No shortage of rights for leaseholders, but they can safely be ignored as a landlord carries on a legal war of attrition in the courts – funded on the service charges
MPs were appalled – as were some of the senior figures in the property management business, including FirstPort, who were in the audience
Talk in sector of rogue traders, but landlord is member of the Residential Freeholders’ Association
Last year the Association of Residential Managing Agents (ARMA) gave FirstPort’s legal department a prize
‘This is the sorry result of a sordid, crooked system. One more akin to blackmail than business. One that should be put out of its misery, without waiting another 50 years’
A devastating account of a leaseholder seeking justice in the flawed property tribunal was presented by commercial solicitor Liam Spender to MPs at the All-Party Parliamentary Group meeting on leasehold reform and commonhold last night.
The meeting, on the day of the King’s Speech, was attended – and addressed by housing minister Rachel Maclean – and members of Parliament with an informed interest in the subject.
Those who contributed to the meeting included Mike Amesbury, Labour shadow minister for building safety and homelessness, Sir Julian Lewis, Anthony Browne, Baroness Ilora Finlay and Helen Morgan. Lord Best, whose report on the Regulation of Property Agents (RoPA) remains languishing, was also in attendance.
So, too, were the senior executives of leading managing agents, including FirstPort.
Mr Spender began his speech by stating:
“There’s a lot of talk in the industry about rogue operators, but what I am describing is what life is like in a site run by a member of the Residential Freehold Association and is managed by one of the largest managing agents in the country, FirstPort.”
After it, Sir Peter Bottomely said that he hoped that the landlord, who Mr Spender did not name – nor the site where he lived – would be put up in lights and LKP is happy to oblige:
The landlord of St David’s Square, a prime site on London’s Isle of Dogs where Mr Spender lives, is: FIT Nominee Limited and FIT Nominee 2 Limited, both subsidiaries of the NatWest Group plc
The full archive of the disputes at St David Square is here
After Mr Spender had given his account of a year in the life of a leaseholder litigant, Justin Madders, co-chair of the APPG, commented:
“Liam, that was absolutely compelling. I think we all feel how difficult that year has been for you. And, let’s be honest, you have the skills to be able to take this on. I think we all get a sense that justice is not being served at the current time, and I think it would have been really good for the minister to have heard that.”
Maxime Fothergill, a managing agent and a leaseholder, asked afterwards whether Mr Spender would ever buy a leasehold property again:
“I would not: it is a financial prison and you are a laboratory animal running around in a maze controlled by your landlord and his enablers. I would not wish it on my worst enemy. But young city buyers have no choice. What is needed is root and branch reform, so I welcome this Bill and hope it passes through Parliament.”
By Liam Spender
Thank you for the invitation to speak here today.
This is one year spent as a leaseholder fighting unreasonable service charges.
As you listen to this, please remember that this is not a site run by a rogue operator.
It is managed by a member of the Residential Freehold Association. It is run by one of the largest managing agents in the country, FirstPort.
January. At the end of 2022 we received demands for the first half of the 2023 service charge.
Electricity has gone up by 154%. I write to FirstPort pointing out that it has not credited the subsidy due under the Energy Bill Relief Scheme
In reply, FirstPort admits that no part of the subsidy is taken into account. FirstPort says “as a prudent property manager, we do not consider it appropriate when setting budgets for 2023 to assume that the discount will continue for the full year.”
So much for the legal requirement to pass on this subsidy. We have no choice but to issue another Tribunal claim.
Between 16 and 19 January I am at the First-tier Tribunal, fighting to recover 2018-20 service charges. I take a week off work as holiday to do so.
I have to work until midnight, rising at 4 or 5 in the morning to get all of the work done. I feel completely overwhelmed. Before this, I never did any advocacy outside of the classroom.
One oddity before we even start. The landlord’s barrister has a pass to the property tribunal building so does not have to queue to enter. Meeting rooms are allocated to first comers. That means the landlord always has a large room to use. We are left in the foyer with no private place to speak.
Watching the interactions between the panel and the landlord’s barrister feels like gate-crashing a party of friends, perhaps a wake.
By the end of the week, I have rubbed my eyes so much one of my eyelids is swollen and bruised. I go back to my day job.
February: we await the decision. I chase the FTT every two weeks for an update on the electricity challenge. Nothing happens.
March: we finally get traction from the FTT. A case management hearing is listed for 14 March. Another day off work.
We join the video hearing. The first question out of the judge’s mouth is whether I’m being paid. He asks whether all the people attending are leaseholders. These proceedings are supposed to be in public. The judge seems none too keen to allow this.
I spend an hour facing off against another barrister. We are arguing over whether I can see the electricity bills showing the Energy Bill Relief Scheme discount. I need this information to plead the case.
We already have a legal right to this information. FirstPort should have told us this information within 30 days of receiving the money. Of course, it hasn’t.
I am now having to fight for us to see the information. Again, this is being opposed, at our expense, because this elementary transparency is being resisted by the landlord using our money to thwart us seeing what is going on.
Fortunately, after an hour of argument, we get the documents we need to be able to plead our case.
For the rest of March, I work on a statement of case for our electricity challenge. More late nights and lost weekends.
29 March: we get a decision from the January hearing. We win on most counts, about £630,000 in total. The lease says this should be credited back to us when the next demand falls due, early in July.
The FTT also decides the landlord can adduce new evidence on the major item in dispute.
April into May: we eventually agree a settlement with the landlord over the electricity charges. The refunds are due in July, with the next service charge demand.
Also April into May, the landlord refuses to engage with the timetable set by the FTT on fresh evidence. The landlord helps itself to another two weeks. It then says it doesn’t have any evidence to justify charges of about £480,000.
3 May: we receive the final FTT decision. This confirms our victory. The FTT also makes a section 20C order. That supposedly means the 102 of us leaseholders who participated in the action will not have to pay the landlord’s costs through the service charge.
The other 374 properties are still at risk. They also get no benefit from the decision, the landlord does not have to settle up with them at all and can keep the money.
12 May: we get a letter from no less than the managing director of FirstPort saying we will be refunded.
31 May: a new service charge demand is issued. It credits neither the electricity subsidies nor the amounts found due by the FTT. We are told this is issued in error.
We also learn the landlord intends to appeal the March and May decisions. No sign of any refund.
June: is spent arguing over permission to appeal. The FTT refuses permission to appeal. We then have to repeat the fight in the Upper Tribunal.
July: you will be shocked to learn FirstPort does not do what it promised in relation to the electricity charges. A new service charge demand comes on 3 July. No electricity credits, despite our settlement agreement.
The landlord also ignores the section 20C order. During 2022 we are billed more than £54,000 in legal costs. Apparently this is another “mistake”.
August: is taken up with permission to appeal arguments in the Upper Tribunal. More work on written arguments, with the landlord’s legal work done – again – at our expense.
September: a horrific month at work. Made worse by the fact that I spend many hours at evenings and weekends researching the law to resist the landlord’s appeal.
12 September: we finally get the electricity credits. On 15 September, we get a letter about late payment. This time it is put down to a “system error”.
9 October: our written case goes in on the appeal. The appeal is listed for April 2024, nearly 3 years after we started.
11 October: fed up of waiting for my money from the FTT proceedings, I issue a County Court claim. Hours preparing a Claim Form and Particulars of Claim. Another £110 court fee.
27 October: FirstPort send us another late payment demand. Plus an £80 fee. Still no sign of any credits for 2018-20.
On the same day, the landlord acknowledges service of my County Court claim, saying it will defend the claim. In other words, the landlord is going to resist any attempt to collect money it has already admitted it owes.
More litigation. More of my time. More of our money on the landlord’s legal fees.
What have I learned from all this?
First, I discover there are two places where income comes before work. One is the dictionary. The other is on a professionally managed leasehold site.
Remember, this is a site managed in a way freeholder lobbyists hold up as a shining example of the leasehold system.
Secondly, I have wasted more than two years of my life on this. Nothing has changed. We have not been paid. Potentially years of litigation lay before us.
The Kafkaesque nature of the current system means the landlord can – and will – bill us its legal costs for fighting us.
Is this really the best we can do after 50 years of reforms?
Secondly, nothing is going to change if the industry is left to its own devices. Why? Because there is no financial consequence whatsoever for landlords or managing agents.
Indeed, last year the Association of Residential Managing Agents gave FirstPort’s legal department a prize. ARMA has also given FirstPort other prizes for the quality of its management.
That shows the contempt in which the industry holds the leaseholders who pay them.
Thirdly, leasehold – despite being hide-bound by statute – is a lawless system. We already have plenty of rights as leaseholders. They are ignored with impunity. The FTT does little to enforce them.
What is to be done?
We need action this day.
First, more legal rights will not solve this problem. I am only unusual in perservering in this fight. Most people – sensibly – would have given up before now.
While we do need more legal rights, we also need non-legal solutions; a multi-faceted approach. We must have meaningful rights coupled with effective means of redress.
The landlord fox must be evicted from the leasehold hen house. That means managing agents and landlords must be licensed and regulated before they touch a penny of anyone else’s money.
If they misuse our money, consequences must be swift and severe.
Secondly, we must remove the right of landlords to charge legal costs via service charges. This ability to spend someone else’s money drives all sorts of unreasonable behaviour.
My own case is one driven primarily by the landlord’s spite: my neighbours are being punished because I speak out. I doubt the landlord would be quite so spiteful if it had to spend its own money. Or were it subject to a system of effective regulation.
We should also have the right to recover costs against landlords if we win in proceedings.
Thirdly – and most importantly of all – we must have the ability to throw out the landlord’s chosen managing agent.
We cannot get right to manage at our site because we need 50% + 1, or 219 people. We have multiple blocks, so we probably also need 50% + 1 of every block. That is unachievable on any large site.
We also cannot get a tribunal appointed, section 24 manager: the Building Safety Act has made things worse for large sites such as ours with Section 110 saying that a tribunal appointed manager cannot take over the functions of an “accountable person” of a higher-risk building.
This means that at nearby Canary Riverside, we are currently seeing a landlord replaced years ago with a tribunal appointed manager trying to become the accountable person. If that happens, a landlord found unfit to manage leaseholder money will then be let back into the service charge funds. That cannot be right.
As I said when I began speaking, this is what it is like to live under the acme of leasehold. Even after 50 years of attempted reforms.
This is the sorry result of a sordid, crooked system. One more akin to blackmail that business. One that should be put out of its misery, without waiting another 50 years.
We can – and we must – do much better with this Bill.
We must act now – fiercely and urgently – to ensure these abuses stop.
And let us join the rest of the civilised world in placing power where it belongs: in the hands of the people who live in these buildings.