Leasehold management companies and the failure of organisations set up to protect leaseholders.

john600602

Hi.

I made a post on here on 22nd June 2022 regarding severe problems with our management company (I own a leasehold flat, 1 of 14 within the block).

The original post was here https://forums.moneysavingexpert.com/discussion/6366966/serious-problem-with-management-company-involving-law-breaking-now-wont-respond-to-us/p1?new=1

It is almost incomprehensible to the residents that 2 years since the first complaints were made, nothing is resolved.  

We are more aghast with the service provided from the organisations that are meant to help us than we are with the management company themselves.

As an indication, the following have been involved.

Property ombudsman - upheld all complaints and awarded compensation but have no legal powers to do anything.

Financial ombudsman - not interested. Infact their comments indicated they clearly had not even read what we sent them as they advised doing something we clearly stated had already been done.

Actionfraud (following an informal chat at our local police station) - not interested (no line of enquiry to follow ).

Trading standards - made a note on their systems but basically not interested.

Our MP Philip Dunne has tried to communicate with the management company but they have ignored him and he has passed it on to Sir Peter Bottomley (who is fighting the corner for leaseholders).

Financial Conduct Authority - referred it to their supervisory team but we never heard anything more.

ARMA - an ongoing investigation but 6 months and waiting!

RICS - did an investigation then cancelled it when existing staff were suddenly "no longer members of RICS".

Cooper Parry (ex accountants) fully appreciated our concerns but cannot do anything.

Leasehold Advisory Service stated the situation sounded "very bad" but just referred us to the property ombudsman.

Alford Burton (previously connected via the FCA register - now terminated) stated "something had gone badly wrong with the firm" but could not do anything.

Where we stand now.

The block has fallen into total neglect with flats suffering from damp due to the rotting windows.  The services (gardening etc) are a joke and the place is poorly maintained overall decimating property values.  Lie after lie after lie from the management company.  The end of year accounts were 3 years overdue, they have since issued 2021 accounts which state as an example £4,700 for gardeners when we had practically no gardeners all year (and have it in writing that no money would be paid out that year).  We also have photo/video evidence.  Management costs almost doubled with no explanation why (when they've done sod all - they don't even respond to emails).  No proof sinking fund exists.  This is all recognised and accepted by the property ombudsman.

As we were about to go to FTT (which admittedly maybe that should have been our first port of call but none of us have been in this situation before) we have managed to contact the freeholder (which the management company blocked / gave false addresses etc) and they have sacked them, but the managing agent state withheld payments for work they can't prove was done (because it wasn't) still has to be paid.  This between all the residents who have withheld comes to quite an amount. It appears they will not transfer the sinking fund to the new company until this is done.  My hunch is there is no sinking fund and they need everyone to pay up to effectively replace our own sinking fund.

I traced a resident in another block they manage who confirms the same, i.e. no accounts, block run down etc.

I ask myself how they get away with it, and the answer is none of the official bodies seem remotely interested.

As an indication the property ombudsman took over 5 months to do their investigation and then offered residents compensation of £116 per flat which the management company didn't even bother to pay until it went to the compliance committee.

Any thoughts? Thanks, I appreciate this is long, but this has been going on 2+ years and the residents are absolutely frazzled with it now.

eddddy

It sounds awful, but taking a step back - there is a big pile of laws that protect leaseholders in your situation, and it doesn't sound like you have used any of those laws.

For example

• The Landlord and Tenant Act 1985 says that service charges (including sinking fund contributions) must be "reasonable". If they are not "reasonable", you can challenge them at the First Tier Tribunal.

• The Landlord and Tenant Act 1987 allows you to apply to a First-tier Tribunal for the appointment of a new manager for your building.

• The Commonhold and Leasehold Reform Act 2002 gives leaseholders the statutory right to take over the management of their property from the landlord by setting up a special company.

It's the first-tier tribunal that enforces the law. The bodies you've contacted tend to deal wit things like professional standards, codes of practice, etc. But it's surprising that none of them directed you to the first-tier tribunal.

CSI_Yorkshire

eddddy said:

It sounds awful, but taking a step back - there is a big pile of laws that protect leaseholders in your situation, and it doesn't sound like you have used any of those laws.

For example

• The Landlord and Tenant Act 1985 says that service charges (including sinking fund contributions) must be "reasonable". If they are not "reasonable", you can challenge them at the First Tier Tribunal.

• The Landlord and Tenant Act 1987 allows you to apply to a First-tier Tribunal for the appointment of a new manager for your building.

• The Commonhold and Leasehold Reform Act 2002 gives leaseholders the statutory right to take over the management of their property from the landlord by setting up a special company.

It's the first-tier tribunal that enforces the law. The bodies you've contacted tend to deal wit things like professional standards, codes of practice, etc. But it's surprising that none of them directed you to the first-tier tribunal.

They probably did, but it was lost in the scattergun approach of complaining to anyone who could be imagined to have even a tenuous link to the situation.

john600602

Thanks for the replies.  And in hindsight the FTT may have been the route to go from the start but it was certainly not a scattergun approach.  The management company's terms and conditions stated if we were not happy with their response we should escalate to the property ombudsman.  The property ombudsman's report stated the areas of the RICS code of conduct that had been broken which is how RICS came to be involved.  We were then advised by the TPO to go to ARMA (more specifically CEDR who they work with to resolve complaints about their registered agents).  I had to sign to say I had exhausted the property ombudsman route.  We could not escalate to ARMA until that had been done. Actionfraud came about as a result of a face to face conversation with a police officer. The financial ombudsman came about after an initial email query to their website where they replied and said they were prepared to look into it based on initial evidence shared with them and they set up a case number.  And this is over the space of two years, it hasn't happened in five minutes.  Also the majority of the residents are pensioners, two ladies are in their 90s, with no internet access, and many have limited knowledge technology wise. It's been a very stressful time for all involved.