– Only 131 retirement leaseholders quizzed
– 17 leaseholders ONLY discussed Property Tribunal
– MORI has to correct criticism of LKP leasehold figures (which are accepted by DCLG)
– BUT poll does confirm that there is more contentment when leaseholder manage their sites in an RTM or RMC compared with those that are freeholder-controlled
Alarm bells are ringing at Campaign against retirement leasehold exploitation about the report by the CMA (Competition and Markets Authority) into leasehold management.
We were already anxious that the Competition and Markets Authority – many of whose personnel worked for the defunct Office of Fair Trading – were manoeuvring to down play concerns in retirement leasehold.
Some of these concerns expressed at the outset of the study “have not been supported by the evidence”, the CMA said in August.
“… according to our leaseholder survey, leaseholders in retirement properties had higher levels of satisfaction than other leaseholders with property management services.”
The Competition and Markets Authority also believed that in retirement leasehold “some individuals will be knowledgeable, able and motivated to represent them … Based on the evidence we have received so far, the problems we are finding in the market apply to the retirement sector in the same way as anywhere else (lack of accountability and transparency, lack of control, ineffective redress etc.).
Campaign against retirement leasehold exploitation has pointed out to the Competition and Markets Authority that there are several blindingly obvious disadvantages in retirement leasehold: residents can be in their eighties and nineties; several flats are usually empty owing to further care needs or death; income and energy levels are low.
In Campaign against retirement leasehold exploitation’s experience, many active sites that have broken free with right to manage have an energetic relative organising the residents.
Now it emerges that the Competition and Markets Authority is relying on a bought-in Ispsos Mori poll that quizzed 1,050 leaseholders – a figure matched by the DAILY readership of the LKP / Campaign against retirement leasehold exploitation websites.
Only 131 retirement leaseholders were questioned, and only 17 who had any experience of the property tribunal.
The survey does at least confirm that leaseholders in RTM/ RMC managed blocks are more content (83 per cent), compared with those appointed by freeholders, 58 per cent.
Four in ten leaseholders have been dissatisfied with the freeholder’s management.
But broadly the Ipsos MORI poll confirms what is already widely known: that a great number of leaseholders are clueless about their legal status, their rights or the management of their block.
A full 90 per cent thought that they owned their flat – rather than renting it from the freeholder – and 78 per cent had no awareness of the property tribunal.
More than a third appear to think that they achieved right to manage before the Commonhold and Leasehold Reform Act 2002, which is clearly wrong.
If you read this story on the LKP web site relating to the RTM legislation passed in 2002 there were 89 companies formed by the end of 2003 (that does not mean the sites had gone RTM by then). By 2012 that number had slowly risen to 4,365 a number with will still include those RTMs that never succeeded, or those which subsequently closed.
In a curious aside right at the start of the report, Ipsos MORI went out of its way to rubbish LKP’s leasehold figures – 4.1 million privately owned leasehold properties in England. Having carried out the poll in April, it had not realised that the Department of Communities and Local Government had accepted the figures’ validity.
Following an intervention by Martin Boyd, of LKP, who has been working with DCLG statisticians on the leasehold figures, received an apology and amendment by Ipsos MORI.
Quite why Ipsos MORI believed the Competition and Markets Authority would wish to see LKP gratuitously – and, as it happened, wrongly – criticised in its report is unknown.
Of the 1,050 leaseholders, 62% were more than 55 years old, and the majority had incomes of £29,999 or less.
997 were owner occupiers
53 buy to letter investors
171 were in RTMC/RMCs
456 Non RTMC/RMCs
64% had good or faily good service
20% poor or fairly poor
14% neither good nor bad
2 % did not know
Ipsos MORI decided that flat owners were hard to find – even 4.1 million of them – purchased its list of potential interviewees from another market research firm called UK Changes.
In the main survey of 1,050 people, 131 said they lived in retirement homes 269 in private sites 142 in sites with an RMC or RTM. 166 in LA owned sites with or without a Tenants Management Organisation.
The survey then says this may well be an unrepresentative sample – they could also have added that there would be a strong chance some respondents did not understand the nature of the ownership of the site they lived in.
It was misleading of Ipsos MORI to ask how leaseholders would rate the “collection of service charges and preparation of accounts”. 42 per cent of the 907 respondents said “very good”.
We could have told the Competition and Markets Authority almost all freeholders are very, very good at trying to get the service charges paid, but a much smaller percentage do as good a job at sending out accounts.
How the survey can conflate these two diametrically opposing issues is unclear.
Of the wide list of issues that worried leaseholders just one per cent said insurance costs were too high.
If that does not sent the message that something is wrong with the survey (or leaseholders’ understanding of the question) nothing will.
We are aware the Competition and Markets Authority has been made aware of a considerable body of current and historic evidence including that from insurance brokers pointing out commissions are a big issue
Of those who used the property tribunal, 41 per cent were very dissatisfied with the outcome, in spite of only 29 per cent saying the tribunal found against them. Oddly 12 per cent said that they could not remember the outcome.
It emerges we are talking about percentages of 17 people.
But that is better than the four who had used the ombudsman services.
The most common place to go for help when a leaseholder had a problem it was not the Tribunal (three per cent) or the Ombudsman (two per cent), but their local MP (seven per cent). As LKP knows for its experience the vast majority of MPs have little understanding of leasehold issues so if they are the best source of assistance it suggests the market has a problem.
For accessing information when a leaseholder has a problem the news is also not good for the formal systems.
Twelve per cent spoke to the HA/LA property manager, 11 per cent sought advice from fellow leaseholders, 9 per cent went to a solicitor, eight per cent searched the internet (shhh, don’t mention LKP) five per cent went to the Citizens Advice Bureau, who we also know have mixed and variable experience of leasehold issues.
Then we have friends and the council also on five per cent.
Down down at 4 per cent was LEASE, the government-funded body intended to provide information on leasehold law.
Conclusion:
This could and should have been an important study of the leasehold sector, but it needed to ask those who know something about it before the questions were drafted.
Rather than asking pallid questions like “do you ever have meetings about the management of the property?”, they could have asked “does your site have a recognised tenants’ association for the leaseholders, do you know what rights such a group has?”.
From a random sample of just 1,050 people, the chances of finding the key residents on the site who happens to have read all the accounts and understood the issues is staggeringly small.
“A full 90 per cent thought that they owned their flat…”
Yes, I’m not surprised. A cocky resident here stood up at a meeting and asked what he actually owned and sat down deflated after learning he owned nothing! A tactic used by Peverel/FirstPort to deliberately mislead leaseholders by referring to them as ‘Owners/YourProperty online’ on the noticeboards and on door labels such as “Owners’ Lounge” etc. Most residents never question it and it was only because I brought up the subject during the meeting after which he asked the question. Ever since then his demeanour has changed somewhat!
In reply to a complaint i made to the ASA concerning the claim that “You own your home” from a high profile retirement development company, when i pointed out it was leasehold not freehold the ASA told me “since everyone thinks leasehold is the same as freehold, the advert meets our standards”
I have aready written to the CMA to criticise the conclusions they appear to have drawn from this flawed survey. I used the evidence of the 65 developments scammed by Cirrus/Peverel, pointing out how delighted their predecessor OFT had been to have provided sufficient information for the 65 to take legal action for redress. But that NOT ONE had done so.
I asked: “Were the 65 happy to have been scammed?”
Answer: “Surely not!”
Question: “Can the fact they didn’t take action to recoup their losses be interpreted as evidence they were happy?”
Answer: “Surely not. Much more likely to be evidence they couldn’t be bothered, didn’t want the stress … in fact, all the reasons they’d chosen sheltered living in the first place.”
Message to CMA: “PLEASE don’t waste this opportunity to do something of real value. And don’t insult our intelligence with an example of ‘How to Lie with Statistics’.
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Susan how right you are.
The OFT was toothless in the Price Fixing Scams.
The residents here, some 75% show no interest at all in the attempts I have made to have Peverel Retirement refund Service Charges that were paid over the past 8 years.
I managed to get £156 refund for each resident last year, 3 resident said thank you. one sent a card and included a Token.
The other 24 never said a word, and at the next meeting only wanted to move on and were more interested in the colour of the grass and can the gardens not grassed have nice flowers?
I did not take on Peverel Retirement so that the residents would benefit I knew if I was successful then all would benefit.
When we recently were offered to purchase the freehold only seven, actually contacted me to see if it was beneficial.
We had the £34,000 secured but no one showed any interest?
So if the CMA speak to the 75% not interested in each development then they will have the result they have shown.
The CMA have my name and address, including phone number, which was given to the OFT when I asked under the Freedom of Information Act to be informed who from Cirrus/Peverel Management Services had had been cheating us.
The OFT replied that it was not in the National Interest to name the villain’s of the Price Fixing?
The OFT did threatened the 4 Whistle Blowers from 2009, that they had to keep quite during the 4 years investigation or they would face, Criminal Action?
YOU COULDN’T MAKE THIS UP?
The CMA ( as a branch of Government ) should be investigating the complicated TFT company structure indentified in EDM 408 sponsored by Barry Sheerman MP :
COMMONHOLD AND LEASEHOLD REFORM ACT 2002
Session: 2004-05
Date tabled: 16.12.2004
Primary sponsor: Sheerman, Barry
Sponsors:
That this House welcomes the Commencement Order made on 16th November that will bring into force some of the key remaining leasehold provisions of the Commonhold and Leasehold Reform Act 2002, requiring landlords to send out written reminders with dates for ground rents before they are able to impose any penalties for late payment and preventing landlords from insisting that leaseholders use a specific insurance company to insure the property; and hopes that this legislation, which comes into force on 28th February 2005, will prevent companies such as Estates and Management Ltd., with a complicated ownership structure including companies registered in the Bahamas and the British Virgin Islands controlled at the top by the Tchenguiz Family Trust, from exploiting elderly and vulnerable householders.
CMA should not be wasting tax payer’s money on MORI Opinion Polls .
The Opinion Poll taken before the Scottish Refendum gave false information on the possible result and caused the 3 main party leaders to panic and giveaway Devolution Rights to S residents not available to E&W residents.
The CMA should realise be aware that 5 million leaseholders contribute atleast £1000 ( rough estimate ? ) per head per year to HMRC & Government Exchequer . That is equal to 5Mil x £1000 = £5 BILLION substantial annual tax revenue. ( paying for MPs in Parliament, up keep of the Courts and LVT and annual budgets for OFT and FCA and SFO, for all those civil servants under Housing Minister etc.)
But what do the freeholder companies collectively contribute in annual tax revenue ? Next to Nothing ?
If the Freehold( ground rent) companies are not paying 50% of what the leaseholders are contributing to the Government, that is definitely NOT FAIR TRADING .
In the above post , I calculated the HMRC tax revenue paid by 5 Million leaseholder based on £1000 per person.
I have found the financial website “This is Money” website published on 20 May 2013 revealed the average tax paid by UK residents was £4,398 ( ( from research by UHY Hacker Young Accountanct firm).
If we assume 1 in 5 leaseholders is retired , then £4 Mil leaseholders would have paid over £17 Bil to the Treasury . But what did did the freehold companies pay in Tax ? Next to nothing ??
CMA are requested to investigate the tax paid by “major freehold ground rent companies” paying next to nothing tax and using the Government Courts and LVT which are paid by the leaseholders shouldering 20% & 40% income tax and 20% VAT , to give favourable judgenment to freeholders .
Ollie, you are soooo right in this posting, I believe you have a great insight into the working of Peverel Retirement.
Thank you.
Sent to the CMA 3rd Oct. I won’t hold my breath for a response.
I note that representations have now closed, but I wondered if it is
possible to report ongoing and new issues for consideration by the
committee? If not perhaps you know of another Government department who
would be interested. The issue I have just discovered is very relevant
to the CMA investigations as follows:
Grange management (Southern) two years ago were an Industrial and
Provident association and passed limited profits to their parent company
Affinity housing. Grange converted to a private limited company last
year wholly owned by Affinity with just two shares. I warned people at
the time that I smelt a rat with this change.
Yesterday I obtained the accounts for Grange up to April 2014. On a
turnover of 2.88 million, they made an operating profit of 838,000.
Of that profit they passed £521,000 to their parent company Affinity as
“gift aid”.
This is an enormous increase in profits compared to previous years, but
more important is this means that Grange leaseholders are being over
charged and with the profits passed to Affinity. That means people on
State pension are subsidising the provision of social housing by
Affinity. This has got to be wrong but it seems leaseholders are
powerless to do anything.