June 28, 2017

McCarthy and Stone gives Peverel the push at 25 retirement sites

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The giant M-shaped McCarthy and Stone's headquarters in Bournemouth is a monument to the achievement of john McCathy

The giant M-shaped McCarthy and Stone’s headquarters in Bournemouth is a monument to the achievement of John McCarthy

McCarthy and Stone has decided to give Peverel its marching orders at 25 retirement sites where it still owns the freeholds – although two weeks ago it said it was not going to do so (see below). Many of the sites still have flats for sale and the housebuilder made no attempt to defend Peverel’s record in a statement to Carlex (below). Two years ago, Peverel was dropped by the upmarket Berkeley Group and by Barratt, which has set up its own in-house management company. The sites will instead be managed by MSMS (McCarthy & Stone Management Services) and the decision affects all sites where Peverel’s management agreement is due to expire in February next year. In the statement to Carlex, which was copied in to Sir Peter Bottomley, McCarthy and Stone emphasises that there will be a cultural shift in the change: “In MSMS, service charges are provided at cost and MSMS does not charge commission on any of the services that are provided, unlike other national managing agents. “MSMS’s policy is one of consultation and complete transparency, openly discussing issues as they relate to home-owners and their development.” There were no expressed regrets at tossing Peverel overboard – a company that rose from being an obscure Bournemouth estate agency after hitching a ride on McCarthy and Stone’s coat-tails. At one point, from the late Eighties to mid-Nineties, Peverel was owned by McCarthy and Stone. But it was sold off in the early 1990s after scandals over excessive service charges. bookcoverThis resulted in a disastrous £800,000 libel action by McCarthy and Stone against the Daily Telegraph in 1991. McCarthy and Stone founder John McCarthy gives a fascinating account of this incident in his book, Building a Billion. More here Peverel is not going without a fight, however. At Clarkson Court, Woodbridge, in Suffolk, Peverel has offered to residents to organise a right to manage application if they wish to stay with the property manager. This is unlikely to please Mark Riddington, the chief executive of MSMS, who is shortly to visit Clarkson Court with his assistant Peter Alderman. Another site where the change is taking place is Forest Court in Chester. Here it is reported to Carlex that feelings are running high, supposedly because of yet more unfortunate problems with a lift breaking down in a retirement site. If so, it would be unfair to blame Peverel as McCarthy and Stone, which built the building, is still its freeholder. Forest Court is another example of a site with flats still for sale: Mc&S claims it is 75 per cent sold is still attempting to attract buyers, which may be why it was decided Peverel had to go. Carlex has obtained a full statement from McCarthy and Stone on the changes: 1/ Is Peverel being removed as managing agents at Mc&S sites where the developer still owns the freehold? McCarthy & Stone Management Services (MSMS) is planning to take into management a number of developments currently managed by Peverel.  This is happening on developments where McCarthy & Stone remains the Landlord and where the initial management agreement with Peverel is due to expire in February 2014.  For all home-owners in these developments, the planned transition will be seamless and uninterrupted, with the intention that the existing House Managers will transfer over and continue in their roles.  The range of services provided and the Service Charge budget will remain the same. The aim, over time, is to improve the services provided to home-owners in these developments and control costs.  This can be achieved through MSMS’s membership of the larger McCarthy & Stone group.  In MSMS, Service Charges are provided at cost and MSMS does not charge commission on any of the services that are provided, unlike other national managing agents.  MSMS’s policy is one of consultation and complete transparency, openly discussing issues as they relate to home-owners and their development.  It also shares the individual costs that make up the Service Charge with home-owners and outlines the methods for calculating the resulting charge.  The Service Charge for each year is agreed in consultation through an open-book budgeting process with residents. 2/ How many sites are affected? Could you supply me with a list of them? There are 25 developments in total.  We are not able to provide a list as this matter is confidential.  McCarthy & Stone must respect the rights and privacy of its home-owners and their leases. 3/ Who will take over the management of the sites? As the Landlord, McCarthy & Stone has written to all home-owners where these transfers are proposed to take place to inform them of the planned change to MSMS, its preferred managing agent.  Meetings are being arranged with home-owners in every scheme to introduce MSMS, to explain the process and answer any questions arising.  All home-owners in retirement leasehold accommodation have the right to appoint their own managing agent through Right to Manage if they so choose and we are happy to discuss this where necessary. 4/ Does this decision reflect dissatisfaction on the part of Mc&S with Peverel’s management? If not, what are the reasons for the decision? MSMS provides a professional property management service, in line with best-practice standards, in all of McCarthy & Stone’s new developments.  McCarthy & Stone is offering this management service to the home-owners in the developments where Peverel’s management agreements are ending.  This is exactly the same service as that provided to the developments which have opened since the date MSMS first became operational.  MSMS allows McCarthy & Stone to have a long-term involvement with the schemes it has built and its home-owners, providing one seamless service. 5/ The residents at Forest Court are reported to be critical of Peverel’s management, particularly regarding issues concerning a broken lift. Has this issue been reported to Mc&S; are only 20 flats sold at the site; will you replace Peverel with your own in-house management company? Following discussions with residents, it is our intention to replace Peverel on this development with MSMS.  We are reviewing our customer service records on this development. 6/ The removal of this particular property manager may be an occasion to reconsider the management of your remaining sites. Would Mc&S consider establishing resident management companies in each site, effectively granting right to manage, so that those who have the greatest financial interest in a site – the leaseholders – control its management? All home-owners in retirement leasehold accommodation have the right to appoint their own managing agent through Right to Manage if they so choose.  McCarthy & Stone believes that, through MSMS, it provides a professional, industry-leading and cost-effective service.

What a difference two weeks makes …

Michael Epstein, a Carlex reader of strong opinions regarding leasehold, asked McCarthy and Stone on October 19 whether there were any plans to oust Peverel and “bring all McCarthy and Stone developments under your control”. Mark Riddington, who heads McCarthy and Stone Management Company, wrote back on October 23 to say “The simple answer unfortunately is no.” Yet now it is confirmed that McCarthy and Stone will be taking back the management of 25 sites. DispatchesUndercoverRetirementHomeCarlex has plenty of issues with McCarthy and Stone, which was the pioneer of retirement leasehold in the UK (including exit fees, which it stopped collecting in September 2008; absurdly high sub-letting fees; flogging off the freeholds; the questionable part-exchange form of purchase highlighted by Channel Four’s Dispatches  …). Nonetheless, the direct management of McCarthy and Stone is good news for anyone who has bought at one of these sites. The full Epstein / Riddington email exchange is below: Dear Sir/Madam, My elderly mother is geting to the stage of life where she would like to purchase a pre owned Mcarthy and Stone apartment. However, she is put off by some horrendous stories concerning the management of Peverel. I understand you no longer use Peverel on new builds since 2010, instead using your own in house management.My mother would feel much more confident if she could live in a development managed by you. Have you any plans to bring all Mcarthy and Stone developments under your own control? Many Thanks, Michael Epstein Dear Mr Epstein The simple answer unfortunately is no.  As you say McCarthy & Stone set up their own in-house management company in 2010, which means there are now over 60 Later Living and 25 Assisted Living developments across the country.  These developments may have some pre-owned apartments, although I acknowledge that they may not be in the right location. I am sorry that I cannot be of more assistance and wish you and your mother well. Yours sincerely Mark Mark Riddington Managing Director

The McCarthy and Stone response to the Dispatches programme is here

Comments

  1. A Reviewer says:

    Hi

    It is my understanding that the exit fees and what is best described as an “unhealthy” set of commissions and settlement discounts were in fact the work of their in house lawyer at the later stages when M&S were short of cash to acquire land before they sold off their in house property management – on which their reputation and success were originally based …

    I sometimes wonder where this individual acquired the necessary cash to go into the nursing home market … was it the return payments on the affinity agreement with Scottish Power ?

    Although this man complained about me to my professional body, which exonerated me entirely, it was found he was not actually known to the professional body which he intimated he belonged to …

    When VT bought Peverel he was given the bump very rapidly …
    He first departed when M&S sold peverel in a management buy out … but came back when the angels sold out to Holiday Retirement Inc – itself under investigation by the US Senate ….

    All that M&S are now doing is what they ought to have done years ago – go back to the original very successful business model.

    happy days

  2. Michael Epstein says:

    As has been pointed out, McCarthy and Stone leaseholders have the option of carrying out a Right To Manage, if they are unhappy with the level of service they receive.
    I have a radical proposal for Mr Riddington, which if adopted will set McCarthy and Stone on a different path to their competitors and will go a long way to allay the distrust that afflicts the sector.
    A right to manage is not the only option to get rid of a poor managing agent. It is possible to petition the freeholder, who in turn can dismiss the managing agent.
    So, if McCarthy and Stone set up a residents’ association at all their developments where they are the freeholders and allow a free vote every two years to endorse their continued management role (or if voted against, appoint another managing agent) this will demonstrate McCarthy and Stone’s confidence in their service at the same time giving trust to the retirement market.

    • A similar right already exists in the 87 Act where an RA exists. Even if the manager is named in the lease, it is possible for that to be replaced by a residents owned company that is then the named manager in the lease.

  3. But a business model that introduced exit fees into long leases ( as opposed to short ones from whence they came, of 5 to 10 years) and more recently bought lifts “on the cheap” with the installers reaping the reward, long term, in proprietary parts and software limiting you to a few and often wholly owned service companies? Hmmm.

  4. Michael Epstein says:

    Though Peverel have lost 25 Mcarthy and Stone developments they are celebrating the “win” to manage Radbrook House, Shrewsbury.
    In his usual understated brilliant way, Michael Hollands posted that “It would be interesting to hear from residents at Radbrook House, Shrewsbury on what it was that persuaded them to adopt Peverel as managers of their development”
    David Gabriel, Head of retirement Homesearch replies that “we’ll look to provide more details shortly”
    You would have thought he would have the details instantly.
    in the meantime i note from About Peverel (son of Peverel Action) that they claim that the residents could not have appointed Peverel as they did not have a Right To Manage Company. Therefore it would have had to be an appointment from the Freeholder/managing agent.
    About Peverel have also posted that the company referred to is listed as dormant, whilst the operational company is experiencing financial difficulties (to December 2012, they showed a loss of £783,000)
    It would appear that several directors resigned during 2012.
    I am looking forward to the reply from David Gabriel. I am sure it will be very carefully worded!

  5. Michael Epstein says:

    Well, I was looking forward to the carefully worded reply from David Gabriel, but it seems the dubious honour has been passed to Pat McEvoy (he of the Dimplex Heater offer)
    He posts “We were first asked to discuss the possibility of managing the development after the residents Association voiced concerns to the landlord about the ways in which Radbrook House was being managed”
    PLEASE NOTE, THE IMPRESSION THAT MIGHT HAVE BEEN GAINED FROM THE INITIAL PEVEREL RETIREMENT REPORT THAT IT WAS THE RESIDENTS WHO FREELY APPOINTED PEVEREL IS SHOWN TO BE INCORRECT AND THAT TO SET THE RECORD STRAIGHT PEVEREL WERE APPOINTED BY THE FREEHOLDER.
    Now we can to one of the most astonishing statements even by Peverel’s standards! I quote.
    “For instance their (Radbrook House) development year end accounts were late and often incorrect. This meant that when residents challenged the costs they were often proved right”
    PLEASE NOTE THIS IS THE PEVEREL THAT HAVE BEEN ORDERED TO REPAY HOW MUCH IN SERVICE CHARGE REBATES?
    THIS IS THE PEVEREL THAT WAS INVOLVED IN PRICE FIXING THROUGH CIRRUS?
    THIS IS THE PEVEREL THAT HISTORICALLY OVERCHARGED INSURANCE COMMISSIONS THAT MISS ENTWISTLE REFUSES TO RECALCULATE?
    THIS IS THE PEVEREL THAT MCARTHY AND STONE ARE ENDING ALL MANAGING CONTRACTS THEY ARE ABLE TO DO WITH THEM?
    THIS IS THE PEVEREL THAT WERE ORDERED TO LEAVE A DEVELOPMENT BY THE PRIME MINISTER, DAVID CAMERON?
    THIS IS THE PEVEREL THAT ED DAVEY MP DESCRIBED AS “MONSTROUS?”
    You really could not make it up!