– Only 131 retirement leaseholders quizzed
– 17 leaseholders ONLY discussed Property Tribunal
– MORI has to correct criticism of LKP leasehold figures (which are accepted by DCLG)
– BUT poll does confirm that there is more contentment when leaseholder manage their sites in an RTM or RMC compared with those that are freeholder-controlled
Alarm bells are ringing at LKP about the report by the Competition and Markets Authority into leasehold management.
We were already anxious that the Competition and Markets Authority – many of whose personnel worked for the defunct Office of Fair Trading – were manoeuvring to down play concerns in retirement leasehold.
Some of these concerns expressed at the outset of the study “have not been supported by the evidence”, the CMA said in August.
“… according to our leaseholder survey, leaseholders in retirement properties had higher levels of satisfaction than other leaseholders with property management services.”
The Competition and Markets Authority also believed that in retirement leasehold “some individuals will be knowledgeable, able and motivated to represent them … Based on the evidence we have received so far, the problems we are finding in the market apply to the retirement sector in the same way as anywhere else (lack of accountability and transparency, lack of control, ineffective redress etc.).
LKP has pointed out to the Competition and Markets Authority that there are several blindingly obvious disadvantages in retirement leasehold: residents can be in their eighties and nineties; several flats are usually empty owing to further care needs or death; income and energy levels are low.
In LKP’s experience, many active sites that have broken free with right to manage have an energetic relative organising the residents.
Now it emerges that the Competition and Markets Authority is relying on a bought-in Ipsos Mori poll that quizzed 1,050 leaseholders – a figure matched by the DAILY readership of the LKP websites.
Only 131 retirement leaseholders were questioned, and only 17 who had any experience of the property tribunal.
The survey does at least confirm that leaseholders in RTM/ RMC managed blocks are more content (83 per cent), compared with those appointed by freeholders, 58 per cent.
Four in ten leaseholders have been dissatisfied with the freeholder’s management.
But broadly the Ipsos MORI poll confirms what is already widely known: that a great number of leaseholders are clueless about their legal status, their rights or the management of their block.
A full 90 per cent thought that they owned their flat – rather than renting it from the freeholder – and 78 per cent had no awareness of the property tribunal.
More than a third appear to think that they achieved right to manage before the Commonhold and Leasehold Reform Act 2002, which is clearly wrong.
If you read this story on the LKP web site relating to the RTM legislation passed in 2002 there were 89 companies formed by the end of 2003 (that does not mean the sites had gone RTM by then). By 2012 that number had slowly risen to 4,365 a number with will still include those RTMs that never succeeded, or those which subsequently closed.
In a curious aside right at the start of the report, Ipsos MORI went out of its way to rubbish LKP’s leasehold figures – 4.1 million privately owned leasehold properties in England. Having carried out the poll in April, it had not realised that the Department of Communities and Local Government had accepted the figures’ validity.
Following an intervention by Martin Boyd, of LKP, who has been working with DCLG statisticians on the leasehold figures, Ipsos MORI apologised and amended its report.
Quite why Ipsos MORI believed the Competition and Markets Authority would wish to see LKP gratuitously – and, as it happened, wrongly – criticised in its report is unknown.
Of the 1,050 leaseholders, 62% were more than 55 years old, and the majority had incomes of £29,999 or less.
997 were owner occupiers
53 buy to letter investors
171 were in RTMC/RMCs
456 Non RTMC/RMCs
64% had good or faily good service
20% poor or fairly poor
14% neither good nor bad
2 % did not know
Ipsos MORI decided that flat owners were hard to find – even 4.1 million of them – purchased its list of potential interviewees from another market research firm called UK Changes.
In the main survey of 1,050 people, 131 said they lived in retirement homes 269 in private sites 142 in sites with an RMC or RTM. 166 in LA owned sites with or without a Tenants Management Organisation.
The survey then says this may well be an unrepresentative sample – they could also have added that there would be a strong chance some respondents did not understand the nature of the ownership of the site they lived in.
It was misleading of Ipsos MORI to ask how leaseholders would rate the “collection of service charges and preparation of accounts”. 42 per cent of the 907 respondents said “very good”.
We could have told the Competition and Markets Authority almost all freeholders are very, very good at trying to get the service charges paid, but a much smaller percentage do as good a job at sending out accounts.
How the survey can conflate these two diametrically opposing issues is unclear.
Of the wide list of issues that worried leaseholders, just one per cent said insurance costs were too high.
If that does not send the message that something is wrong with the survey (or leaseholders’ understanding of the question) nothing will.
We are aware the Competition and Markets Authority has been made aware of a considerable body of current and historic evidence including that from insurance brokers pointing out commissions are a big issue
Of those who used the property tribunal, 41 per cent were very dissatisfied with the outcome, in spite of only 29 per cent saying the tribunal found against them. Oddly 12 per cent said that they could not remember the outcome.
It emerges we are talking about percentages of 17 people.
But that is better than the four who had used the ombudsman services.
The most common place to go for help when a leaseholder had a problem it was not the Tribunal (three per cent) or the Ombudsman (two per cent), but their local MP (seven per cent). As LKP knows from its experience the vast majority of MPs have little understanding of leasehold issues so if they are the best source of assistance it suggests the market has a problem.
For accessing information when a leaseholder has a problem the news is also not good for the formal systems.
Twelve per cent spoke to the HA/LA property manager, 11 per cent sought advice from fellow leaseholders, 9 per cent went to a solicitor, eight per cent searched the internet, five per cent went to the Citizens Advice Bureau, who we also know have mixed and variable experience of leasehold issues.
Then we have friends and the council, also on five per cent.
Down down at 4 per cent was LEASE, the government-funded body intended to provide information on leasehold law.
Conclusion:
This could and should have been an important study of the leasehold sector, but it needed to ask those who know something about it before the questions were drafted.
Rather than asking pallid questions like “do you ever have meetings about the management of the property?”, they could have asked “does your site have a recognised tenants’ association for the leaseholders, do you know what rights such a group has?”.
From a random sample of just 1,050 people, the chances of finding the key residents on the site who happens to have read all the accounts and understood the issues is staggeringly small.
Related posts:
Competition and Markets Authority issues update on leasehold study
LKP meets Competition and Markets Authority over leasehold house mis-selling
Competition and Markets Authority cannot investigate leasehold mis-selling because of Brexit, Brokenshire told
AgeUK’s damning verdict on leasehold in CMA study
OFT leasehold management inquiry includes housing associations and council properties – and will report in September
LKP’s Block Managers Limited stops leaseholders from paying to redecorate £1m flat
When it stated at the beginning of this posting, that many of the personnel worked for the OFT, it was no surprise at what the CMA had said.
The manor of the OFT Cirrus/Peverel Management Services investigation was bordering on criminal in its 4 year investigation was in my view biased towards Criminal and neglected the innocent.
The OFT was toothless in the Price Fixing Scams.
The residents here, some 75% show no interest at all in the attempts I have made to have Peverel Retirement refund Service Charges that were paid over the past 8 years.
I managed to get £156 refund for each resident last year, 3 resident said thank you. one sent a card and included a Token.
The other 24 never said a word, and at the next meeting only wanted to move on and were more interested in the colour of the grass and can the gardens not grassed have nice flowers?
I did not take on Peverel Retirement, so that the residents would benefit, I knew if I was successful, then all would benefit.
When we recently were offered to purchase the freehold only seven, actually contacted me to see if it was beneficial.
We had the £34,000 secured but no one showed any interest?
So if the CMA speak to the 75% not interested in each development then they will have the result they have shown.
The CMA have my name and address, including phone number, which was given to the OFT when I asked under the Freedom of Information Act to be informed who from Cirrus/Peverel Management Services had had been cheating us.
The OFT replied that it was not in the National Interest to name the villain’s of the Price Fixing?
The OFT did threatened the 4 Whistle Blowers from 2009, that they had to keep quite during the 4 years investigation or they would face, Criminal Action?
YOU COULDENT MAKE THIS UP?
Reply
Deja vu! But you aren’t alone. It is the lot of the progressive activist to get things done – and take the flak. I hear stories about leaseholders using their own money in court to win benefits for everybody but they don’t get thanked, let alone reimbursed.
Leaseholders – you say 75% and you could be right – prefer to put their trust and their investments in the hand of people like Spivvy Stewart147 (see above) who, incidentally, is crowing over winning contracts to manage a further 30 estates.
Onwards and upwards!
Sue,
My 75% is favouring the don’t knows and those who do not want to know? My 75% is generous to the 7 residents 25% who showed an interest in the purchase of the Freehold for only £1,200 each and 75% showed no or little interest at all.
I have spoken to some family’s of those elderly, I am speaking about those great residents, who are over 90 years young.
We have lovely residents on ABC who have purchased the flats having been sold the development by both the Estate Agent and then the Conveyancing Solicitor, who of course are renown for providing what residents wish to hear. Of course they will not inform the facts regarding our Area Manager as that would put them out of business. Since I moved in 2008 there has been 14 new residents in 6 years, I have spoken to 6 of them regarding the purchase and they all disagree that they have not purchased the flat, bricks and mortar?
Living here is somewhat topsy turvey, as the development is in a beautiful valley and surrounded in an area of Outstanding Natural Beauty. Some of the gardens are excellent, since a new resident moved in and has transformed the gardens where Alan Titmarsh would be very pleased.
The mention of Peverel Retirements poor handling of the Service Charges and refunds upsets most of the residents who purchased the flats not aware of the workings of Peverel Retirement Senior Managers.
They purchased some in the late 1990s and were not aware of the ways Peverel Retirement were cheating them. Now they have been informed of the various ways they feel that they should have been aware of what happening are now upset that they were sold a pup, as I was.
I have chosen to correct the Peverel Retirement poor management including the Price Fixing and Excessive Commissions including the nepotism with contractors who pay commissions to find work, especially related contractor.
Others God Bless them Bury their Heads and who can blame them?
Excellent critique.
What needs to happen now is a crowd-funded survey of retirement developments with an LKP survey, or a sponsored one if a sponsor will step forward. LKP already has the mailing address of every Peverel-managed site (sorry, should that be FirstPort?) — just to pick the worst offender.
Perhaps there is a member of parliament who would be willing to send the survey? I’m afraid the elderly are not online much.
While my/our submission is long done, one of the key premises of the report was enabling owners. Sadly, taken in the round, even when comprehensive information IS given to people I have heard of calls ” its two pages its too long tell me what it says” or buyers, before purchase, time and time s never reading it , let alone understanding it. Yet the buyers know the IKEA catalog inside out…
There is already much in the legislation to enable leaseholders, if only sufficient number can get together. This rarely happens in practice. As AM says most people cannot be bothered, another excuse is “I am not clever enough to understand this…” The only way to protect leaseholders (in spite of their inertia and ignorance, if you like) is statutory protection.
Do we really need more surveys? Do we need more proposals for self regulation? No we don’t.
There is an excellent RICS code which is not being followed because “it is only a guidance”, the same for the ICAEW guide on accounts. These should be made compulsory. And most importantly sections 21, 21A ect of the LTA1985 as amended by the 2002 Act should be brought into effect. I think this is what LKP should be campainging for. Exposing a few “worst” cases, still leaves hundreds of the more clever ones (in the sense that they don’t get caught) carrying on regardless.
It doesn’t surprise me one bit that the ‘survey’ undertaken by MORI aka OFT purports to be showing no problems in Retirement Leasehold…. It suits the governement to not upset the gravy rain/applecart at the moment as they have too much invested in the chicken sheds being built today called homes.
I believe that leasehold property not held on either commonhold or enfranchisement will implode in the not too distant future as more and more people are being made aware of the perils of leasehold…..
We have to keep on educating the general public about the scams out there and how the government (any party) is not interested in cleaning it up.
Leasehold is corrupt through and through and everyone knows it.
I agree Karen,
Leasehold will implode as more understand the perils of leasehold.
At some stage, before new legislation is brought in, one of the “big players” will break ranks and offer new developments on a commonhold basis..
Forgive me for being a cynic, but would i be alone in thinking in thinking CMA studies are carried out in order to delay changes until the banks (who the public bailed out) can protect their positions?
The CMA is concerned that competition between property managers may be too weak to produce efficiencies or generate incentives to innovate. Yes.
So what is the CMA recommending? Well, it suggests either amending existing laws and/or improving industry self-regulation by:
● Requiring freeholders to tender for property management services every three to five years or to be able to veto a given property manager
Comment: This would have the effect of weakening existing law: Landlord & Tenant Act 1985 s20 Limitation of Service Charge: consultation requirements applies to ‘major works’ and ‘qualifying long term agreements including the appointment a property manager/managing agent. The spirit of this law is that, if managers do no comply, the limits on service charge payable are sufficient to squeeze their proverbial danglies – and their profits – so it hurts. So far, this threat has made property managers adept at finding excuses as to why ‘it doesn’t apply here’. Unfortunately, too often tribunals have agreed with them.
● Requiring ‘full disclosure’ by freeholders and property managers, including details of any fees and supplementary charges
Comment: The Financial Services Authority’s ongoing FRED 50 consultation with the a accountancy profession due to report early next year could lead to a winner here if, as it seems, managing agents’ fees and charges will appear on the public record at Companies House as part of new reporting requirements for service charge accounts.
● Various measures to encourage leaseholders to act collectively, such as through residents’ associations
Comment: Errm… and the point of the Commonhold & Leasehold Reform Act 2002 is ….??
CLRA is a great piece of enfranchising legislation but perhaps it is too complex even for the managing agents to get their heads around?
Ours (a spiv who I shall call Stewart147 because he favours the nickname when posing on websites pretending to be a happy customer of his own property management company) goes to great lengths to justify filing the management accounts as ‘dormant’ claiming – with gratuitous references to the Royal Institution of Chartered Surveyors an carefully crafted Minutes – that CLRA 2002 exempts small companies from filing active accounts. This, in spite of the fact that his own compliance officer and the estate’s freeholder, countless lawyers and the tribunal service have advised otherwise.
Spivvy Stewart147 isn’t alone in his wily ways. The message here, of course, is that the measures are only as good as the will to implement them. In the face of such opposition, can we be surprised that leaseholders lack the will to ‘act collectively’ knowing that their Minutes may be fiddled or that black is the new white.
● Providing more information to prospective leaseholders on the costs of future works when they are thinking of buying or renting a property
Comment: Isn’t this a job for the solicitor who arranges the deed of transfer or draws up the tenancy agreement – to find out what costs await their unsuspecting client?
So three cheers to the CMA for reinventing the wheel. By the end of the year, when the final report is published, my sincerest wish is that the penny will have dropped from a great height: self-regulation of the property management sector just doesn’t work..
Another 10 comments and that will be a bigger response than the number of those who had used the PropertyTribunal!
Watch this space – congratulations to all at LKP 😉