LKP meets Roger Southam and Taylor Wimpey over embedded management companies

Last Thursday LKP met Roger Southam, proprietor of Chainbow property management and chairman of the Leasehold Advisory Service, as well as two executives from Taylor Wimpey.

The meeting was called by MPs Jim Fitzpatrick and Sir Peter Bottomley at Westminster to discuss concerns surrounding embedded management companies at Taylor Wimpey London sites.

The embedded companies set out in the leases to run these sites were/ are entirely owned by Roger Southam and Chainbow Ltd. In some, there is no reference in the leases how these companies transfer to the ownership and control of the leaseholders, or even whether this was ever the intention.

The issues have been reported on LKP here

Last year, leaseholders at Mulberry Mews in Highgate were told THREE times by both Taylor Wimpey and Mr Southam that the company was not a residents’ management company and they had no involvement in it at all (see below).

Now, owing to the intervention of LKP on behalf of the leaseholders, the company is being described as a “residents’ management company” by Taylor Wimpey and control is being transferred to the leaseholders from the sole shareholder, Mr Southam.

But it was pointed out that he could just as easily have sold the company to anyone. Or, had Chainbow gone into liquidation, the company with its valuable embedded management at Mulberry Mews would have been treated like any other asset by the administrators.

As there is no reference in the leases at Mulberry Mews to a residents’ management company, the issue of leaseholder control will have to be made in the company articles. The leaseholders have been assured that this is not a problem.

However, LKP had obtained written advice on this matter from two landlord and tenant lawyers, who expressed concerns.

In particular, the master articles of the company at Mulberry Mews appear to place no restriction on ownership of the shares, which could at a future date be owned by anyone.

As there is no provision in the lease to establish the company as a proper RMC, it is left to the company articles to define its ownership in relation to the leaseholders of Mulberry Mews.

Separately, the meeting was told that leaseholders at Mulberry Mews had had to make an anonymised inquiry to the Leasehold Advisory Service in April 2016 regarding insurance commissions paid to Chainbow.

They made the inquiry anonymously because their management company, Chainbow, and LEASE are both headed by Mr Southam.

They felt that there was a potential conflict of interest, with the LEASE chairman deeply involved in management in the sector.

After the Leasehold Advisory Service examined the lease and provided written advice, Chainbow returned £1,760 to the leaseholders in insurance commissions.

At the meeting, Sir Peter called for an industry-wide roundtable forum to consider how residents management companies can be made more coherent and robust.

LKP is in the process of organising the industry-wide event.

Both Taylor Wimpey and Mr Southam are invited to post comments which will be added to the bottom of this article if they wish.

Where did Mulberry Mews residents get the idea that they had no involvement in the management company embedded in their leases?

On 21st August 2015 Taylor Wimpey wrote to leaseholders:

“There appears to be some confusion relating to the management company which I wanted to clarify for you. For the avoidance of doubt and in accordance with your leases this is set up as an embedded management company. This means that the obligations for the management company remain with Chainbow as opposed to having resident Directors. I understand this information was clearly set out in the legal information packs; plot contracts and leases sent to your solicitors at your point of purchase.”

On 8th Oct 2015 Roger Southam told leaseholders:

“Taylor Wimpey designed the leases so that the management company is not a resident management company. This was different to our original understanding and is what caused the confusion.”

On 13th October 2015 Mr Southam wrote again:

“1) There is no legal right for formal representation within Aberdeen Lane Limited [the embedded management company at Mulberry Mews]. However we are entirely happy to engage with leaseholders and would not use the lack of legal right as a block on working with you and your neighbours.

“2) Chainbow owns Aberdeen Lane Limited and has control of the Company. So it would be for Chainbow to address.”

Related posts:

Southam surrenders control of Mulberry Mews LEASE chair Roger Southam in Private Eye (again) Taylor Wimpey leaseholders ask: if the management company is ours, how do we oust Roger Southam? Southam sells Chainbow to Savills, so who owns the embedded management companies now? Should the chairman of the Leasehold Advisory Service be the owner of embedded management companies?