A leasehold campaigner has overcome enormous odds to boot out the Adderstone Group from the management of her investor-owned building with a brilliant RTM success. And now she is poised to take over the freehold as well.
The next few weeks will see whether Karen Peel (above), 54, a businesswoman, succeeds in her efforts on behalf of residents at The Pinnacle, in Wakefield, West Yorkshire, to enfranchise the site of 137 flats in the city centre.
If she does so it will be a tremendous vindication of 18 months of effort – not least because barely five per cent of The Pinnacle is owner-occupied.
Karen’s painful research project into the miseries of leasehold began in October 2007 after she bought a £144,000 flat for her son Lewis, now aged 30, who had started work in computer design in Leeds.
The freehold of The Pinnacle had been hoovered up by the Newcastle-based Adderstone Group in the form of UK Ground Rent Estates Limited.
Adderstone then decided, after careful reflection, to appoint itself as managing agent.
Karen became involved when she queried why she had not been served an invoice for the £250 ground rent, as well as a £700 service charge demand.
After repeated inquiries, it emerged that the demands had been sent to Lewis’s previous address, rather than to his flat at The Pinnacle.
“Although the mistake was theirs they sent us a bill for £700 in legal costs, which I refused to pay,” says Karen. “I should have challenged this in the Leasehold Valuation Tribunal, but I did not know anything about leasehold at that stage.”
To her annoyance, Lewis’s mortgage company hastily paid the sum after a threat of forfeiture while she was on holiday, so the matter never came to court.
It then emerged that other residents fell into default after Adderstone moved the management on to another property management company in the group, Avoca. This had a different bank account, and several overseas owners paying by direct debit fell behind with service charge payments and incurred costs. There is no suggestion that the residents were misled.
“When I heard of similar issues with other residents, I was determined to do something about this,” says Karen.
She spent six months tracking down all the leasehold owners at The Pinnacle, who lived in Canada, Abu Dhabi, New Zealand and China.
“I paid for the information from the Land Registry and then tracked people down through social media,” she recalls. “In the end, I got in touch with all but about four.”
Karen was determined to exercise right to manage “to protect my son’s property if nothing else”.
Property values in the Leeds area were in free fall after 2008 and repossessions at The Pinnacle for similar flats to Lewis’s were selling for £65,000.
Helped by a local managing agent, Andrew Edgerton, of RBM, Karen served her right to manage application with 90 per cent support from the leaseholders in August last year. It was not contested and the residents took over control on December 1 2012.
Having persuaded the other owners to opt for right to manage – Karen has only personally met five of them – she has now raised 70 per cent support from qualifying members for enfranchisement.
“So many of these property management companies and those who bought the freehold always gambled on leaseholders being too disorganised to fight back, especially on sites dominated those who had bought flats as investments,” Karen says. “But we have proved them wrong.”
Those wanting to enfranchise have paid up £225 into an account controlled by RBM, which now manages the site. Karen reckons that the ownership of the freehold will pay for itself in eight years.
“After enfranchisement, it will be a property where the residents are totally in control,” says Karen.
The beneficial effects of right to manage are already apparent and property prices at the site have increased, with Lewis’s flat now worth around £120,000.
Attempts were made to contact the Adderstone Group in connection with this article, but its telephone numbers and website details are not functioning at present. We are happy to include a statement.
Related posts:
Leasehold activist features in Independent
Ground rent groups concede leasehold house owners have a right to buy freehold
Mail on Sunday urges right to manage or buy the freehold
Observer newspaper features Leasehold Knowledge Partnership – and warns of problems with joint freehold owners
Boughton Hall’s £950,000 freehold for sale and it pays out 22% a year …
Many congratulations today to Mayor Bob!
What a fantastic and inspiring story. Well done Karen. Absent owners are a nightmare, but you have clearly been able to motivate them. You should go into business offering a Right to Manage service!!!
Unfortunately, this story is all too common, and this Government appears to not want to upset these freeholders [EDITED] … who use obfuscation and groundless yet worrying legal threats to obtain money from hard-pressed leaseholders. Indeed, I have recently experienced THE FREEHOLDER writing to my mortgage company twice, falsely claiming I had breached my lease, and hoping they would pay up and in doing so, increase my mortgage and give me a black mark on my credit record. The mortgage company is not stupid! I wrote to it immediately, and it will only pay the freeholder if I agree the default and the freeholder obtains a county court judgment.
The freeholder’s latest nonsense, which all leaseholders should take note of, is to claim unreasonable costs for subletting: a common money making scam. The freeholder’s response to recent LVT judgements against it for precisely these issues is to claim the property in question is different, as is the lease. Next stop: LVT. What a waste of everyone’s time and money!
So, the only options open to us leaseholders are to risk taking the freeholders to the Leasehold Valuation Tribunal, at great individual cost, and to confront the freeholders’ financial muscle (or, in some cases, in-house lawyers)
… OR, TAKE CONTROL! As Karen did. Start with your legal Right to Manage and then, if you can get sufficient leaseholders on board, Collective Enfranchisement (RTE).
Property prices have dropped significantly since most freeholders acquired their ownership, and if you can raise the cash, the medium-long term benefits for leaseholders are significant, not least in breaking the stranglehold of freeholders and their managing agents.
Raising the enfranchisement cash for many leaseholders is difficult. However, with the benefits of freehold well appreciated in the financial markets, with specific funds invested, surely there is a niche low-risk opportunity for mortgage providers to offer low cost loans to fund enfranchisement. It will only enhance the value of the properties over which they hold the charge.
I found when looking at raising the finance for enfranchisement (RTE)that a lot of banks/investors were not very co-operative. I firmly believe that one of the reasons for this is that lenders/investors do not want to be seen to ‘encouraging’ owners to owner their own blocks and set a precedent, which would be laughable if it wasn’t so serious.
If ground rent investments were not such a lucrative investment for pension funds and investors then why do all the big investment companies buy them up? … Think about it….
If you are considering the RTM/RTE route, then please do it now because as Lou says – ‘it is a waste of everyone’s time and money fighting’ when you can legally manage or buy your blocks and rid yourselves of unwanted owners/managers.
One of the major benefits of RTM is that all the covenants in a lease then become the responsibility of the RTM company. So if you have a managing agent or a landlord who is insisting on you paying high amounts in admin fees to rent out your own property, you could eliminate this fee, or at best limit this to a reasonable £10 per sublet for clarity. All it takes is a little organisation and time but will be well worth it …
Well done on such a monumental exercise. The lesson for any non resident flat owner is to diarise their due dates for GR and SC, and when bills don’t turn up, call and ask.
E&M is another company that makes a lot of money out of administration charges for late payments of ground rent (£45 a time, which is often a substantial premium over and above the actual ground rent). Non-receipt of the bill is not a mitigating circumstance in law. LHA’s advice to pay on schedule whether a bill arrives or not is right.
Karen could have saved herself the land registry costs if she’d served (on behalf of her son, and in his name) a Section 11 demand on the freeholder for the contact details of the owners. This would have resulted in the details being furnished, by law, within 28 days.
Oh, if only it was so simple…. I doubt very much that they would have sent anything from my experience with them. Our new managing agents had to wait months for any information and that was only because they had to use the threat of reporting them to the appropriate bodies.
Various owners have told me they had requested various things from them over the last 12 months and many of the letters have just been ignored. I wasn’t about to play any games and waste my time waiting for them to not respond and then having to request this information again and again. There is only one way to deal with companies that ignore complaints and requests for information and that is to just get on and do what you have to do to get to where you want to get…
Actually it is that simple. I did it and it worked a treat. If they didn’t comply within the statutory 28 days you could take them to the court and they’d have to pay your costs as well. Most people don’t know about a section 11 notice and most managing agents don’t like to talk about it.
If you’ve been on the receiving end of non-cooperation over the handover to a new managing agent (common behaviour with the likes of OM Property Management in particular) you should document the case and the costs and take them to court.
Well done in any case. I hope their other customers are paying attention.
OMhostage
Thank you for all the information over the years. Please confirm Section 11 of what for the Names of the Owners. I asked a member of Peverel Retirement Division for the owners of our develpment, a Mr Peter Whalley replied that they are protected by the Data Protection Act, is this correct?
Chas
Thanks OMHostage, I had no idea but I will certainly use this on my next Right To Manage claim which I am currently helping another group on 🙂
You can find my email address on Peverel Action at http://www.spanglefish.com/peverelaction/guestbook.asp
If you send me a message I’ll reply with useful information.
Excellent, thank you.
Information taken from:
http://www.lease-advice.org/publications/documents/document.asp?item=21
Quote:
Information notice – Section 82 of the 2002 Act provides a right for the RTM company to serve a notice on the landlord (s) requiring any information ‘which the company reasonably requires for ascertaining the particulars to be included in a claim notice for claiming the right to acquire the right to manage’. The wording is quite precise – the power is to require information sufficient to serve the claim notice; it is not a general power to obtain information other than for this purpose. Where the required information is contained in ‘documents’, for example, accounts or bank statements, contracts or specifications, the notice can require the landlord to allow access for inspection and copying of documents or to supply a copy of the document.
A landlord served with a notice under Section 82 must comply within 28 days.
Section 83 provides a right of access, after service of the Notice of Claim.
But most will just ignore any request and hope that any lone disgruntled leaseholder will go away with their tail between their legs…… don’t be one of them…….. be dogged about it and then when they don’t adhere to the law report them to ARMA and Lease!