OFT to investigate activities of leasehold property managers

OFT to investigate activities of leasehold property managers

19:04 PM, 5th December 2013, About 8 years ago 53

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The news that firms which manage blocks of flats are to be investigated by the Office of Fair Trading should be welcome to anyone who owns a flat in England or Wales.

Complaints about the management of blocks of flats and the activities of managing agents have been escalating in recent years, as more and more people are now buying flats. But until now it seems that most politicians have not been interested in addressing the concerns of flat-owners. OFT to investigate activities of leasehold property managers

Flats are a popular choice for BTL properties. Virtually all flats in England and Wales are owned on leasehold title. In many cases the freeholder/landlord will be responsible for maintaining and insuring the building, with the flat-owners having to pay a service charge to cover the cost. Freeholders may manage the building themselves or frequently employ a firm of managing agents to do the work for them.

I see that readers of Property118 often raise problems which they have encountered with freeholders or their managing agents – extortionate charges for licences to sub-let, charging penalties for late payment of service charges, massive hikes in insurance premiums, etc., etc.

Now is the chance to make your views known. The OFT wants to hear from interested people and businesses about the priority areas of concern that may be preventing this market from working well for consumers.

A major area of concern has been that some management companies arrange maintenance contracts with companies in which they have a financial interest, rather than with companies that provide good value for money for flat-owners. They are also likely to arrange building insurance with companies that give them the biggest commission rather than the cheapest premiums.

Another frequent source of complaints is the hefty fees some of these companies charge when a property changes hands – first of all the seller will usually have to pay for an information pack that the buyer will need, and then there are fees for registering the new owner as well as any mortgage.

If you own a flat and have had trouble with the managing agents do contact the OFT. They are particularly interested in:

  • Whether leaseholders feel that they have sufficient involvement in decisions taken about appointing managing agents, and if it is difficult to establish whether the property manager is providing value for money or a sufficient standard of service.
  • Whether property managers and freeholders have the same interests as leaseholders in, for example, keeping down costs of maintenance work or buildings insurance.
  • Whether there is effective competition, including evidence about how easy it is to switch between providers.
  • Whether residents receive good value for money and reasonable quality of service.
  • The time, effort and resources required to complain and seek redress.

Full details can be found HERE

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Comments

by Shakeel Ahmad

19:26 PM, 5th December 2013, About 8 years ago

I can do a Phd on the subject. The managing agents/Freeholders are the same whose names keep on cropping up time after time.

OFT, just has to Google Consort, Peverel, Freehold managers, LPM and they have enough to work on.

Insurance is a scandal, Why should the Freeholder earn any commission they are not the ones who are paying for it. Freeholders also create obstacle in the way of the leaseholders to set up a resident association in order that the leaseholders do not have enough member to go for a RTM.

I had raised this issue with my MP, who seems incapable of even understanding the issues not surprising as these landlord contribute handsomely to both the parties..

The Leasehold valuation tribunal are a disgrace and has allowed these modern they Rachman's to proper.

I would like to give my input to OFT, who do I approach ?

by Yvette Newbury

19:27 PM, 5th December 2013, About 8 years ago

Thank goodness and at last! I agree completely with Shakeel, though thankfully we did manage to set up a Resident's Association. Even so the freeholders remain remote and do not engage with the RA. WE are lucky to even get a response from the managing agent. It's time the freeholders were made to liaise more with leaseholders or ensure the managing agent works on behalf of the leaseholder as well as the freeholder. After all they are appointed by the freeholder yet PAID for by the leaseholders. That must change.

by Elaine Hassall

19:57 PM, 5th December 2013, About 8 years ago

found this site via property118, http://www.leaseholdknowledge,com, makes interesting reading.

by Shakeel Ahmad

20:13 PM, 5th December 2013, About 8 years ago

Managing Agents employed by the Freeholders are either part of the same group pf companies & where this is not the case they are in the pockets of the Freeholders as this is where they will get there other future income.

The Managing are not interested in doing anything except making service charge demand & whilst the demands do not comply with legislations. They are waiting for the leaseholders to slip up so that charges can be levied.

The managing agents are more interested in spending the time with solicitors & using the threat of lease forfeiture of lease than resolving the issue. makes one wonder what kind of kick back arrangement is there between the managing agents & the solicitors. While this goes on the block deteriorates.

The solicitors while having the correspondence address of the leaseholders uses the property address (in the case where the leaseholders does not reside at the property) as a result the leasehold is aware of the proceedings. The solicitors obtain judgement and than approach the lender who out of fear of forfeiture pays up and the racket carries on.

LTV should be abolished as it is totally incompetent and banks should not pay as this is encouraging the extortion in which the managing agents/Freeholder, the debt collectors and the solicitors pocket money. This merry go round can take up to eighteen months in the mean time the funding of the block is starved of cash flow.

by Shakeel Ahmad

20:26 PM, 5th December 2013, About 8 years ago

Permission to rent. Why should this be required the leaseholders owns the leasehold interest for" X " number of years.

The leaseholder rents the property he/she has gone through the reference etc and accepted the tenants and say a years contract has been signed. On what grounds will the freeholder reject the tenant/s ? What does a leaseholder/landlord do ? throw the tenants out during the agreed tenancy period !!! I would like to see how the judges will employ section 8 in this instance.

Pet licence; Where the lease does not allow pets why should the payment of a few £'s allow the Landlord to breach the terms of the lease and where does it end.

In my experience it is the single & the elderly people who keep a pet. The freeholder's for few £'s financially/emotionally black mail these people who have pets for company.

by Annette Stone

20:56 PM, 5th December 2013, About 8 years ago

Hallo everyone. It feels odd to be blogging about something other than the WBBS!!!

I am a managing agent. My family own a smallish firm in London and we manage freehold properties all over London and the South East. We do not belong to any trade associations but we do follow the rules set out by the RICS as they are the most stringent.

We manage property for quite a lot of large landlords, some of whom get mentioned from time to time on Property 118 and I can tell you that sometimes the freeholders do not know what their tied managing agents or the big firms to whom they give most of their business get up to. That might be wrong but it is a bit like a bank where there is such a huge staff that they simply cannot keep track of everything.

We are often asked to take over from big firms and we are asked to do this by recommendation because we do always try to act in our leaseholders best interests. We also manage for freeholders with a few buildings and for lessees who own their own freehold as well as for RTMS.

It is really, really important to remember that not every lessee is an angel either and I could write an enormous volume about some of the things I have had to deal with in 23 years so it is not all a one way story.

Not every one likes my firm; not every one likes me but we do our best and sometimes for the good of the majority of the residents in a building the managing agent does need to go to Court to collect management fees or he does have to take action against a buy to let lessee who has let his flat to someone who is running a cannabis factory or dealing in drugs from the flat. This can lead to a huge amount of additional work for a managing agent and like all professionals they are entitled to charge a reasonable amount for their services. Licenses to have a pet are used by responsible managing agents to refer to one specific animal so if a resident moves everyone else in the block can be reassured that a poodle does not become a rotweiler overnight!!! Similarly if you have a block of 20 flats and a buy to let landlord lets to what is effectively a brothel the managing agent can have to deal with 19 irate lessees/residents and spend hours getting the situation resolved. Why should they not be able to charge for that?

I that that Mark might vouch for my expertise and integrity as a managing agent and if there are people out there who are having problems, the solutions are enshrined in law and you just need the help of a good managing agent.

Shakeel has obviously had a very bad experience with Tribunal (there is no longer such a thing as the LVT) but actually it does a great job. It is there to decide on specific incidents between landlord/managing agent/freeholder and normally the panels have expert surveyors who do know their stuff. The decisions they make only relate to that specific case and anything that requires a decision that becomes Case Law has to go the Upper Lands Tribunal.

I hope this is of interest to those commenting on this tread

by Joe Bloggs

21:38 PM, 5th December 2013, About 8 years ago

Reply to the comment left by "shakeel ahmad" at "05/12/2013 - 19:26":

'The OFT intends to commence the market study in early 2014.' so i guess thats when they will be inviting contributions. at the moment they are consulting on the scope of the investigation and i have asked that it includes local authorities.
as bad as peverel were, our new agents are even worse!

by Brian Phillips

9:48 AM, 6th December 2013, About 8 years ago

I agree entirely with Annette - I am also a block manager, about 80 blocks in total in the North West
the relevant word is "SOME" - they are usually the larger national firms who have in-house arrangements with Builders such as Persimmon, Bellway, etc... which lock leaseholders into a pre-agreed arrangement. I have done quite a number of RTM's to "undo" that specific arrangement, and clients are generally relieved and pleased at controlling their own destiny and finances

by Annette Stone

11:21 AM, 6th December 2013, About 8 years ago

Thanks for the recognition Brian. What about the rims that go haywire when directors do not realise what they have taken on? I have had buildings with rims come to me in complete disarray because the directors simply did not realise what was involved.

One further observation is that I have always found that some do the lessees who scream loudest about the service charges are the ones with the highest expectations of how the building should be kept and the most insistent that we work day and night to sort out any issues resulting from the behaviour of other residents.

I am going to make myself available to the OFT as a managing agent with 23 years experience. I don't do much day to day stuff anymore but I am considered something of an expert in the field of lease extensions and freehold sales and purchases. There are problems with some firms but these can be dealt with and as with my own small firm who operate in London and the South have proved we can normally provide a better, more efficient and ultimately cheaper service

by Mark Alexander

11:45 AM, 6th December 2013, About 8 years ago

My only foray into freehold block management came about when my family trust purchased the freehold of a block of flats in Portsmouth. We only did so to protect our own interest when the freeholder went bankrupt. The process of buying was a real eye opener to us and took 18 months. It was only when we owned the freehold that we realised we had delved into a parralell universe of landlordism in which we knew little to nothing about the rules and regulations. Thankfully, by that time I had met Annette stone though Property118. She was like an angel from heaven and took over the management for us and is now in the process of purchasing the freehold revisionary interest. I am pleased that people like Annette are planning to get involved in this consultation as well as the really big players that most landlords who own leasehold flats often come to detest. Thanks Annette 🙂
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