member after being managed by one for years (prior to RTM) who were absolutely useless and then finding out that infact our ‘service manager’ at the time was also chairman of ARMA!!
So what use complaining to them? None. So we complained to RICS and after they found out who we were complaining about mysteriously could not continue with our complaint as they only deal with surveyor complaints?!! We found out later that said ‘service manager’ also worked for RICS prior to ARMA!!!!
Imagine my disgust to find him listed on the NOTB Hot 100 2016 most influential people in the residential leasehold property sector. Says it all really!!!!
Kim
Absolutely Shocking. This swamp must be drained and drained NOW!!
Managing Agents are exploiting leaseholders and committing criminal acts with impunity.
It is literally Bandit Country out there in the Residential Property Management World.
THE GOVERNMENT MUST BRING IN STRICT REGULATION OF MANAGING AGENTS.
ENOUGH IS ENOUGH.
Kim
Lesley, check out Romneycourt for a Master class in ‘alleged’ bad practice from a freeholder and his Managing Agent. For the record, in 2009 LVT appointed a receiver manager to the property.
This same individuals who were ‘allegedly’ involved,are currently operating in Residential Property
Management under different company name
Absolutely shocking isn’t it?
Michael Hollands
Lesley, I think your description of the ARMA Conference as a “Jolly” just about sums them up..
I have been following their website and Twitter for many years and they have always given me the impression that they are a giant Social Club..
With the Board continually congratulating the member companies and the Companies forever thanking the Board.
Plenty of reports on Forums and Social Events, the weather and the move to Wimbledon.
I rarely found anything on the problems suffered by Leaseholders.
It amazes me, if true, that any of their members would find anything to take legal action on.. Even First Port/Peverel were forgiven for their price fixing.
Michael Epstein
Michael Hollands,
Not entirely, my friend. It is still the case that over three years since Peverel/Firstport Retirement applied for ARMA-Q accreditation ARMA has still to admit them to even a basic associate membership(which would be normal for companies as they work towards full accreditation.
Of course this must be embarrassing for Sue Petri, who is a very senior member of Firstport managers and sits on the ARMA Governance committee.
That said, it would have put ARMA in an extremely invidious position had they admitted Peverel/Firstport Retirement before they were fined £460,000 for serious Health & Safety breaches in the fatal Gibson Court fire.
Michael Hollands
Michael, what I was getting at was despite all the evidence on record , ARMA dismissed the Price Fixing complaint saying there was not enough evidence to back up the OFT Inquiry conclusions.
So considering that decision and the way they appear to have a “love in” with their member companies it surprises me that they have actually taken some action which would cause a member to retaliate with legal action.
I hope they come up with an explanation.
Michael Epstein
Michael Hollands,
I wonder (pure speculation on my part of course) if action was not taken against a member due to failing leaseholders, but because of a complaint by a fellow “high profile” member about their conduct.
ARMA do have a reputation on coming down hard on property management companies that are felt to have been poaching developments from fellow members.
And the grapevine does tell me that one “high profile” member of ARMA is currently under attack from a formerly connected freeholder who wants the management changed to a “friendlier and more amenable ” company and is encouraging leaseholders to complain to them about the managing agent, so they can terminate their management contract.,
I do not believe this to be a local matter either? It may well be countrywide?
Michael Hollands
Yes Michael Epstein, I do remember a while ago that ARMAs problem was more countrywide than local.
Mistakenly,I thought their problems were caused by them giving overwhelming support to Leaseholders.
When ARMA Q was introduced many of us hoped that it would be a major contribution to the reform of leasehold. Unfortunately they have missed the opportunity to do this and it has been a big disappointment.
Leasehold reform
The mere fact that managing agents are not regulated proves the redundancy of the system. Another feudal relic from the days when the managing agent was the landlords poor relation given a ‘job’. managing the peasants. The result is poorly run buildings, ( but who cares though right?) and higher service charges for the tenants. ( who are really only there to provide a steady income for the landlord.)
And let’s not forget that today’s managing agents have no obligation to be members of ARMA -they can just be the mafia for all we know…leasehold is a money laundering paradise.
Kim
Leasehold Reform. The end most certainly must be a Nigh for Residential Managing Agents. The Government must REGULATE this lawless industry.
I for one shall not rest until these unscrupulous Individuals are brought to heel.
My first contact with a Managing Agent was in 2014. Had I not experienced the absolute venality of the breed first hand I would never have believed it.
Subsequently I have spoken to many others who relay the same sorry story.
The behaviour of a MAJORITY of. Managing Agents leads to serious harassment of individual tenants and sometimes whole communities. This cannot be allowed to continue. Without introducing proper forms of legal discipline and serious financial penalties for those who perpetrate such ill judged practices.
Bring In Formal Regulation for Managing Agents. NOW!!
Cath
Self-regulation is a myth; It does not work; And we have too much of it in England.
A “code of conduct” or a “charter” is not legally binding but it makes the lobby look good, respectable..
ARMA have just been reminded who is the boss! how many managing agents are backed by big freehold/ground rent residential property investment firms?
Commonhold can work and does work everywhere in the world.
Government and MP must now ACT to ensure managing agents are paid and under the control by those who pay them: individual flat owners!
Commonhold= common sense!
Kim
Hear Hear Cath. Thank you for supporting Flat owners who are being ‘shaken down’ by crooked Managing Agents day in and day out. It is absolute lawlessness out there and for too long these shysters have been allowed to get away with it.
1.ARMA should be disbanded as it is not fit for purpose.
2. Managing Agents must be strictly regulated.
3. Acts of fraud and other thievery by Managing Agents must be investigated and the perpetrators treated as the common criminal that they are.
4.Leasehold must be abolished .
Let us all stick together and fight to right the wrong that is leasehold and venal Managing Agents.
We will win.ENOUGH IS ENOUGH!
Michael Epstein
Taken from the last published accounts of ARMA (who reported a loss in the year)
The association has been notified of an application for pre-action disclosure. the applicant is a member of the association. after the year end a pre-application disclosure was ordered by the County Court, requiring the disclosure of certain information. at the time these financial statements statements were approved, it was not known whether or not there is a claim against the association, nor is it possible to quantify the amount of any potential obligation with sufficient reliability..
so what can infer from this is that a) the amount of potential liability was very significant b) ARMA attempted and failed to prevent key information coming before the court and c) having failed in their endeavors, they agreed an out of court settlement with a confidentiality clause .
Is it any wonder Sally Keeble resigned? This is the body that was set up to reassure and protect leaseholders..
How can anyone have any trust in them?
David McArthur
Much comment about self regulation and the bodies who (don’t) regulate and (don’t) discipline offending members. This is par for the course, all supposedly regulatory bodies look after their own – their trade or professional members, this is no great revelation. I am not sure that government regulation would put an end to abuses, it would clearly make the situation better – LEASE after all is a government appointed body who needed the recent intervention of the housing minister to direct them to the main reason for their existence, to look after leaseholders. Has anyone ever had dealings with financial ombudsman? I have and I will never have dealings with them again, they are hand in hand with the financial institutions.
Apart from doubling ground rents on new houses, the really troublesome area of leasehold is apartments(?). Surely the solution is CONTROL, this means apartment dwellers owning the freehold, and not appointing an agent but managing themselves. I gather there are problems with such a set up, but surely not as problematic as having a managing agent?
Kim
Indeed! Flat leaseholders need to step up to the plate and once they own the Freehold they should Manage themselves. Once a good system is in place and there is strict adherence to the lease – which means No Favours’ for friendly fellow leadeholders , then by and large should be no problems. The block should purr along like a sleek Bentley motor car.
I managed at my block for 20+ Yrs without major incident.
David McArthur
Pleasing that someone who has been there,done that, and has the scars to prove it, concurs. From my distant view it is the only way to go.
Kim
Yes indeed. Although since April 2014 when our outrageously unscrupulous Managing Agent who lied when interviewed for the post and unfortunately the numpty directors did not carry out proper due dilligence so as a result the agent got the gig the block is more clapped out cortina with a dodgy log book than it is Sleek Bentley.
Hey ho, it can’t last forever- Everything has a beginning a middle and an end and I will do my best to ensure that this particular outfit cannot continue with its nefarious practices which makes the lives of leaseholders utter misery.
I refer you to ‘Romneycourt for a masterclass of a Freeholder and Managing Agent ‘allegedly’ behaving in a manner not conducive to the wellbeing of leaseholders.
The Managing Agent was subsequently removed by LVT ruling.However, the same individuals are operating in Residential Management under a different company name.
Lesley Newnham
David,
I agree it is the only way to go. I have been self managing our building under RTM for the past 7 years to stop the rot allowed by the previous managing agents and spent something like £100.000 to do so, BUT of course it is NOT OUR building and only shared ownership will satisfy me as to reform with little or no redress for freeholders. Why should they be compensated when they do not pay a penny to uphold ‘their’ property and in our case I doubt they even know where the building is let alone what it looks like!!!
Kim,
I have looked at romney court and absolutely nothing surprises me with leasehold anymore. Have a look at Leasehold Outrage and read the story of Noelle Rawe that really is ‘outrageous’!!!!
David McArthur
Lesley, as I said in my above post, the real troublesome area (apart from new houses and doubling ground rents) is apartment blocks, I only have an inkling of the issues – I can well imagine the horrors, well beyond my inklings, . This morally criminal activity hasn’t suddenly appeared, it has been going on for decades and longer. So why hasn’t OUR government acted to remedy the situation? Why has it become necessary for affected individuals to group together and lobby, and I might add be opposed by vested interests and their professional friends, including the man empowered by government to look after leaseholder’s interests, one Roger Southam (quote from the man himself “There is nothing wrong with leasehold itself? There is something wrong with a few of the practises concerning leasehold”. Classic partial withdrawal with the aim of preserving the leasehold system, which in time will be exploited again.)
Quite simply leasehold should have been abolished by government long before now and without active lobbying. It hasn’t happened because politicians when they achieve power, become a critical part of exploitative systems, they are in bed with the exploiters.
Paddy
After many years dealing with the leasehold ‘professional’ agent the conclusion I reach is that the industry either suffers a collective delusion that it is a profession, or it knows well enough that residential leasehold in England is the golden goose that just goes on laying.
The whole premise of residential leasehold, where communal services require management that no individual demise can be held liable to carry out, is far too good an open goal for exploitation.
The nonsense theory that somehow the manager needs to be an ‘expert’ serves to add to the mystique.Millions of homeowners maintain their properties or act as landlords. It is not rocket science. What technical skills that arise can be quickly acquired.
The proof is in the centre of gravity of these agents. The common standard is minimal skill with maximum cunning to make a bigger buck.
Today’s Guardian again reveals how extraordinary a level service charges can reach and no apparent embarrassment in the explanations given.
I have no idea how much hall cleaners cost in Brixton but prior to RTM we were charged £2K a year to clean a small hallway and since RTM easily get cleaning contractors willing to attend once weekly for £500 a year. Every other costs saw huge savings too.
Our cleaners are done in half an hour. It is small hall.
Let’s look at the math: Uk living wage = £8.45 an hr. 40 hr week = £17,576 a year
University of Bath employee on-cost calculator here…
http://www.bath.ac.uk/finance/payroll/employees-on-cost-calculator/
…suggests total on-cost £22,267 if in a good (local government style) pension scheme (unlikely?)
This gives an hourly on-cost of £10.70. Excluding profit margin, one cleaner on the living wage, let alone the minimum wage, cleaning for one hour a week would cost £10.70 x 52 = £557.
Then there is the profit margin. There’s the rub.
If Universities can produce on-cost widgets like this and even if I have made a horlix of the Bath version, the government could easily in the modern age produce reasonable cost benchmarks for service charges in different regions for different services and stop the farce of needing tribunals to decide whether the cleaner is costing too much.
The whole basis of leasehold is an invitation to go after profit first. Nobody gets to see the truth. This to me has been deliberately legislated to support. We are not where we are by some accident.
Lesley Newnham
We are certainly not here ‘by accident’ as you rightly say Paddy. It has been well thought out (leasehold that is) for maximum exploitation with minimum effort!
The reason we chose self manage ( despite the daunting task ahead ) is exactly as you say — NOT ROCKET SCIENCE. Most of us had previously owned freehold properties and therefore maintained them without any third party taking their cut!!
Kim
David,
I think the Politicians will be well advised to stop behaving like brasses and leave the beds of the exploiters eg Freeholders and Managing Agents who are getting away with persecution and “gangster “tactics which include wild overcharging, inappropriate threats of forfeiture, threats of legal action from shady solicitors, failure to produce accounts and general breaches of individual leases.The politicians had better realise that the love affair/ one night stand is over!! ENOUGH IS ENOUGH.
The above practices mentioned are routine and commonplace amongst certain agents acting for Freehold companies that have grown large over the last few years off the back of Freehold residential acquisitions and now seek to profit through charging excessive service costs.
Although in my case it is a case of of our Freehold company having absolute cretins as directors who have allowed an agent of the above description to wreak havoc with out beautifully set up Freehold company. It will all end in tears- theirs!
David McArthur
Best of Luck, Kim. Keep us all posted.
Kim
Thank you David.
I will keep you all posted have no about that! I don’t want to become the ‘ Gina Miller’ of the ‘ Regulate Managing Agents’ campaign as I don’t have her cash, although I believe I could be a very strong voice and I do have a bit of heft behind me….
Kim
Above post edited – I will keep you all at LKP posted.have no doubt about that. I refuse to stand by and let these wannabe Rachamnists make the lives of guillable, vulnerable and intimidated leaseholders lives a misery.
For sure there are flat leaseholders out there who will just pay up because they have the cash to splash, are letting their property for a good rent ( paticularly in central London , me included) and just can’t be bothered with the hassle ( Not Me included) . I am genuinely staggered at the venality of these managing agent individuals and am going to do my best to bring about change.
Our agent once said to me that I . “Shouldn’t pick a fight I am not going to win”????? This coming from a paid employee????
She / he also once said – ” I never bare my teeth unless I have to” Huh? Ooooh I quaked in my Jimmy Choos when I heard that – NOT!!
What a joker. However,when this spin employs the same tactics with the vulnerable and elderly it can have catastrophic results. Think about it…..
Kim
Clarification, meant – “THESE SPIVS”
Paul Joseph
It’s been suggested here that self-management is better than appointing a professional managing agent. This can work with a small block but it doesn’t scale very well. Running a large block with elevators and other plant, with staff, and other things to be managed — insurance claims, contracts, contractors etc. is demanding, time consuming and generally thankless. Most people just want to get on with their lives and only want to know that they aren’t being cheated and that things are being done properly. It’s been reported that about half of RTM Companies fail within 5 years and the most common reason is director turnover.
The best assurance of continuity, and a reasonable burden, for some RTM Company directors is to have a reputable professional firm manage the building and be accountable to the RTM Company. As most of us know, ARMA is completely worthless as an accrediting organisation. It simply cannot be taken seriously There’s a very good alternative run by the Leasehold Knowledge Partnership. Our managing agent is LKP accredited and we wouldn’t consider one that wasn’t.
Leasehold reform
You are absolutely right, smaller blocks and conversions (say up to 6-7 units) should be able to self manage. (Human nature being what it is sometimes things go wrong’, one sees some horrific cases at the tribunals, where I attended a few cases to familiarise myself with section 24. )
Anthing over 30 units with lifts and grounds and what have you, would require a professional manager.
In my view managing agents should be paid more and not rely on defrauding the leaseholders with commissions and hidden extras. There should be proper performance reviews and the ability to replace them should they prove unsatisfactory. As things are there is ZERO accountability. One could get the queen removed more easily than the freeholders managing agent.
David McArthur
Educate me please. Isn’t the first, and overwhelming, problem with apartment blocks the fact that most apartment block residents do not own their freehold? If this is the case then self managing or appointing a managing agent simply isn’t an option. All campaigning and lobbying and energy must be towards making government legislate to outlaw outside ownership of freeholds.
That achieved then self managing or appointing a managing agent becomes an option. And if appointing a managing agent is sensible for larger blocks so be it, but he who appoints can remove. Who is it that appoints if the freehold is owned by the block owners?
Paul Joseph
“All” you need is 50% of the leaseholders to participate in a Right to Manage enfranchisement. We did it online and it cost £65 per participant. It’s possible to do it for less. We did it online as an online payment can serve as an authentication equivalent to a signature. It took very little time, then there was a 3 month waiting period once the notice was served before the new company with leaseholder directors had the legal right to dismiss the freeholder’s managing agent.
If your development has a large number of non-resident owners one of the obstacles to getting this done is getting their contact details, and it is normal for the freeholder not to cooperate in providing such information, falsely invoking the data protection act. In fact the law makes it possible to compel them to divulge the information. Any leaseholder can serve a “Section 11” notice on the freeholder giving him 28 days to provide the information.
Though they don’t usually share the information, this is what other managing agents will do on your behalf if offered a fixed term appointment. There’s no need to do that. You can do it yourself and can then choose any agent you like.
There are circumstances where it’s not possible to acquire RTM — if 25% or more of the space is commercial e.g., and, quelle surprise, once that criterion was introduced many freeholders arranged to have at least that much commercial space.
Leasehold reform
There a number of exclusions which prevent even 100% leaseholders from forming an RTM or buying their share of the freehold.
Some are not so obvious, but are exploited to the full by predatory lawyers who know they have the leaseholders pinned to the wall.
Kim
Leasehold Reform,
I agree that 30+ units with lift etc would benefit from ‘Professional ‘ Management. However, All Managing Agents must be STRICTLY REGULATED by Government.
At present Managing Agents in England and Wales are unregulated and able to operate without qualifications or any legal requirement to belong to accredited Trade Associations.
Even the Trade bodies that do exsist such as ARMA have become self serving Institutions for Managing Agents and in no way are they bodies bent on upholding and Improving ethical and professional standards. The ‘RICS ‘ ditto!
PEVEREL that watchword for incompetence,greed and malpractice amongst leaseholders as the managing agent to be avoided at all costs has always had close ties with ARMA. Incidentally our current venal agent was an area/ regional manager for PEVEREL.10+ yrs……….
Leaseholders need help in redresssing the balance between the unregulated excesses of their managing agents and fairness. The balance is currently tilted very much in favour of the Agent’s who seem able to get away with persecution and “gangster” tactics which includes inappropriate threats of forfeiture. Wild overcharging and threats of legal action from shady solicitors.
This behaviour that leads in many cases to serious harassment of individual tenants and sometimes whole.communities cannot be allowed to continue without introducing proper forms of legal discipline and serious financial penalties for those who perpetrate such ill judged practices.
..
STATUTORY REGULATION FOR MANAGING AGENTS – NOW.
ENOUGH IS ENOUGH!!!
David McArthur
Kim, I have to smile ( more like a grimace) when you suggest strict regulation from government as if that would solve everything.. Yes that would be nice, and is necessary, but a fool proof system of regulation will not happen, there will always be angles and loopholes, AND the means of challenging unscrupulous behaviour would be through courts and tribunals – I have an aversion to courts and tribunals, and my aversion is natural and healthy. It is not something that needs putting right.
“ARMA have become self serving”. LEASE is self serving and much worse than self serving. Every QUANGO I have had dealings with has been self serving, and worse – unhealthy relationships with those they are appointed to restrain understates it. Conclusion, we absolutely must achieve government legislation that outlaws leasehold – all house to be sold freehold, and all apartments to be sold on a common hold basis with only residents having an interest in the freehold.
I am not, and never will be, an apartment owner. If I was I would go down the self managing route even in large apartment blocks. There would be free loaders but hopefully there would be sufficient active owners to make things work.
Kim
David,
I too believe that leasehold should be abolished and flats should be commonhold./ shared Freehold. However there will always be instances where flat dwellers appoint a Managing Agent.
I mean look at my situation
1. Shared Freehold
2 cretinous company directors in thrall/ scared of agent.
3 Venal Managing Agent committing fraud with impunity.
Nowt I can do about the cretins,( although they have clearly behaved negligently) However, if there was Strict regulation of Agents and legal discipline for jiggery pokery then at least that these spivs masquerading as ‘professionals ‘might think twice before nicking clients monies.
Shared Freehold is preferable to the alternative but it can also be- ‘All or nothing at all’.
Paddy
Picking up on Michael Epstein’s mention of a job description: “driving revenue through major works projects…” here is one account of the unique world of leasehold management agents:
I’ve mentioned before how having avoided insolvency in our first year of RTM with an “RTM friendly” agent, we prepared a detailed pre-contract spec for new agents to tender.
One RICS/ARMA member entity floated to the top by promising everything we asked.
We had our budget and long term maintenance plan ready, and up to date cash book records to supply them even before the handover from the old agent.
Our first meeting post signing was to agree the AGM budget for the new year. We supplied the calling notice documentation. They had an easy life starting with us.
A few weeks before the AGM, and by sheer coincidence, I noticed a contractor arriving on site with drill in hand, looking around as if unsure where to go.
I went out and asked him which flat had invited him. He gave our new RICs agent’s name and explained he was there to drill the cavities to test for insulation requirements, but that he could already see we needed exterior cladding. He referred me up his food chain.
I explained to the boss we were an RTM run estate and had not asked for this work. He said he had no idea what an RTM company was, he usually only worked with agents and freeholders.
He said there was a new Green Deal funding stream coming out in *two weeks* and he needed to apply quickly to be sure of getting the funds.
Certain there had to be a mistake, I rang our new RICS agent.
Our agent confirmed there was no error. They had authorised the contractor because there was indeed a fresh Green Deal opportunity in a few weeks and ‘we’ needed to act fast because the funding would go quickly.
I said we had not discussed this work, had no budget for any major works, had not consulted anybody under s20, and we did not need the work.
Besides which, the Green Deal at the time covered over forty grants for such as loft insulation and draught exclusion and no flat had been inspected for its needs. Just because there was a fresh fund coming out didn’t mean we should grab the wrong deal
The agent had answers: No worries about consultation, they could get dispensation, had done on another site for the same cladding work for another client RTM company. (So it did seem to be about cladding).
I said I had no idea why any RTMC would proceed with major works without consulting (hardly the point of RTM) and I had checked that the Green Deal did not cover the full cost, leaving one third to be paid. Where would that come from?
Silence.
I asked how much would this work likely cost in total (given the two week urgency).
At this the agent said, and I quote: “I cannot do my job under these conditions.” This was within TWO months of starting with us as their new RTM client.
So what was the “angle” if there was one? To serve only their client’s needs and best interests of the premises?
I could be cynical, but I recall they could charge 12-14% of any major works bill on top of basic fees.
If you look at the old Green Deal the most lucrative grant was for exterior cladding at about £4K a unit. The majority of grants were far less.
Assuming £4K was 2/3rds, a rough assumption for our site would be a bill of £6K x 24 = £144K, of which the flats presumably would find £2K each? I’m only gueesing as no figures were ever discussed. Just that they would apply for the grant in two weeks.
14% major works fee = £20K.
We did not have any evidence we needed the work and had not asked for it or discussed it. Even if there was a new tranche of funding, there were other issues that might benefit checking. It was the most bizarre experience so far of RTM. Begs the question what may have happened if we had not been an RTM able to kill it dead.
That job description puts the experience into new perspective.
David McArthur
Paddy, If I understand your post correctly (being pig ignorant, RTM means “right to manage” but not owning the freehold?), appointing a managing agent still has its problems in that there are openings for exploitation?
If that is the case it confirms my belief that it is always best to self manage, even if self managing is not problem free.
Kim
Goodness, not the old ‘ URGENT’ works scam. We’ve had that one.
I do wonder if these unscrupulous individuals operating in Residential Property Management all go ton the same approved school for the morally bankrupt?
Also, i believe the reasons their cheating, scamming and downright criminality is uncovered is because not only are these Agents venal they are as thick as mince too!! Lethal combination.
Kim
The above post is in response to Paddy
Paul Joseph
The story is not surprising. The solution isn’t that difficult, but it is quite a bit of work up front:
Prepare a detailed tender document and interview a handful of companies
(excluding all who are not LKP accredited; this is simply mandtory–get the details of what is involved from LKP; borrow some tender documents when preparing your own and adapt as needed)
Conduct reference checks of your own; the ones offered will always be positive (use Google to find other developments; check for Tribunal cases involving the agent)
Be aware that the property manager may make a bigger difference than the company and that you might experience bait and switch (get a different one after the contract has been signed)
Most importantly:
Agree in writing that the management fee shall be the managing agents sole remuneration for the work they do; that they shall receive a fixed fee and may not receive any commissions, incentive payments, rebates, contributions to overhead, kickbacks — no considerations of any kind — for work undertaken or services provided, in any way whatever.
Putting that up front in the tender will sort out those who go in for nice little earners at the leaseholders’ expense. They will respond that they are unable to respond to the tender because it’s a lot of work and they can’t do it without being assured of being appointed. At least one LKP accredited agent made this response to a tender invitation.
In our development we arranged our own insurance, declining to use the affiliated broker of our newly appointed managing agent. We cut our costs dramatically. Sadly, the insurance broker, who was initially so excited to have insured a building without having to deal with a managing agent, got greedy and pushed up premiums to the point that a few years later we agreed to, and did, switch to the managing agent’s insurer (which pays a commission to the managing agent). It saved us several thousand pounds a year. To date that is the only exception we have made to the no other earnings besides the management fee policy. Our managing agent was fully transparent about the commission.
If your managing agent takes a payment or other consideration having agreed not to you have a case for breach of contract.
For a large development it’s important to have a managing agent with a large panel of quality contractors. This is a difficult thing to assess prior to appointment as the details will not be divulged “for commercial confidentiality reasons”. Much can be claimed that may later proven unfounded. It’s an important area to dig for information on when checking references.
The story above raises another issue: expenditure limits. The property manager should have a fixed limit above which expenditure cannot be authorised without approval by a director. This can be set, in writing, at an initial value and raised over time if the directors are satisfied that the authority is always used correctly. Needless to say, the directors should have directors and officers insurance, or they may be personally liable for any expenditure that was not carried out in accordance with the law (Section 20 consultation requirement for example).
It’s a few years since we tendered. If doing it again I would place a significant premium on electronic sharing of information. Some managing agents can deal with it, last time around most couldn’t. The best was unfortunately too small. If all the directors have email on their phones and can manage a separate email account then decisions can be managed quickly and easily and with full consultation, without the need for meetings (we almost never meet).
Kim
Paul Joseph thank you for what seems an excellent Template for appointing a managing agent.
It seems highly unlikely that my fellow leaseholders will opt to self manage when the icy grasp of our current ex PEVEREL area/.regional manager agent is finally prised of our lovely block. Therefore your process seems the only way to go. Still no guarantee of course of appointing an honest Agent but perhaps coupled with strict Government regulation it will tilt the balance more in favour of leaseholders.
Blimey , what a malarkey it all is.