Are you a leaseholder and have issues with your property manager?

Former_MSE_Aileen

Do you own your property leasehold and have issues with your management company? The Competition & Markets Authority (CMA) is concerned that as freeholders decide who manages their property, leaseholders can easily lose out by being overcharged and receiving poor service. It is looking for views from leaseholders on how to address these issues, including leaseholders who rent out their property.

You can read the full consultation (30 page PDF) but we have provided a summary below. Email your thoughts and/or answers to the questions to propertymanagers.study@cma.gsi.gov.uk by Fri 19 Sep.

The CMA’s concerns include:

• Leaseholders can’t influence or control which management company is chosen and they can’t choose what work that they do. This can lead to the company feeling little threat of being replaced.
• Management companies may overcharge leaseholders for their work, provide poor quality services and spend money on unnecessary work. As freeholders don’t pay for property maintenance they may not care about any of these issues.
• Management companies may set high additional charges for leaseholders which are not clear (e.g. admin charges)
• Freeholders (or management companies) may not choose the best value buildings insurance, which the leaseholder has to ultimately pay for through the service charge
• Management companies may not handle complaints properly and it may be difficult for leaseholders to access proper redress

The CMA proposes to introduce remedies to deal with these issues:

• Freeholders to review the market for management companies every three to five years, or if over 50% of leaseholders agree this should happen. Leaseholders also to have a say in the choice of company, if over 50% agree.
• Management companies to provide leaseholders with more information on their rights and information on their services, including all their charges, breakdown of work carried out and associated cost.
• Management companies to set fixed fees for elements of work, including routine and major work, rather than a proportion of costs (unless written in the lease).
• Leaseholders to be given clear information on the buildings insurance obtained including what is covered, any commission paid, and that they have got the best value deal.
• A cheaper and quicker redress system for leaseholders either by extending the role of the Housing Ombudsman (which currently only focuses on tenants) or by increasing funding to the Leasehold Advisory Service, which offers free legal advice to leaseholders, freeholders and management companies.

What do you think of these suggested remedies?
Do you think there could be any unintended consequences?
Would you suggest any other solutions?

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johnc

This is a really important area that I feel just doesn't seem to be well served. Its currently the "Wild West' where companies like Peverel manage properties, do what they want and largely have no repercussions. Leaseholders lose out so much on this currently.

Having bought a leasehold flat last year and finding all this out I don't think I will be buying a leasehold flat in future. I have a Property Management company that doesn't care and even staff have hinted there's nothing I can do about it without spending lots of money taking them to the tribunal. Also you have to get all the leaseholders to agree and in large buildings these Property Management companies know they have the upper hand and so Service charges and services - they literally can do whatever they want. We had a 20% rise in Service charge without any explanation - and services are worse than previous years. We had the water cutoff for 24 hours with no real explanation and the list goes on. I am completely frustrated with it and feel there's not much I can do as an individual. Have tried getting other leaseholders together to talk about it but most of them don't mind the cost of the service charges or rent out the flats are so don't reside in the building and perhaps don't reside in the UK either.

Meanwhile the Freeholder and Management Company seem to be just laughing all the way to the bank!

I think that:

1. Service charge increases should be capped and any service charge increases should only be implemented after agreement from over 50% of leaseholders
2. There should be a way to remove the Property Management company without having to have the 50% agreement of all leaseholders (because it is so difficult to get leaseholders involved in a large building to get to that 50%).
3. There needs to be a fully independent Regulator that imposes serious fines. Right now there is none with any teeth. The Leasehold Advisory Service currently is inadequate.
4. There should be the option automatically to change the Property Management company every 3 years so if the existing Property Management company wanted to stay it would need to be re-elected by leaseholders.
5. Serious Complaints that are unresolved lead to the expulsion of the Property Management company and the leaseholders can select another Property Management company

MillieHarry

I have lived in leasehold properties most of my life, so have a lot of experience with this issue.

My first property was owned by a local Housing Association. The upkeep of the building was appalling and it took threatening them with not paying to get things fixed.

On several occasions the main security door lock was broken and repairing it seemed an afterthought although this was a fire risk. They also seemed to think it was acceptable to charge me over £600 to paint my balcony!!! Their reasoning for this was that it required a cherry picker, so imagine my shock when I came home and saw the painter on a ladder painting mine and my neighbours balcony, which was filthy within a week or so!! I felt that becauseI privately owned my property and the majority of people were council tenants, that I was almost over charged for this to make up their money somewhere.

I decided then it was time to move on. I sold my property and moved into a just over 10 year old building on the 31st March and finally felt at ease……….. but that was short lived.

My list of charges are astronomical!!!!! £125 per year for ground rent, ok so that’s not too bad but when you then add on £495 every 6 months and the £296 building insurance that is due 1st October its starts to build up. I always thought the building insurance was included in the maintenance charge that you pay, so if a friend of mine who lives in the same block hadn’t of warned me that it was roughly around £200 I wouldn’t of had some of the money put by!!!

To then add to my further stress, 2 weeks after I had moved into the building I received a letter in regards to the buildings cladding, and that there was to be an investigation. Funny I thought nothing was disclosed about this when I purchased the property. Scaffolding went up and an investigation took place and it appears that the cladding is not fit for purpose, should never have been signed off when the building was built and is letting water into the building, and has been doing so since it was built. A number of people have complained about this over the years and only patch up jobs which no one knows about were carried out. Now this has become a serious matter and they expecting the leaseholders to fit the bill!!! £20,000 per flat. The NHBC were not interested as the flat past its 10 years in September 2013, of course the builders felt the same and the Freeholder is putting this all onto the Leaseholder.

I have now found out that the NHBC are now investigating this as there were claims put into them about this and there is another investigation going on about this, and it will be discussed whether they will contribute or if the leaseholder will have to pay the full amount!

I don’t think we should have to pay anything as this was an error when the building was built, it is not ware and tare and general upkeep of the building!!! It is almost as if the management company waited until the building was over 10 years old as they knew this was an on-going issue, they declared it to the building insurance so we cannot claim to get the cladding fixed!!! I for one do not have £20,000 lying around and the fact that we have no control over this or the maintenance company and the fact that they neglected to disclose any of this information before I purchased the property is frightening I for one will never buy a Leasehold property again. As soon as this is resolved I will be selling my flat and looking for a Freehold property.

joehoover

Are they extending this to look at council as freeholder also.

Having bought a flat 6 months ago I have been inundated with notices of major works. It seems everything apparently needs doing and is running to the tens of thousands. Have just had to pay £1000 for a new front door from them, have had a bill for £7000 for electrical work covering 4 flats so they estimate checking electrics and changing one light fitting will cost £28,000! ( I work in lighting so know the fitting they say costs hundreds is actually £50 on the open market, and I know the manufacturer who I can buy it for £15. They also advsie they are doing other work which could run into the tens of thousands. Appealing is futile as you have to pay for that and always rejected anyway

Seems like a council scam to pull in cash they lose elsewhere.

SandyFoot

I think the law need reviewing whether the lease is managed by a Management Company or the freeholder themselves. It is a challenging process to complain and especially to get effective outcomes where the lease manager is not performing as they should. I have explored the Leasehold Advisory Service on a few occasions as my freeholder charges £800 per year in maintenance and I see nothing for it - nor does he live up to his obligations in the lease re building maintenance etc The complaints process seems quite drawn-out and costly and it is also worrying that there is an obligation to declare disagreements with one's freeholder which have occurred within the recent timescale (2 years I think) when selling a property - that puts people off formally complaining. I think there should be more detailed responsibility on the freeholder to show that the money paid is being spent in the correct way and more criminal sanctions for lazy or downright dodgy freeholders eg they must pay an external accountant (who is accredited by the govnt) to audit the finances relating to the lease management once a year & this audit should also include a review of how the property is being managed according to the obligations of the lease - I would happily pay a sum towards that each year ..

Former_MSE_Aileen

joehoover wrote: »

Are they extending this to look at council as freeholder also.

Hi Joe

Yes, the CMA's proposals cover local authorities as freeholders. They are looking at blocks of flats/apartments/retirement properties where:

• the freehold is owned by someone unconnected to the leaseholders who receive residential property management services (RPMS) from a property manager or property management company
  
  
• the freehold is owned by the leaseholders, who all have a share and vote some of their number to be directors of a management company, which engages the services of a property manager
  
  
• the freehold is owned by the local authority or a housing association which supplies RPMS, either directly or through a contracted property manager

starving_artist

SandyFoot wrote: »

I think the law need reviewing whether the lease is managed by a Management Company or the freeholder themselves. It is a challenging process to complain and especially to get effective outcomes where the lease manager is not performing as they should. I have explored the Leasehold Advisory Service on a few occasions as my freeholder charges £800 per year in maintenance and I see nothing for it - nor does he live up to his obligations in the lease re building maintenance etc The complaints process seems quite drawn-out and costly and it is also worrying that there is an obligation to declare disagreements with one's freeholder which have occurred within the recent timescale (2 years I think) when selling a property - that puts people off formally complaining. I think there should be more detailed responsibility on the freeholder to show that the money paid is being spent in the correct way and more criminal sanctions for lazy or downright dodgy freeholders eg they must pay an external accountant (who is accredited by the govnt) to audit the finances relating to the lease management once a year & this audit should also include a review of how the property is being managed according to the obligations of the lease - I would happily pay a sum towards that each year ..

Completely agree. The situation where it is just the freeholder and there is no management company can be every bit as poisonous and should also be scrutinised.

Laura13214

I currently have a flat I rent out and it's costing me over £1100 a year in different service charges, plus I have to pay a 'Global Licence Fee' to be 'allowed' to rent the property out - this gets a small discount if I pay every five years bringing it to £330, plus everyt ime I change tenants I have to pay another fee to them. I really think it's a case of 'what can we get away with?' rather than 'what is right and fair'. I have Peverel as my management company and, when I get norifieed of a charge added because someone lost their keys I get really annoyed - it's not my fault they are careless and surely that should be the individual's responsibility, not mine! There have also been instances of people fly-tipping but I end up paying the bill to clear it up!

They've also sent letters threatening to break into my flat because one of the flats has a leak in the bathroom overflow which is running down the outside of the building and they need to find out which one it is. Surely with only six flats in the glock it's easy to see which overflow is dripping - it's not rocket science.

Anything that is introduced into legislation/law which gives the leaseholders more rights and which stops this extortion (it's the only thing I can call it in polite company!) will be useful but I think the 50% of leaseholders needing to agree should be revised to any one of the leaseholders can call for a review of the management company as block of flats I own one in is all BTL so I have no way of contacting the other leaseholders. The management company won't tell me who they are and I have sent letters to the leaseholders via the tenants in the past to try and get support for this but none of them have replied.

:mad::mad::mad:

bye_bye_band_G

My daughter is currently thinking of buying a leasehold flat and neither she nor I know very much about leasehold as we've always owned the freehold of our house.
The flat has tenants in at the moment and when we chatted to them at the viewing they were having a real moan that they see next to nothing for the £80 they pay in maintenance charges per month. So I questioned this with the estate agent selling the flat, and their reply was that the bulk of the money will be being saved in a slush fund for the day when some really large bills come in. Most of the time nothing is needed apart from quick hoover of the communal areas and tidy of the garden, but the rest of the money will be being set aside for when the roof starts to leak or similar. As a leaseholder my daughter would be entitled to view the Property Management Company's Accounts and see just where the money is being spent and how much is saved.

Is this a valid point and a rebuttal to those saying they are receiving poor value for their money above?

KennyH1

We pay nearly £3k a year in service charges and have very little say in what goes on.

The last time the management company just kept with the same Property Management company.

The problem with trying to get 50% of leaseholders to agree is that we have 179 flats in our block, most people aren't interested or are landlords.

We had one leaseholders meeting where a landlord said there was no point trying to challenge any costs as we'd all only save a few hundred pounds a year!!! I'd love to save a few hundred.

We have a cleaning bill of £18k, miscellaneous repairs / maintenance of £15k, buildings insurance of £70k and electricity to communal areas of £17k and the management company have ruled out using PIR sensors so the lights stay on all day and night.

The worst part is that as we have the largest flat we pay more because the SC is worked on floor area per flat so we pay more towards the cleaning, more toward the electricity, more towards everything yet we don't get any better service.

unhappy_leaseholder

I have a property managed by Freehold managers plc. They gave me sleepless nights demanding hundreds of pounds for reviewing my agreement with my tenant. I couldn't find an organisation to help so stood up to them and demanded a copy of the relevent part of the lease. When they sent it they still asked for hundreds but on reading the lease the designated fee was one guinea! I sent a cheque for £1.05 and they didn't bother me any more. I think they should be obliged to inform you who the governing body is on all correspondence and that might stop them trying to bully you.