Peverel has taken a hammering in central London this year and lost the management of a number of key sites.
And its former owner, the Tchenguiz Family Trust is going along with the decision to replace the giant management company.
The Berkeley Group – often at the behest of residents – has been pressing the changes, sensitive to quell murmurings of discontent at its prime riverside sites.
Rendall and Rittner is the managing agent that is getting the lion’s share of the new business.
Sites that are giving Peverel its marching orders on or around January 1 are:
Riverside West (531 units)
Imperial Wharf (1399 units)
Here St George (the Berkeley group) and Estates and Management (Tchenguiz) have appointed Rendall and Rittner.
Royal Quarter (446 units) has gone for Kingleigh Folkard & Hayward (KFH), where the freeholder is Freehold Managers.
Battersea Reach (700 units) also went to Rendall and Rittner, appointed by St George and Fairhold Athena (also Tchenguiz).
Altogether that’s 2,376 units.
A Peverel Group spokesperson said: “As the largest property manager in the UK, London has always been and remains an important market for us.
“Peverel Group manages 3,700 developments across the country – 395 in central London and 850 across Greater London.”
Related posts:
Executive guilty of plundering £122,000 from managing agents Rendall and Rittner
Chelsea Bridge Wharf: a win for Peverel
The Right To Manage Federation chalks up its 28th leasehold RTM success in central London … as it fights epic Plymouth RTM duel in the Land Tribunal
Palgrave Gardens gives Peverel its marching orders
Mainstay loses prime Norwich site to right to manage
AgeUK removes its logos from the Peverel Retirement website
Clearly the loss of those developments is another major blow to Peverel. They not only lose the management income, but they lose all their “add on’s” such as insurance commissions.
Even if the profit from each unit was just £120 that is a loss to Peverel of £28,512. Not something Peverel can afford when having to pay back their investors at interest rates of between 9 and 15%!
It must be particularly concerning to Peverel that their former owners are casting them adrift.
Rumours have reached me that other developments are being prepared to transfer managing agents, by the previously connected freeholder.
Considering Peverel have strengthened their PR department, i have to say the reaction to the loss of these developments is utterly feeble.
Imagine the captain of a plane heading towards 18,000 ft mountains and announcing, “Though we were flying at 35,000 ft, we have descended by 20,000 ft. However, it is important to remember we are maintaining an altitude of 15,000 ft! As the song goes “There may be trouble ahead!”
ME
When you mention Insurance Commissions are these the Commissions that they receive from companies such as Oval Brokering Services Ltd who pass on the Commissions to Kingsborough Insurance Services Ltd who then pass them on to Peverel Retirement Division, who are part of Peverel Management Services Ltd and Peverel Services Ltd and linked to another 18 Companies which include Cirrus Communications Ltd and CarelineUK Ltd?
I have great respect for you and the information you provide us with.
I recently informed our Regional Manager MPW that we as residents at ABC were considering RTM, he laughed and stated it would not be easy as we had to pay our Ground Rent to Mercian Holdings in Shrewsbury who has informed me that they have no control over Meridian Retirement Ltd who had been given a 125 year lease. We have now found out that Meridian who Peverel inform us is our Landlord, are also owned by ………… YES PEVEREL SERVICES LTD.
A freeholder/managing agent is not supposed to profit from placing insurance, but is allowed to cover reasonable costs.
So you are basically right as to how the insurance scam works. Essentially it would be Oval that would negotiate the up to 40% commissions, but Kingsborough would offer to carry out “most” of the functions Oval would be expected to do. For “sub- contracting” the work, Oval pay Kingsborough up to 33% commissions.. So Kingsborough with around 12 staff manage more work than Oval with over 800.
This means the freeholder/managing agent does not profit from placing insurance. Their profit comes from offering a service to Oval. Via Peverel these profits eventually ended up with the freeholder,
Now of course. companies are separated so the freeholder will seek alternative brokers (I presume E&M)
But as insurance does form a significant part of property management income ( which in general terms is a very low if steady rate of return) it shows that in order to make it work when this revenue is hived off into other groups, how much reliance is placed on treasury management ( supplier deals etc) and reducing overheads. In PM, the biggest overhead by far is staff and as most staff work at home, I’d take a close look at my business model or go the way of Erinaceous. Accounts and sales department to India perhaps ? :)
While some companies may take these on, my view is that with the freeholders remaining the same, it is toxic business, unless appointed by an RTM or for an RMC group ( taking the place of a named manager).
LHA,
I agree with your comment that with the remaining freeholders the business is still toxic.
The freeholders have no need to retain Peverel and appear to have a vested interest in helping to bring Peverel down. The appointment of new managing agents, will most likely improve service levels, but the fundamental problem of having companies owned by the Tchenguiz Family Trust remain.
The way E&M operate has not changed, nor should any resident be fooled into believing it has.
There remains a distinct possibility that the new management appointments have been made to lessen the risk of residents conducting a RTM or worse, exercising their right to purchase the freehold. As was shown at Charter Quay, if the freeholds are bought at 28% of the freeholder valuation that spells big financial trouble.
Until a freehold is purchased the freeholder and the bank lending against the value of the freehold can pretend to each other the valuation is accurate and the loans granted are fully backed by assets.
The 28 % is misleading you. You get two different answers if you use the 87 and 93 Act as the models (and the ACOP on insurance) are outdated in their assumptions. The FH and related companies make no bones since surfacing about being asset managers and therefore not only take fees for notices consents insurances etc but from all SC expenses via commissions commercial agreements third party companies some of which are associated or wholly owned.
That greatly increases the income flow and can justify a much higher valuation than 28%. That might be regarded as unethical or immoral however it is wrong to think of everything as real cost plus a huge mark-up. The large freeholder can negotiate huge discounts from suppliers and in the case of insurance ( not to mention other things) put that beyond the ACOP applied to agents or freeholders through a third party broker or associated company or by treasury management.
As the law offers a protection that the costs should accord with S19 “F’n’R” that does not then simply equate to all discounts must be passed on to the SC.
That would the require the Tribunal to then examine in detail the underlying businesses of suppliers which many advisers would not simply be able to do, nor get disclosure of, and as in the case of insurance, are unlikely to get to the bottom of without the help of a reinsurer (who if you met one would shock you about the mark-up in premiums before they even get to the broker or agent).
It would in turn lead to a difference of FTT decisions and approach to say the token block of 10 flats with costs under say RTM or the local chap or lass on the corner agent, and if owned/managed by the made up “Extortion and Malfeasance, BVI” .
Like the “starry” coffee you might be drinking while posting on a “Brazilian shop” laptop, the underlying business might be multilayered and which could therefore have lower prices, you have to accept that the law for both that and flats is that the best deal or outcome is going to be a price that is F’n’R. Even if you go elsewhere, the price might not be that different but you might be happier with how they do business with you.
Yes, as while service for day to running might well improve, no doubt staff are being TUPE’d as we “speak” and the biggest issues of fees for underletting consents insurance and long tem contracts etc remain.
If a new agent does well, why not RTM and retain them?
The other aspect is that while service and trust might improve, the toxicity is not about bank loans but ongoing arrangements (as above) and historic disputes. Unless the manager is a party to the lease, it is the freeholder that is recovering their costs and therefore neither a new agent nor the freeholder can insulate themselves from the past issues. Would the freeholder willingly enter into, or even in part fund action against old manager’s or agents? This puts the new agent in an uncomfortable position of having to resolve or defend issues or collect arrears (which objectively would rightly be disputed and won at Tribunal) but which may be in conflict with their client’s interests to agree with the flat owner. The new broom is therefore bent, if not snapped.
It is my understanding we can now add Metro Central Heights to the growing list of lost developments.
Consort were given a one year contract to manage after Metro Central Heights formed a RTM company.
From October 3rd the managing contract has gone to KFH.
This is yet another huge financial blow for Peverel.