OFT to investigate activities of leasehold property managers

I don't want to do a big rant BUT....

First of all I wish that Annette Stone was training Property Management companies, she said

" we do always try to act in our leaseholders best interests"

and this is where most of them go wrong, because they are appointed by the Freeholder, they tend to forget that they are paid by the Leaseholders - Servants with two masters.

They work on behalf of the Freeholders as their agents. Normal rules of agency apply. Besides their bias will always be towards the Freeholders as they expect to get more business from them.

I pressed send too soon and could not edit - sorry

I don't want to do a big rant BUT....

First of all I wish that Annette Stone was training Property Management companies, she said

" we do always try to act in our leaseholders best interests"

and this is where most of them go wrong, because they are appointed by the Freeholder, they tend to forget that they are paid by the Leaseholders - Servants with two masters.

In my opinion it is the Leaseholders who should ALWAYS appoint the managing company
1. They are usually on site, apart from landlords, and can watch the reality of the management of repairs, general maintenance etc. If they were in a position to ensure that the contractors who were not doing a good job were sacked they would not suffer from some poor workmanship and pee taking.
2. They would not be waiting for months for a reply to a request for maintenance because they would be able to sack the Management company
3. They would be able to look at the quotations for Insurance and choose the best cover - not the highest commission, in fact all those Management companies who do not declare their commission are breaking the guidelines and should be forced to do so.
4. When there is a leaking roof they would be able to prevent the Management company sending one of their associates to carry out a "survey" at a cost of several hundreds of pounds when all that is needed are 3 free quotes from contractors
5. When the cleaners spend less than 10 minutes on a four story stairwell they would be able to insist that they were replaced.

Instead of chopping large jobs into small pieces to stay below the consultation level they would be able to discuss the project , look at all the quote and ensure that there are no kick backs when they choose the contractors.

I am delighted that the OFT have finally decided to deal with this important issue because I spend more time arguing with Management companies than anything else. I even threatened to charge one of them for my Accountant fees when for 3 YEARS they were carrying forward arrears that I PROVED 6 TIMES had been paid. This could have had an impact on my Credit rating and they just could not be bothered to check their records.

Finally.

I was really cross when a RICS surveyor paid the third visit to a block where there was black mould and rolling water in one of the airing cupboards in a flat. I attended the visit to be told that the brick ties had been breached and the cavities needed to be cleared. This was going to be an expensive piece of work because the block was 4 stories and scaffolding would be needed.

I took the RICS man to the outside of the building and pointed out the green growth down the walls. I pointed out the leaking overflow pipe in the flat above the one with the problem. He said "I see what you mean but I don't think there would be enough water there to be causing the problem".

I took the time and trouble to follow this up because I KNEW that I was right. The people who owned the flat with the overflow lived in Spain most of the time and they had not been back to the flat for almost 2 years. Cutting a VERY long story short - all the time fighting to prevent the Managing Agents getting in contractors to clear the cavities - eventually I was able to contact the owners of the flat, they came back to find that their own flat was thick with black mold where the overflow pipe had been leaking for so long. They got the pipe fixed, both flats were re-plastered on the Insurance (don't ask me how they agreed to pay out when it the flat had been empty for so long). That was about 5 years ago and there has been no problem since.

RICS surveyor works for the Management company and all his bills were on the accounts for that year despite the fact that he was completely wrong and could have cost us another big bill. Could you imagine paying this person for not noticing the green mold and a leaking pipe?

Rant over.

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Reply to the comment left by "shakeel ahmad" at "08/12/2013 - 17:34":

My full post covers this Shakeel

The perfect Christmas present for property investors @ £4.64. My book, where I warn about the storm clouds that are gathering for landlords is available on Amazon title. Property For Rent – Investing in the UK: Will You Survive the Mayhem? http://www.amazon.co.uk/dp/1484855337

Follow me on Twitter@landlordtweets

Reply to the comment left by "Mary Latham" at "08/12/2013 - 17:58":

I am hoping, Mary Latham, that you will be sending all your findings to OFT. I know I shall certainly be contacting them. I have spent so many years chasing management companies that I am just going to have to find time to send this in!

The contracts are given with kick backs. Jobs not done but invoices paid. Building in SW London. The cleaning company in Essex ?????. Guess who is paying for the travel time between Essex & South London ???

The joke LVT, is simply satisfied if they see twelve or four bills in an year irrespective if the work has been carried out or not.

Yvette, you can depend on it. I have a very think file and loads of emails to print off but I will spend some time in a couple of weeks compiling a complete case study. I am not a person to moan and do nothing - pay back time!!!!!!
Good for you for taking the time to do this too, so many people do moan and do nothing and this is why things don't change.

Thank you Property118 for raising another very important issue. I am tweeting to make other landlords aware of this discussion.

The perfect Christmas present for property investors @ £4.64. My book, where I warn about the storm clouds that are gathering for landlords is available on Amazon title. Property For Rent – Investing in the UK: Will You Survive the Mayhem? http://www.amazon.co.uk/dp/1484855337

Follow me on Twitter@landlordtweets

This is an early which is so corrupt which ever corner you turn to. I have properties in in blocks where one of the ex prime minster hold a portfolio.

He/she had never raised the issue & just keeps paying the inflated service charges. Neither he/she or his/her agent had appeared at any of the AGM's

Reply to the comment left by "shakeel ahmad" at "08/12/2013 - 18:15":

You are right Shakeel, it is a crazy situation we are the turkeys paying the gas bill and it needs to stop.

I understand that the Freeholder must protect his interest but the Leaseholders have a vested interest too and it is us who are on site and know the reality, therefore the Freeholder can be certain that his interests are protected too.

The perfect Christmas present for property investors @ £4.64. My book, where I warn about the storm clouds that are gathering for landlords is available on Amazon title. Property For Rent – Investing in the UK: Will You Survive the Mayhem? http://www.amazon.co.uk/dp/1484855337

Follow me on Twitter@landlordtweets

Mary I think some of your posts on 118 have been brilliant and as a buy to let investor I have learnt a lot from you as I have on other threads.

There are remedies for dissatisfied lessees. Much of what has been said here is right but there are many smaller firms who do look after their lessees and obtain additional instructions, as we do, solely by recommendation. I've written to the OFT asking to be part of the formal consultation process, not just a contributor and I can provide references as to my experience. I will let you know if I hear from them

There are lot of misconceptions about how charges could be reduced but unless I wrote a 20 page article on the blog I could not outline all of these!!! When we are asked to take over management of a lock the first thing we do is see where we can make savings for the lessees and how far a surveyor or contractor has to travel is not normally a cost factor. Of far more interest is how willing contractors are willing to go to help any lessee and the managing agent who gives them work.

For all jobs costing over £250 lessees have the right to nominate contractors and you would be surprised but very few are actually interested in doing so. Separating out allied work to get it below the threshold is really not worthwhile and is not allowed now.

One of the big misconceptions is that using the same contractors regularly means the managing agent is getting some sort of "kickback". I don't know which firms do this but I know that we have people we use all the time and all the work we give them means we get good prices and service to pass on. Of course, I realise there are people for whom you can never do the right thing or be cheap enough and over the years there are some I have given up on

I hope the OFT listen to everyone, realise that property management in the 21st century is a complicated skill and base their findings on the industry as a whole and not on extreme cases of abuses. The OFT need to look at the way management has changed in the years since the but to let explosion, the abuses that can occur when tenants can, as I have seen happen, entirely change a block to the detriment of the majority of the resident lessees and how unsocial tenants can be removed quickly as well as looking at alleged abuses of lease provisions by unscrupulous freeholders and managing agents

I think that Tribunal on the whole do a good job. My main complaint would be that their decisions are binding only on the dispute before them at any one time and obtaining case law is a more difficult process. Speeding this up would do away with a lot of problems

Having read what you and Yvette have said I do not understand why you have not gone to a company like mine to see if we can help with transferring the management of the badly managed block as we are surely not the only company prepared to help and provide good and fair management.

That having been said we also have some lessees who hate us, who who prefer not to pay any service charges and think that any charges are "rip off" charges. I simply cannot help people like that.

I would be happy to be part of an intelligent, thoughtful programme to improve my profession provided it is conducted in a climate of co-operation. I suspect that as an mature and sensible businesswoman you feel the same and let's hope they take advantage of our experience!!!