March 25, 2017

What can you do?

Research thoroughly – leasehold is a complicated area.  To find out what other people have achieved at the LVT, click on this link to search relevant decisions that may help you decide what action you can take.

http://www.residential-property.judiciary.gov.uk/search/decision_search.jsp

Almost all the issues in leasehold properties can be resolved by going Right to Manage, click here to view our page about the Right to Manage (RTM) process. However, you will need a majority of your fellow leaseholders to embark on this process and if many of the flats in your block are owned by buy-to-let investors, this will make it more difficult. Exercising the Right to Manage for your own development, granted under leasehold law, enables you to replace an unsatisfactory Manager, without having to prove fault, with one of your own choosing answerable directly to leaseholders.

Enfranchisement or buying your freehold also gives the residents control over the building, because it enables you to appoint your own preferred Managing Agent, (which could be yourselves) and control your ground rent. Click here to view our page about Enfranchisement.

If you wish to complain about the size of your service charge budget, you could write a synopsis of your situation and send it/email it to the trade organisations ARMA (non retired) ARHM (retired) RICS (if your Managing Agent is also a Chartered Surveyor) LEASE and your MP. This would enable you to take control of your complaint, and might enable you to monitor the performance of the Trade Bodies who claim to be acting as professional organisations with a regulatory interest in overseeing the sector. You may also wish to write to Mr. Grant Shapps the Housing Minister if your complaint is extremely serious. The addresses for all these organisations appear on the “Associations who can help you” page. However, we are aware of the fact that historically there has been no real assistance offered by these organisations.

There are lots of other things CarlEX supporters can do:

Chichester Action Group

Form a local Action Group with other developments near you, and meet them informally to exchange ideas and information, especially if you are considering RTM, forming a residents association (see below) or how to handle questions at a budget meeting for example. Get your children involved if they are nearby.  They will be online and have plenty of energy to support you.  Take control of your own affairs; you have nothing to lose and a lot to gain!  Get together with other people in your building, form a Residents’ Association (but NOT under the Managing Agent’s rules or with his interference!)  Forming a resident’s association confers additional legal rights on it over and above those available to the individual leaseholder.  See Section 12 of the ARHM code (pdf file loaded here).

ARHM Code re RAs

Look at all the significant items in the service charge, get comparative quotations and write to Peverel or Fairhold (or whoever the Managing Agent or the Landlord may be), challenging them to justify their charges against those you have obtained. In particular

• Get figures from local agents and compare the rent of the House Manager’s flat with those of similar flats in the open market.  Demand that Fairhold reduces its rent to a similar figure and rebates the overcharges for previous years.  Avoid agreeing to any figure which you do not believe to be fair and reasonable; if you do, you lose your right to appeal subsequently to a Leasehold Valuation Tribunal to decide the matter.  Fairhold will usually try to defend the indefensible with a lot of fatuous and irrelevant claims about the value of the flat and will often threaten you with higher costs (car parking charges) or loss of benefits (guest room income) in other areas.  Don’t be intimidated by them.

Excessive Rents for House Managers’ Flats – detailed suggestion

If you have a Resident House Manager, the rent on his/her flat is typically the largest single item in the service charge.  It is also the item on which the landlord is likely to make the most profit since, very often, the rent he charges is well in excess of the local market rents for comparable properties.  Leasehold law requires all items in the service charge to be “reasonable”.  If it is not (relative to local rents), then you have the right to demand a reduction from the landlord and a rebate for those previous years where he has been overcharging you.  Many people have done this and achieved big reductions (30% to 50%) and rebates; the highest so far is £52,000!  If you think you are being overcharged, share your concerns with other residents and try to agree on taking action together.  You do not need to form a Residents’ Association but it is worth considering for this kind of joint action.

First, check your lease.  If the lease does not specifically give the landlord the right to charge rent for his flat, then it is unlikely he will be able to do so and you should write and tell him so and ask for a refund.  If it does allow for rent to be charged, then it has to be “reasonable”. It is not difficult to assemble the information necessary to make a claim for a reduction and a rebate of excessive rent.

The first step is to gather information on local rents for comparable flats – and then deduct service charges and ground rents, which would not be payable on a warden’s flat.  The easiest and best situation is if there is a flat in your own development that is let or was recently let.  There is no room for dispute here; the flat is clearly comparable as it enjoys all the facilities that the HM’s flat enjoys.  If it is a one bedroom flat, and the HM’s has two bedrooms, a rule of thumb is that the extra bedroom increases the rent by around 15% so make that adjustment.

If there is no flat let in your development, look for flats to let in similar retirement developments nearby.  Girlings are a nationwide letting agent specialising in retirement flats and have hundreds on their books.  Take a look at www.girlings.co.uk and use their “property search” which allows you to see all flats to let in any county and town.  Remember, however, that as with any other agent these are just asking prices and few deals are done at these levels which should therefore be discounted by 5% to 10%.  Girlings also work closely with Peverel and the rents they quote can be high.

If you can’t find comparable retirement flats with similar facilities, then look at rents in the local “open” market for non-retirement flats.  These are easily available from local estate agents.  Make sure that, as far as possible, the flats you consider have similar facilities -car parking, gardens, lifts – since your landlord will inevitably try to talk up the value of his own flats by reference to all the many benefits a tenant would enjoy (for which, by the way, you already pay through your high service charges and should not expect to have to pay again in a premium rent).  A friendly local letting agent may also be prepared to come to your development and put a rental value on a comparable flat.

When you have a good idea of the proper rent for the flat for the current year, use the same rent to go back to the point at which you consider the rent charged ever to have been reasonable in comparison.  You can find these rents in the service charge accounts for previous years.  Most people find it has never been reasonable from the start.   Using these figures you can calculate by how much you have been overcharged over the years and therefore what your rebate should be.

Keep copies of all the information supporting the rent you believe to be appropriate.  Equipped with this, write to your managing agent or landlord, setting out the figures, your sources and your calculations, demanding a rent reduction and a refund.  If you have done your homework well, there should be little room for dispute.  However, you should expect a letter in due course (if no reply within two weeks, chase them) trying to defend their valuation with various arguments about the wonderful facilities of the flat and why it should command a premium rent.  These are usually specious and can be easily refuted if you have done your research thoroughly.  Their letter may include an offer to reduce the rent but to a figure still be above the market rate.  Do not accept this first offer if you believe it to be inadequate compared with your market figures.  We have seen leaseholders prematurely accepting inadequate offers and regretting it later.  You should also ensure that the letter offers a refund reflective of the historical overcharges.  Again, we have seen inadequate refund cheques being sent pre-emptively to leaseholders before any agreement has been reached in a clear attempt to stampede the less well informed into accepting less that they are entitled to.

Hopefully, after some further exchange of letters and revised offers, you will feel able to agree figures with the landlord for a lower rent and an appropriate refund.  Remember, however, that the agreement on the lower rent is likely to cover only past and present financial years, not the future.  Keep your eye on the budgets in future to make sure the landlord does not try to move the rent up again.   Market rents are typically very stable; they do not go up every year as the landlord may try to make you believe.

Be prepared also for the landlord to retaliate to any reduction in the rent by withdrawing financial benefits that you might have had in the past such as the guest room income going into the service the charge account.  Check your lease to see if it allows him to do so.  He may also threaten to impose charges for the use of the (currently free) car park.  Don’t be intimidated by this; most leases do not allow for such charges to be introduced.

If you cannot agree an acceptable rent or refund directly with the landlord, your only recourse is to a Leasehold Valuation Tribunal (LVT).  Anyone can take the dispute to an LVT; it does not have to be a unanimous or even a majority decision of leaseholders but it would be desirable for a significant number of leaseholders to be in agreement on this course of action.  LVTs, while they are supposed to provide accessible justice to the layman, can be stressful so are not to be lightly entered upon.    Typically, the landlord will field a solicitor and a barrister but there is no need to be intimidated by this.   Provided your case is well supported by the facts and the relevant leasehold law, and you have made all reasonable attempts to reach agreement with the landlord “out of court”, it is a reasonable course to ask the LVT to decide the matter.

Finally, where a refund is agreed, the question arises as to how this should be distributed amongst leaseholders.  The fairest is to divide it up according to how long leaseholders have owned their leases and the “lease fraction” applicable to their flat (1 bed or 2).  If possible, advise anyone who has moved on (or their estates), of their entitlement so that they can claim too.  Anything balance not attributable to anyone should be paid into the service charge account for the benefit of all leaseholders.  In the past, some landlords have retained any such balance for themselves “in case a claim is made on us at some later date”.  They have little justification to do so and are simply keeping it for their own benefit..

For advice on taking this or any other matter to an LVT, contact the Residential Property Tribunal Service at www.rpts.org.uk or call 0845 600 3178

For advice on any other matter affecting older people contact AgeUK (formerly Age Concern and Help the Aged) at www.AgeUK.org.uk or call 0800 169 6565

• Ask your Managing Agent for details of insurance premiums and commissions paid, and what services have been provided, and by whom, for these commissions.  You will find that generally speaking very little of significance has been done to justify these high commissions. Ask for the commission to be reduced and for rebates for earlier years.  If this is rejected, consider taking the matter to an LVT.

• Compare the costs of services provided by Peverel-related companies with those in the open market and demand that Peverel reduce their charges to match these or put the business out to competitive tender.

• Refuse to pay the 1% transfer fee, pointing out that it is considered “unfair” by the OFT.  If forced to pay to complete a sale, do so under protest and reserve the right to reclaim the money if it is subsequently ruled unfair by a court or by the OFT in agreement with Fairhold.

• If your Managing Agent or Landlord refuse to negotiate or to reduce charges to “reasonable” levels, and you have good evidence to support your case (not difficult), start proceedings against them with the Leasehold Valuation Tribunal service as a number of our group has successfully done.

• Write/email your MP via their own individual website, or at the House of Commons, London, SW1A 0AA, detailing your concerns. You may find that your MP is already knowledgeable on these matters, as several of them are already in correspondence with constituents who are part of our group.

• Contact the OFT, via their website, (www.oft.gov.uk) or at Fleetbank House, 2 – 6 Salisbury Square, London, EC4Y 8JX, detailing your concerns.  We have been in contact with them regarding many of these issues.  They are already looking to have lease transfer fees declared “unfair”, and therefore unenforceable, across the whole leasehold sector, and are evaluating an investigation of the retirement leasehold sector generally.

• Investigate/join the Campaign for the Abolition of Residential Leasehold (CARL)– (see their website www.carl.org.uk).  The exploitation of leaseholders generally by unscrupulous landlords is possible only because of the outdated, feudal, concept of leasehold tenure.  Scotland have abolished residential leasehold.  Abolish that in England and Wales, the last bastions of this form of tenure,  and put them all out of business!

Comments

  1. Alan Ward says:

    I wanted to contact Carlex about a possible important ommission on this page but could not find a direct way of doing so. There is another page on the Carlex site (http://www.carlex.co/about/rent-for-wardens-flat/) which contains much the same as the above but with one important difference. Instead of the sentence above: “The first step is to gather information on local rents for comparable flats” the other page says: “The first step is to gather information on local rents for comparable flats – and then deduct service charges and ground rents, which would not be payable on a warden’s flat.” The service charge and ground rent (and possible letting agents fees) should be deducted when determining a reasonable rent for a house manager’s flat since none of these is paid for by the owners of that flat.

  2. Alan, Thanks for that. I have made the change.

  3. Lorna Cruddas says:

    We secured a reduction in our house manager’s flat and this was divided amongst us
    Unfortunately my flat is held on trust and although I pay all charges the cheque was sent to Fairhold
    They now say they haven’t received it or my solicitors request to reissue it to me. They are senfong me roumd in circles and seem determined not to pay me

  4. Lynne Chappell says:

    Do you have any plans to look into the conduct of Methodist Homes (MHA). I am a Leaseholder of one their flats at Ferguson House, Lincoln. MHA are our Management Company, but we have lots of issues with incorrect charges, we are at present waiting for a date for our Panel Hearing after going through their various stages of complaint. We know we are not the only scheme in the MHA portfolio with problems with their accounting errors. Seems the legal route may be our only option left.

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