Would Campaign against retirement leasehold exploitation readers offer any thoughts to this concerned correspondent wondering about the financial health of managing agent and freeholder?
We have put in an offer for a retirement flat for my grandmother. I wondered if you could provide me with any details of what happens to a property should the landlord company or management agency go bust – The managing agent for this property is Peverel and the agents to the landlord are Estate and Management. Do you have any experience of this happening in the past, if so, has this resulted in the occupiers having to sell up or lose their home? Are there protections in place for such a scenario and are retirement homes regulated by an Ombudsman?Many thanks for any light you can shed on the matter.
Campaign against retirement leasehold exploitation: we are not sure there are any serious issues if a freeholder goes bust (it will be Proxima or Fairhold here; E&M manage the incomes).
Obviously, with the managing agent there is a concern over the money held in trust and completely unregulated.
Leasehold Knowledge Partnership and Campaign against retirement leasehold exploitation repeatedly urge regulation of the sector, which involves far greater sums than lettings.
In the case of Peverel, that will be millions of other people’s money. But it did go into administration in March 2011 and no funds went missing. Campaign against retirement leasehold exploitation, in the past, has expressed concerns over contingency funds for different sites being pooled.
We are not aware of bankruptcy of a managing agent has caused loss of home, but contingency funds have been plundered as you can read here.
Peverel is a member of ARHM and ARMA (indeed, as the largest property manager in the country it is the principal source of funding for ARHM, and fairly significant for ARMA as well).
The protections are not adequate in our opinion, which is why Campaign against retirement leasehold exploitation was started. ARMA (Association of Residential Managing Agents) also supports regulation of the sector, as does the British Property Federation and most organisations familiar with leasehold management.
But statutory regulation brings with it costs and the government is loathe to act, although it did over lettings.
Rather than Ombudsman, leasehold practitioners respect and respond to legal action at LVT, of which there have been a number of noteworthy cases such as this.
Related posts:
After £11,500 Peverel victory, Strand Court dumps second managing agent
Mark Prisk’s department sabotages attempt to license leasehold managing agents
Sisters desperate to sell retirement leasehold face 10% exit fee, estate agent is run by freeholder’s brother and – yes – capital values have tanked
Fraudster managing agent gets 30 months jail after using leaseholders’ cash to fund high life in Chelsea
Whether a freeholder or managing agent goes bust your home is safe, so thee is no need to have any worries on that score.
In the case of the freeholder, all that will happen is that either another company will buy the stricken freeholding company at a discount from the administrators,thereby acquiring your freehold as that is part of the company assets, or you will be offered the freeholds on an individual development basis.
If in extreme circumstances the company is not bought and residents don’t buy the freeholds those freeholds revert to the Crown Estates,
With the proviso mentioned in the Campaign against retirement leasehold exploitation post, service charge funds cannot be used by a failed managing agent to pay debts.
If the freehold company goes bust, the leaseholders should contact Bona Vacantia to buy the freehold title from the Treasury’s solicitor. Don’t let it slip into the control of a leasehold abusing company. .
http://www.bonavacantia.gov.uk/output/BVC7-Disclaiming-Property-vested-in-the-Crown-as-bona-vacantia.aspx
If the Managing agent goes bust, get together and set up a RTM company.