Extortion to pay their own management company!

Extortion to pay their own management company!

8:17 AM, 10th January 2018, About 4 years ago 20

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I had to review the service charge breakdown for two apartments in one development this year, as this and last year service charges have risen to almost double from all previous years.

What I found is interesting and these are the biggest items;

  • Management fee 70k
  • Building insurance 128k
  • Fire door audit 34526 (an audit costing 35k)

They obviously depend on what actual repairs and work to be done, but having management fee at 70k and a building insurance costing 128k is astonishing.

As a comparison, another leasehold building where I own in one of the most expensive borough in London, only has management fee at 25k and building insurance at 26k.

Mostly importantly, the freeholder and the management company is own by the same people. Clearly they have been paying themselves with all leaseholder money.

This is only one of the ways freeholder and their management company bullying leaseholders across the country.

Are they allowed to do so? What rights are on leaseholder side to challenge this?

Many thanks

Mike



Comments

by David Price

4:57 AM, 11th January 2018, About 4 years ago

Reply to the comment left by Richard Adams at 10/01/2018 - 22:58
Absurd perhaps but the owner may have requested that his details are not made public, in which case your only recourse is to the Land Registry records which are in the public domain. But wait for 25 May and the 20 million Euro fine associated with GDPR. It is doubtful whether you will be able to send any personal information via email unless the data is encrypted for you cannot be sure that he message will not be transmitted via an inappropriate route. And I bet the government will ban encrypted email on the grounds of national security!
Even the smallest landlord with only one property or perhaps letting a single room in their own house will have to register with the Information Commissioner. Yet another small tax on every business, for every business must surely keep a record of its customers and employees?

by Puzzler

11:13 AM, 11th January 2018, About 4 years ago

Reply to the comment left by Neil Patterson at 10/01/2018 - 08:21
Hi Neil, could you elaborate on this for me please? Your link just goes through to the website and it is not easy to find the details you refer to. Are you saying that a lender would not lend on a flat where the freeholder manages the block? Since a lot of developers do manage them themselves I am doubtful that this is the case. Also it would preclude any self-managed leaseholder-owned freehold company...

by Neil Patterson

11:49 AM, 11th January 2018, About 4 years ago

Reply to the comment left by Puzzler at 11/01/2018 - 11:13
Hi Puzzler,

The link is just for general reference and will not contain the lender criteria bit about being the freeholder and manager.

If you are purchasing a flat or block BTL lenders tend to insist on a completely separate management company to run the building. As long as it is a separate company the leaseholders can own shares.

by Puzzler

15:09 PM, 11th January 2018, About 4 years ago

Reply to the comment left by Neil Patterson at 11/01/2018 - 11:49
Hmm interesting, I have not found that to be the case. Which lenders in particular?

by Puzzler

9:13 AM, 12th January 2018, About 4 years ago

Reply to the comment left by Puzzler at 11/01/2018 - 15:09
No, what I said is not true, I have not yet made any enquiries so I don't know. I am looking at a flat which is managed by the developer which still owns the freehold. I have not yet offered on it for a number of reasons but if funding is going to be a problem then obviously that will be a factor. I am not aware that any of the other flats had a problem but may have been largely older people who did not require mortgages although they are not retirement flats. So it would be very useful to know which lenders might be ruled out...

by Neil Patterson

11:37 AM, 12th January 2018, About 4 years ago

The issue with lenders is if you the mortgage borrower are both. I am sure the developer above will be ok as this is common practice.

by Badger

8:11 AM, 14th January 2018, About 4 years ago

Reply to the comment left by Richard Adams at 10/01/2018 - 22:58
I have had this issue come up in various contexts on a number of occasions.

It can help to call the ICO helpline to discuss the circumstances:

https://ico.org.uk/global/contact-us/

So far every time that I have done this they have confirmed that there is no impediment to me receiving the information that I seek.

They will not, sadly but entirely understandably, intervene on your behalf but they will give you the confidence to robustly challenge the appalling level of misunderstanding about data protection that exists amongst the wider population.

by Richard Adams

14:42 PM, 14th January 2018, About 4 years ago

Reply to the comment left by Badger at 14/01/2018 - 08:11
Re assuring to know but frustrating nevertheless as you seem to be saying while ICO may be on one's side a Man Co may still refuse to give contact details. Meanwhile the leak goes on dripping and damage & repair bill escalating.

An annoying irony of all this DP malarkey is the following. I acquired my small BTL portfolio eight odd years ago. Never bought another property since and no intention of doing so. My name and contact details are though on a list of BTL investors which has been "sold" to marketeers of new developments and I continue to receive approaches inviting me to buy stuff. I don't wish to be contacted yet I am. Never ticked any boxes saying my contact details could be divulged. Crazy.

by Puzzler

10:43 AM, 17th January 2018, About 4 years ago

Reply to the comment left by Neil Patterson at 12/01/2018 - 11:37
Ah I see, that is interesting and useful information as I do have a property of which I am the freeholder and own some of the flats, so should I make further purchases your condition above would apply. This is to prevent amateur block managers endangering the lender's security I presume. I do use a professional firm but useful to know that I should not consider doing it myself!

by Gracie

14:57 PM, 3rd February 2018, About 4 years ago

Hence the fight for leasehold and management company regulation & reform
https://www.leaseholdknowledge.com/what-is-lkp


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