The Leasehold Knowledge Partnership has proposed changing the government regulations on the creation of residents’ associations, and has received widespread backing for the reform.
The key changes that have been presented to Communities Secretary Eric Pickles are:
That residents associations can be recognised with 50 per cent of qualifying residents plus one supporting the move, not 60 per cent which is the current – arbitrary – figure.
That the freeholder inform all leaseholders with the service charge demand, or once a year, to join a proposed or existing residents’ association.
The changes have been proposed by LKP director Martin Boyd (left), who is also the chairman of the residents’ association at Chartered Quay in Kingston, Surrey.
On five occasions, Boyd represented the residents at Chartered Quay in its battles over excessive service charges with Peverel and the Tchenguiz Family Trust, which owned the head lease.
This resulted in more than £500,000 being repaid to the residents, the ejection of Peverel and – in July – the purchase of the head lease for £900,000 (it was on the Tchenguiz books at £3.2 million and heavily indebted).
The reform to residents’ associations is being backed by representatives of the three main political parties:
Ed Davey, the LibDem Energy Secretary and MP for Surbiton and Kingston, Sir Peter Bottomley, Tory MP for Worthing West, and Baroness Gardner of Parkes (Conservative), and Jim Fitzpatrick, Labour MP for Poplar and Limehouse.
All are known to have an interest in leasehold reform.
In addition, the LKP initiative has secured the backing of:
- Steve O’Connell, (Conservative AM) London Assembly
- Ian Fletcher, British Property Federation
- Caroline Abrahams, AgeUK
- Chris Paterson, CentreForum think tank
- Mark MacLaren, Which?
- Ian Wingfield, Deputy Leader of Southwark Council & Cabinet Member for Housing
“Setting up a residents’ association is often the first step for leaseholders obtaining justice and I am sure Eric Pickles will support a measure that is both beneficial and reduces needless red tape,” said Sir Peter Bottomley.
“Forming a residents’ association was vital when we began our legal battles at Charter Quay,” says Boyd. “We had no idea how difficult it would be to contact enough owners to reach the ridiculous 60 per cent qualifying limit.
“Every conceivable barrier was put in our way to prevent it happening, although we were assured time and again by the freeholder that we would be recognized.
“Only after the Leasehold Valuation Tribunal made the decision for them was recognition granted.
“As Peverel, in particular, continues to assure everyone it welcomes residents groups it may finally have to do something about it if these guidelines are approved by the Secretary of State.”
An officially recognized residents’ association was a vital weapon in the armoury during Charter Quay’s battles for freedom, even though it apparently has few rights.
“Formal recognition meant we were able formally to appoint independent surveyors and accountants, and have them seen as independent experts at any hearing.”
Steve O’Connell, Tory Assembly Member at the London Assembly and chair of the planning committee, said:
“It’s pleasing to see a new set of guidelines that are also designed to reduce bureaucracy and make it easier to form leasehold tenants associations. They will also help save the state having to spend so much money on the Property Tribunal with courts arbitrating on these issues as they have to do under the existing guidelines.”
Ian Fletcher, of the British Property Federation, said: “The Federation’s Residential Management Committee considered that the existing guidelines were long-in-the-tooth and in need of updating and their status needed to be clarified. Working with other stakeholders such as the LKP therefore made a great deal of sense.
“Generally in our experience, collaborative efforts tend to be viewed more positively by Government and dealt with more expeditiously by it, and I hope that will prove the case with these guidelines.
“Within the existing guidelines there seemed some unnecessarily bureaucratic hurdles to overcome and the new guidelines seek to be more practical and fair in who can vote and to set out a process that seeks reasonable obligations on both parties.
“The 60 per cent threshold seemed rather arbitrary and on the basis that no one we came across could explain why that had been chosen, and a simple majority seemed a fairer and more sensible basis on which to proceed. Members were concerned about the potential for ‘rival’ groups being recognised and hence the desire for a simple majority.
“We see both residential and commercial sectors at BPF. In the commercial sector landlords are often crying out for better participation in occupier groups and the like. Groups that are properly constituted in the residential sector are therefore welcome.
“The only caveat I would add is that the groups themselves, once established, need to continue to be democratic and representative of residents and not be taken over by a few individuals. Some safeguards are therefore written in to the guidelines. Best practice rolled out by bodies that represent leaseholders is also very valuable in that respect.”
Caroline Abrahams, Charity Director of Age UK, said: “Age UK strongly supports measures to promote the engagement of older residents in the management and control of their own schemes. Encouraging the establishment of recognised residents associations is an important part of achieving this objective.”
Full regulation changes here
I am a bit confused about this as the 60% is easily explained in that it was to ensure participation and consultation at a representative level after the inevitable fall off in interest after initial signing up for membership and/or as business gets under way. It was also to ensure that the membership was substantial to allow it to prosper and to avoid it being the tool or creation of an ill intentioned minority. Ever since the old Rent Assessment Committees granted certificates, they, and their successors, were prepared to grant recognition for groups of less than 60%. While it is a good thing in principle, those concerns are still valid. I suspect when it comes to certain issues the 50% plus 1 gives the twirly moustached landlords the opportunity to challenge how representative the RTA /TRA is and what weight should be placed on it’s input
AM you seem not to have noticed the proposals are supported by the British Property Federation who represent a number of landlords and those who have been around long enough to remember the days of old.
You should also know that for many sites the issue if finding 50% of the owners, let alone getting their interest, is difficult. The argument that somehow, at this level, the RTA is not “representative” is fatuous.
Thats hardly fatuos, and not what I advanced. I did notice the supporters, and offered my tentative support . The level of participation is a crude attempt ( amongst crude criteria) to ensure that the majority of residents are involved or at least supportive and the RTA/TRA is therefore is representative of , and accountable to, a majority or at least a sizeable rump of residents. The criteria fails to ensure, as it always has, that the RTA/TRA is representative over time, and lowering that threshold can increase the opportunty of a few to act in their, rather than the block’s interests. I’d be happy with 50% +1 if the RTA/TRA were subject to disclosure and review on their ” representivity” (ouch). This is based on long experience and applies in most of my work for RTM’s and RMC’s who are vulnerable to the same problems. Having been invovled in a recent audit of such groups for an ALMO it was shocking to see how poor many of these were vanity projects for, in one case, one person, and then in a case of two people, who regularly conducted meetings and excluded all residents!
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AH many thanks for your “tentative support” – it’s a pity you then go on to use a number of the false justifications often used by dodgy landlords, managing agents and trade bodies to limit the number of RTA’s in the past. The argument we need to carefully control these rights to avoid undemocratic groups deliberately ignores the fact that there are not enough RTA’s and an RTA has few powers and none to impose its will or costs on those who choose not to join. You should also have noticed a number of the points you raise are already addressed in the draft guidelines.
Your suggestion the industry is doing ok with just a few tweaks and that this site sees the exceptions to what you see as the mostly good management is I assume a joke. This is a sector is riven with poor training, appalling accountability and far too many dodgy managing agents and landlords overseen by groups like RICS ARMA IRPM who have been more than happy to turn a half closed eye to a number of dubious practices endemic to the sector –in some cases some of these groups have even encouraged these practices. While ARMA is at last lifting it game there is still a long way to go as ARMA themselves know this.
Just how representative is it when a freeholder appoints themselves as managing agent? 0%?
Whatever the imperfections anything over 50% is a majority.
Making it easier to form a residents association or right to manage company is beneficial to both freeholders/managing agents and leaseholders. Only those who operate at the margins of legality need have anything to fear from any changes.
Oh come on. Look, you are understandably looking at this through the prism of your dreadful and unethical treatment by certain landlords and one agent. I for one believe that both types should be licensed and bonded under a government scheme (even if qualified eg RICS or IRPM) and a wider a.c.o.p. for all. You are forgetting that landlords, from the chap in the basement to the landed estates, as well as RMCs and RTMs, are often their own agent. In many cases they do it “more or less” and some excel. They are just as open to not being representative, failing to engage, and are as dictatorial self interested and destructive as those who you have suffered under. My point is that whether working for a residents group or landlord, we often need to steer them back to being representative and see broader interests. In one case an RTA tried everything to block the landlord putting another floor on top of the block, fighting on planning and appeal, yet it came to light that little of this was known to the residents nor had they put out the offer from the landlord to put five figures into the reserve fund and that the two lifts ( on their last legs) would be replaced at his cost. Not to mention that existing funds in reserves for the roof and lifts could now be used for other things. That sort of behaviour is something for people to fear, in this case the residents themselves, who when told, ousted the committee. The regulations and changes don’t address that concern or require these groups once recognised to be transparent or effective. Reducing their membership and accountability increases that risk.
This is flimsy stuff.
Any elective organisation can become unrepresentative (the Commons, for example), but that is not grounds to argue for an arbitrary figure (60 per cent of residents) in the forming of a residents’ association. If 60 per cent of the electorate had to vote in general elections, some constituencies would not return MPs. And that is leaving aside the percentage required to form a government (where 51 per cent of the electorate would be an enviable figure).
There are cases on LKP where RCMs have acted badly: the outrageously expensive litigation against Dennis Jackson at Plantation Wharf was taken by an RCM (although, at first, the residents did not, in fact, control this company); we have reported the arrest of an RCM chairman who is alleged to have stolen £1 million off his neighbours.
Your anonymous freeholder philanthropist is unpersuasive as there is no name or detail. We would be happy to publish a case of a freeholder improving a building for the good of all in the face of a clique of self-interested residents.
It would make a change from freeholders and their agents playing the system, cheating, price-fixing-cartels, acting unlawfully and committing outright fraud (cf Simon Van Houten), which are reported on this site.
It is far from flimsy stuff and rather more nuanced that you give credit to it. I have stated that any group is open to failure ( unlike some who see it in a limited perspective of a disreputable landlord and agent and therefore easily solved). I have advanced the idea that perhaps the regulations and the criteria set for independent determination (if the landlord refuses to do so) could apply to both instances and would eliminate shortcomings if they were more specific about what a RTA/TRA should do to be representative, as well as a clear process to review that. The current proposal does not help a landlord, or residents, to ensure representation or representative decisions or actions, or even transparency or accountability, without herculean efforts.
In the limited scope of a forum, it is not appropriate to name landlords without their permission, even if they were willing to do so, however this sort of fair and pragmatic commercial compromises (very far for philanthropy) are common practice for those in the sector who practice professionally and fairly. It is only relevant in this case, as one of numerous examples, where a minority actively worked against the interest of the majority. The residents and landlord would have been better served by more comprehensive regulations and guidance, that apply not simply to agents ( ie the current a.c.o.p) but to all groups, not lowering the bar ( which, in fact, was never simply fixed at 60% anyway).
Thankfully the cases reported here are the exception and however painful for some, the majority of properties managed in E & W are done so adequately and some very well, as I know that some of your members can attest. As I mentioned earlier wee need to go further than tweak and all parties should be licensed and bonded, but that needs robust criteria and guidance based on government regulation, as well an expansion by the RICS IRPM and ARMA, now freed from self regulation, to educate and support . Thats hardly flimsy.
How nice it is to see you squirm… You obviously have a vested interest in Freholds/Managing Agents or RICS and for bovious reasons you are avoiding any changes or reforms.
So, show your cards and stop acting behind the anonymous front of AM….
50%+1 is good enough for right to manage and for freehold enfranchisement. It should be good enough for recognition of a tenants’ association. The idea that 60% is needed is nonsense that could only come from someone with a vested interest in preventing the establishment of an association.
What heaps insult upon injury in all of this is what happens to the poor taxpaying leaseholder who has the misfortune to live in a block that is majority owned by non-resident landlords, many of whom do not reside in the UK (70% is not unusual in London).
This person typically finds that without an association s/he is powerless in dealing with the managing agent, who may very well be appointed by the freeholder and engaging in many crooked practices. In order to form an association this person has to contact other owners and persuade them to join. When most are non-resident even getting their contact details is itself a significant challenge.
OMhostage glad you are back.
In our case at ABC the Landlord is Meridian Retirement Housing Services Ltd who happen to be a SISTER COMPANY to Peverel Services Ltd. I have asked for Peverel Retirement to help set up a RA at ABC. The Regional Manager PW has decided to ignore my requests, as I think he has decided that I am to much of a question asker. This is true that I ask too many questions, this is because he fails to answer most of them? I did mention this to him at a meeting recently, but his reply was, he was waiting for me to re-ask as I had not mentioned it for some time?
The professional bodies that provide support for the Managing Agents are shaking in their boots at the moment with the resignation of Benjamin Mire who jumped before he was pushed.
The RICS must be attempting to limit the damage done by Benjamin Mire. In a statement From:-
The Judicial Conduct Investigations Office:- The part that said:-
“The Review Body found Mr Mire had failed to observe the standards that could be expected of a judicial office holder.”
This was for a Managing Agent who also was part of the LVT and had feet in each camp.
Surely the RICS, ARMA or the LVT must have been aware of this and having looked at the cases some 39 that had been before an LVT some one should have seen the smoke before the fire?
The first case I looked at was in Manchester in 2006 and Mr Mire was involved. The case was for: Administration Charge – for Reasonableness.
Off the first 15 cases, 13 were for Reasonableness of Charges, does this ring a bell with us or does it ring a bell?
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