The government has chosen Easter Day – also April Fool’s Day – to announce a regulator for the leasehold sector and other major changes.
New crackdown on rogue agents to protect renters and leasehold homeowners
Independent regulator and code of practice for letting and managing agents Easier way to help leaseholders challenge unfair fees and service charges Possible prosecution for those who severely breach the code Almost 9 million households in England’s private rented and leasehold sectors will benefit from stronger protections against rogue letting and managing agents thanks to new government proposals announced today (1 April 2018).
A working party is to be established immediately to work out the details.
The announcement today also declares that the right to manage process for leaseholders should be made simpler.
It seeks to empower leaseholders to switch managing agents where they perform poorly or break the terms of their contract. This is curious as leaseholders usually have property management imposed on them by the freeholder and they are not a party to the contract.
The government also proposes that criminal sanctions will be imposed on agents who practise despite not meeting minimum standards.
Its statement said:
“With thousands of renters and leaseholders suffering at the hands of rogue agents every day from unexpected costs, deliberately vague bills or poor quality repairs, a new mandatory code of practice is proposed to stop managing and letting agents from flouting the law.
“To further professionalise both sectors, letting and managing agents will be required to obtain a nationally recognised qualification to practice, with at least 1 person in every organisation required to have a higher qualification.
“A new independent regulator responsible for working practices of agents will be given strong powers of enforcement for those who break the rules – and agents who fail to comply will not be permitted to trade. Criminal sanctions could also be brought in for those who severely breach the code.”
Housing Minister Heather Wheeler said:
“Most property agents take a thorough and professional approach when carrying out their business, but sadly some do not.
“By introducing new standards for the sector, we will clamp down on the small minority of agents who abuse the system so we can better protect tenants and leaseholders who find themselves at the end of a raw deal.”
Other proposals to be brought in under the code include:
A new system to help leaseholders challenge unfair fees including service charges.
Support for leaseholders to switch their managing agents where they perform poorly or break the terms of their contract.
A requirement for all letting and managing agents to undertake continuing professional development and training.
DCLG civil servants inform LKP that a Working Group involving stakeholders across the leasehold and private rented sectors will be created to deliver these commitments, and that the group will be established as soon as possible.
LKP greatly welcomes this initiative.
We might carp a little at coupling leasehold property managers and letting agents on the grounds that the government is pushing leasehold towards other forms of tenancy.
This is not unreasonable given the legal status, but our argument is for transforming leasehold tenancies into secure property ownership: creating only commonhold, ultimately. One of the first answers to the problems of leasehold is: stop creating more of it.
But a proper, robust regulator of the leasehold sector would be very welcome.
We only need to look at the mess made by self-regulation.
RICS managed to pull off disciplining Warwick Estates with a £20,000 fine for a health and safety failure that resulted in death. But it really did little more than rubber-stamp a criminal court’s prior decision.
It messed up ruling on Benjamin Mire, and its regulatory regime had to apologise in October 2016 to 317 struck-off or disciplined chartered surveyors after a barrister revealed failings in its procedures.
Still, this is way better than ARMA, whose regulatory regime is in tatters.
Warwick Estates said it would leave the organisation if it were subject to a disciplinary process, and the result was that a disciplinary panel called by regulator Sally Keeble was stood down. She resigned from the organisation owing to this and has told LKP that self-regulation cannot work.
ARMA regulator Sally Keeble outlines five areas where statutory regulation is needed in leasehold
Whoever gets the regulator role, please, let it be absolutely none of the usual leasehold sector professionals.
Leaseholders have had quite enough apologists for the status quo (if not worse) in the Leasehold Advisory Service.
Indeed, if you have made your money out of leaseholders and the leasehold system not working very well, then let’s hope government is not interested in your application.
We need a serious, determined and respected regulator, the leasehold sector being awash with jobsworths and charlatans already.
But haven’t we come a long way? Today shows government is determined to get to grips with this sector and improve it.
And it is hugely welcome to see paragraphs such as this now coming from government (which until LKP came along was being told that the sector was functioning just fine):
“In leasehold, the structure of the system itself is partially to blame. The very nature of the agreement means that leaseholders are typically excluded from decisions on property management.
“A number of protections to address the imbalance of power in leasehold have been introduced over time, but these are often inconsistent, complex and can be abused by those that they were meant to defend against. Rights to challenge service charges, or to take on management directly, can be undone in a tribunal system that can often be daunting, costly and uncertain”
Related posts:
Will Lord Best’s regulator help break the power of freeholders over their leaseholder victims?
ARMA: prepare for a regulated leasehold management world
ARMA regulator Sally Keeble outlines five areas where statutory regulation is needed in leasehold
We won’t protect leaseholders’ funds even after Van Houten’s theft because … that was the last government’s idea
‘The time is right for commonhold,’ announces Law Commission. (Pity the government doesn’t agree …)
National Leasehold Campaign tells Roger Southam to resign from LEASE
Just when I got used to relying on cynicism about the leasehold caper and the political class.
I imagine RICS will be a shoe in as the new regulator?
Good to see RTM will be simplified. Need to overturn the one-building nonsense..
Could forthcoming changes be a reason for the Ombudsman Property Services withdrawal from the sector?
Agreed. Too pathetic for most leasehold disputes.
And misleading. One of Martin Paine’s victims at Blythe Court went to the legal ombudsman, got £800 but did not sue for negligence.
The result? They are now stuck in a flat that’s worthless, with £1,000pa ground rent, and they have left it more than six years to sue their conveyancing solicitors who did not spot Paine’s trap.
This is a working class family trying to own a home whose lives have been completely messed up.
And Paine has sold on the freehold of Blythe Court to some other speculator.
We are trying to get the case reopened despite statute of limitations. It is their only hope to get negligence payout to vary the lease back to something normal.
Admin ,
Please consider making complaint against a UK limited company for engaging in corporate abuse i.e unethical conduct .
https://www.gov.uk/complain-about-a-limited-company
Admin, you say the “ARMA regularity regime is in tatters.”
Whilst of course I must respect your opinion (and that of Sally Keeble) I, in my capacity as The scourge of Peverel do not take anything at face value, so I shall shortly be making a complaint to ARMA to see how they handle it?
In essence I received a service charge demand from Firstport Property Services which i immediately paid via credit card..
On a closer examination of the service charge demand, I noticed the demand had been issued in the name of the wrong freeholder/landlord (a completely unconnected company)
I noticed that the company number ascribed to Firstport Property Services actually belonged to Firstport Bespoke Property Services.
I contacted Firstport Property Services to make them aware of their error.
The excuse given was that a development with a similar name had recently changed freeholder which is why the wrong details were given on the service charge demand. The wrong company number was given due to ongoing inter company changes. I was assured that despite the “administrative errors” my payments had been allocated to the correct service charge account.
My suggestion that the service charge demand was invalid and that as such a new service charge should be issued with the correct information or my payment should be refunded until such time a valid service charge was issued met with the response,”That future service charge demands will be accurate” but that they” now consider the matter closed ”
It may be closed for them. It most certainly not closed for me! According to About Peverel giving the wrong freeholder/landlord and an incorrect company number for Firstport Property Services may be far from an isolated case?
It is strongly recommended that leaseholders should read the small print on the back of the service charge demand(the bit we always ignore!) to check that it is correct.
It does appear that giving the name of the wrong freeholder/landlord and the wrong company number may not quite meet ARM-Q standards?
I will keep LKP fully informed of my progress with ARMA.
Michael, It will be interesting to see how ARMA deals with your complaint.
Now that FP Retirement are full members it gives thousands of leaseholders the opportunity to get ARMA assistance. I hope they have have the staff to cope.
Realistically though I doubt you will get much help
ARMAs advice to leaseholders is as follows.
1 ARMA will remain totally impartial.and the following procedures must have been exhausted.
2 complain to Ombudsmam
3 First Tier Tribunal
4 Court action
5 If appropriate investigation by the Health and Safety Authority, Local Authority, Trading Standards, Financial Conduct Authority, Competition and Markets Authority, Local Fore Services..
And before tackling the above list all the FP Retirement complaints procedures must have been completed which could take months.
Once all these have been undertaken if you wish ARMA to consider, all the documentation must be sent to them and it must be within 24 months of the incident taking place.
Following all this the offending member company may get a warning letter, forced to make an apology, forced to undertake training. Unlikely to be anything more.
And after all that ARMA will not have solved your problem as they say they are not in a position to do so.
And as an elderly leaseholder the complainer will be much older and by that time completely stressed and shattered.
Perhaps a quicker way for Michael to get an answer would be to ask ARMA the following question.
Is it possible to withhold payment of a service charge demand if it has been issued by the wrong freeholder/landlord.?
Michael Hollands,
Thank you for your comments.. i do not expect for one moment that ARMA will intervene on my behalf, but they should take action against a member that has clearly contravened their ARMA-Q codes.
Demanding a service charge on behalf of a company that has no connection with a development and then refusing point blank to issue a service charge demand on behalf of the actual freeholder/leaseholder takes Firstport’s actions beyond a mere “administrative error”.
Since the solution I suggested was to simply issue a correct service charge notice (given I have already paid) has been declined does point to the possibility of some more sinister reason for their “administrative error?”
I am intrigued as to the reason they could not issue a valid service charge demand.?
Many are under the false impression that when they receive a service charge demand from Firstport, that demand comes from Firstport? It does not.. It comes from the freeholder/landlord but is sent by Firstport who are acting as agents on behalf of the freeholder/landlord.. So clearly if a service charge demand is sent out by Firstport then it must be sent out on behalf of the freeholder/landlord. And of course if the wrong freeholder/landlord is named (that has absolutely no connection with the development) then the actual freeholder/landlord cannot have instructed Firstport to send a service charge demand on their behalf?
If they had Firstport would have apologised and sent a new service charge demand with the correct details, Problem solved!
Because I have made payment by credit card I have been advised by a property lawyer that my credit card provider must intervene and issue me with a refund and claim the funds back from Firstport.. I have given Firstport 14 working days to resolve the issue otherwise I will proceed with this course of action.
We are in a situation that after years of being taken for a ride by Peverel / FirstPort we acquired RTM and chose a LKP accredited company as our Managing Agent. Their property manager is a member of the Institute of Property Managers who profess to set the standards in Residential Property Management.
After 10 months of so called management by this rogue company, we complained to LKP about just one of their actions. LKP immediately took up our ‘fight’ and the managing agent immediately resigned from LKP. This, of course, indicated guilt, but it didn’t help us.
Following this, and under the terms of the agreement, we wrote to terminate the contract within 28 days, indicating breaches we were alleging they had committed. The Managing Agent wrote back stating that they did not agree they had breached the contract and, as such, they do not agree the contract is terminated. This was 4 months ago, and they still ‘will not go away’.
We are now faced with expensive Court action simply to terminate an agreement in line with the clauses in the agreement. The clauses state that one breach is enough, and, having highlighted in excess of 20 breaches, we have no doubt whatsoever that we will win our Court hearing. But it will take months to complete, and all this time we are still being managed by this so called managing agent, who had previously been screened and accepted by LKP. They still have full access to our funds and no doubt continue to abuse the use of these in the manner we have alleged. To ‘rub salt into the wounds’, since January they have cut off all communication with us, as, in their words, we have ‘taken it legal’. So they are taking their fees for doing absolutely nothing.
Whilst under their management, we took FirstPort to the Independent Ombudsman Property Services. We provided all the necessary evidence and were obviously convinced we had a case, backed up by an independent surveyors report. The previous correspondence between us indicated we were ‘poles apart’ and someone needed to mediate. Needless to say, we lost and the Ombudsman supported their member.
We have all seen evidence of members of professional bodies being allowed to ‘do wrong’ and getting off lightly (eg Warwick Estates and ARMA). We have all seen companies being taken to a government body and getting off lightly. (Peverel and the SFO). We have seen people suggesting it is all part of ‘the club’ system. I happen to agree.
The LKP post states that the new proposal ‘seeks to empower leaseholders to switch managing agents where they perform poorly or break the terms of their contract’. Who will decide whether the terms of the contract have been broken. Presumably it will be the new independent regulator who will decide? Somewhat like the independent Ombudsman?
It also states that there will be ‘A requirement for all letting and managing agents to undertake continuing professional development and training’. As stated, our managing agent, independently chosen by us, the leaseholders, were LKP accredited and had IPM qualifications. And yet it still all went wrong.
Call me cynical if you want, but leasehold has made me this way. I still have my doubts about how this will all work. It has been allowed to go on for far too long, and it will take far too long to recover from all this.
To end on a positive note, something has to be done. So I too welcome the initiative, and commend LKP in the work they have, and still are doing, to attempt to regulate the system. I eagerly await the outcome.
As an RTM we avoid the breach of contract route precisely because agents hold the client funds and also know RTMs have no non client funds for court action.
We always use the normal termination period. Regularly needed so far. Surely you have a contract with a defined period? If only for QLTA avoidance?
Government above all must bar agents insisting on holding the key to the client bank account. There is no reason I know that banks would not open a client account for the RMC/RTM and let the leaseholder directors mandate the signatories. That way the directors always hold the key, not the agent.
Everything about leasehold is designed to put the industry firmly in control, not those who pay all costs.
Hi Paddy
We needed to terminate quickly for reasons that cannot be made public at present. However, our problem is that the Managing Agent will not accept the termination notice. How would terminating in a different matter help this situation? If a rogue Managing Agent wants to do whatever they want, there is nothing leaseholders can do about it. Hence the need for regulation.
You say you have regularly needed to terminate contracts. That being the case, you must have been involved with Managing Agents who have kept to the termination clauses in the contract, accepted the termination on your terms and returned your funds. Unless there is a magic formula to use when selecting Managing Agents, you have been lucky.
We are very sorry that something has gone badly wrong.
The managing agent, which has quit LKP, here feels so sore about the experience that it is now hostile to leaseholder empowerment and has even taken to making snide remarks about LKP and joining in the claque on the recent comments against us over Warwick Estates.
We assume the managing agent was appointed for only 12 months, so you should be rid of them.
This matter probably needs to be taken up publicly, with involvement from MPs, to get rid of this managing agent and allowing you freedom to appoint another.
I am not surprised that this Managing Agent is so hostile to leaseholder empowerment. They want a clear mandate to do what they want and spend what they want, without a leaseholder having the ‘nerve’ to ask questions. Their Facebook and Google reviews indicate this quite clearly.
The Managing Agent acquired RTM for us. Part of that was that they would manage us for 12 months, which has now passed.
It is interesting to note that the Managing Agent feels so sore about the experience, and yet they will not go away and eliminate Sounds like they are looking for some sort of revenge to me, indicating what a professional company they are!
If this is to be addressed publicly, it needs to be done properly.
Hi again. Personally I have yet to meet either a professional or a competent leasehold managing agent and therefore take no comfort in qualifications or accreditation. Good to see LKP backed up their accreditation with intervention in your case, but proof that there are no guarantees in this caper.
We have had to terminate three agents in our first five years just to stay solvent and in control.
We used the normal no fault termination clause each time and always insist on there being one before we sign. You should never sign the first draft contract offered. We also insist on an added schedule of bespoke client requirements for avoidance of slippery interpretation later of ‘codes’.
The problem with the ‘fault’ breach route is the opening for litigation. The no fault termination route leaves even leasehold sector actors no legal leg to stand on. You could get an injunction to freeze the client account once the no fault termination notice date passes and even issue advice to leaseholders to pay into a different client account.
Terminating by the no fault route renders the agent with no legal status to demand money in your name – or anyone else’s or run service contracts on your site. .Have LKP read your contract and find the no-fault notice clause and use it. If the agent still refuses to go then you must be in the driving seat legally.
Sadly an agent can sit on funds etc, but the bad publicity in such circumstances would surely be irrational.
Correction. It was two in five years. Third has had a year and if anything proved least competent but has convinced us to hope. The desparate introduction of an updated client task list spreadsheet that lists and dates every unresolved issue with a running time clock proved rather a break through.
“We have seen people suggesting it is all part of ‘the club’ system. I happen to agree”. You are right to have your doubts, and to be cynical, there isn’t a single state appointed mediator in any sector which isn’t part of the club.
I read that but ignored it assuming it was an aprils fool joke…
It is–against lessees
Marie Claire mag says Meghan has published her bridesmaids’ list. It includes the usual suspects, an award-winning pooch [not an award-winning managing agent (too many) sorry about that] and a white swan.
If the new regulator is to be truly independent – of the forces most harmful to leaseholders – that is, the free market economy – it cannot be funded by the free market economy.
I propose a statutory levy on statutory service charges, paid for by leaseholders, themselves. To reinforce the point, the levy must be included on individual leaseholders’ annual statements of account.
The accounts should be prepared in accordance with ACCA/ICAEW TECH03/11 latest update, as currently approved by RICS, ARMA, Law Society and, I believe, ARLA.
Get the accounts right and the shady deals will stop.
Ultimately this is the solution. Get the accounts right – but who has the stomach to carry out such a scheme? I have been asking for accounts since 1997 (!) and even at the tribunal stage this was glossed over by judge Vance who appeared very keen to whitewash the whole sordid affair.
Accounts should be mandatory and independently audited. In fact they should be accessible to the public so we can see why ie one building needs £50000 pa service charges while the identical one next door is better maintained with £10000…
It should also pointed out that it is extremely difficult for leaseholders to prove services charges as unreasonable without proper accounts and overall a more transparent system. I am speaking from experience here, even when forming the ridiculous time wasting and toothless Recognised Tenants Association, we asked for accounts ( which they are obligated by law to provide) but if they don’t there is no mechanism in place to do anything about it!
Residential leasehold should be abolished in its entirety with limited compensation–there is no logic to residential leasehold–and commonhold is NOT the answer
If i can buy a mid terrace house freehold then why not a flat–insurance can cover all eventualities
Faux-tories will make things worse–may has form for incopmpetence
Terry, agree with residential leasehold should be abolished “in its entirety”. What is wrong with commonhold?
This announcement is indeed welcome. Can I please make a plea that an actual leaseholder dealing with dodgy management practices is invited into the working group as a representative of the consumer?
Too many times the people these decisions directly affect are excluded from the decision making process and as uncomfortable the experts may feel, leaseholder presence is essential.
National Leaseholder Campaign group will be able to provide representation. Just tell us where and when!
Just to add to the credibility of ARMA! How ironic that as Firstport Retirement Property Services faced a record fine for serious breaches of Health & Safety Legislation which led to the loss of a resident in a fire at Gibson Court, Esher, Surrey not only do ARMA believe it appropriate to award Firstport Retirement Property Services SRMA_Q accreditation, but they appoint Mark Varley the Firstport Head of Health & Safety to Head of Health & Safety Governance at ARMA!
Let’s hope that he checks ARMAs roof space fire breaks are in place
A regulator is a welcome step. However my experience of Ombudsman is of limited power. Unless the regulator is there to serve the tenant and leaseholder there is no point in its existence. The ultimate goal is to abolish leasehold and abolish all leases in the residential sector and have freehold.
Can anyone point us to advice given to leaseholders in mixed use buildings ?
As we can’t find any help we might have not many rights as we our building has more that 25% commercial use.
Any pointers would be appreciated
Thanks.
Fill in a help form. Martin Boyd, trustee of LKP, is also chair of Charter Quay, Kingston, which is very mixed use, including a theatre, restaurants and river frontage eco legislation thrown in.
Thanks
Thanks