It was a lengthy post and we hope that you managed to absorb the important bits of the report.

For those of you that haven’t got round to reading the whole report, we thought we’d publish Michael Epstein (who instigated the paper trail) take on the responses from Judi, who appears to have accidentally revealed a little more than she had wanted to.

We’re confident that having published yesterday’s e-mail trail between Michael and Judi – the atmosphere within Kingsborough / Peverel will probably be able to be cut with a knife!

Any how, here’s Michael’s interpretation of Judi’s replies:

What is significent to me is that the information i have obtained is not my “sources” but is direct from Judi Runciman herself.

So she provides proof herself, which Kingsborough would find hard to give an alternative view at a LVT.

The following therefore is not speculation, it is from Judi Runciman, a director of Kingsborough.

Kingsborough employ 10 members of staff. They share Peverel/OM IT systems.

When Peverel/OM need to insure their developments, they approach Kingsborough who approach Oval, who approach potential insurers.

Prior to any quoatation, a commission is solicited for placing the business by Oval, acting on behalf of Kingsborough.

Technically it is argued that Oval having negotiated the commission rates with the insurer, Oval then negotiate with Kingsborough. Presumably it is done this way in order to exploit a legal loophole.

This means an insurer is invited to quote for Peverel/OM business after a 19.5% commission is agreed. Those insurers that do not agree to such a large commission do not have the chance to quote, even though there is a strong possibility that they would have been significantly cheaper. I do not argue with the principal of insurance commissions, but asking for the commission prior to the quote, would I suggest put a temptation on the insurer to add the commission to the cost of the quote.

The commission is divided on a 16.05% to Kingsborough and 3.45% to Oval basis.

In effect, the large company with a large amount of employees gets 3.4%, yet a small company with only 10 employees receives 16.05%.

Judi Runciman gives details of all the advantages of using Kingsborough, and claims they do the majority of the work.

This is incredible. Think for a moment just how many developments Kingsborough insure? How could they do that level of work with just 10 employees?
When challenged to produce quotes from other insurance companies Judi Runciman refuses.

I do have a source within the insurance industry who is of the opinion that Peverel/OM property insurance is generally between 30-40% more expensive than it neede be.
For anyone challenging insurance costs at a LVT, please consider using these points, when Kingsborough are trying to justfy their charges.

Bear in mind the admission that they share Peverel/OM IT.

This means that we are paying for Peverel/OM IT systems which are accounted for in our Peverel/OM management fees.

We are also paying via the commission charged for Kingsborough IT systems. Since they share the system it would appear we are paying twice.

Now, allow me to address the payment methods.

Judi Runciman states that when insurance is due, Kingsborough issue a payment request to Peverel/OM, who send Kingsborough the funds to be passed on to the insurer.
Payments have been negotiated on a 60-40% payment basis. This according to Judi Runciman is to “aid development cashflow”.

This would be bourne out had development bank statements shown funds being taken on a 60-40% basis. But from the statements I have had access
to, they show funds being taken from development accounts on a monthly or annual basis.

Judi Runciman responds to this point by asserting she cannot answer for other developments, the information is only concerning my development. Perhaps she is suggesting that only the Ravenscroft development pays on a 60-40% basis? This can only mean large sums of money are taken from our trust funds, before any payment is due.

Before being passed to Kingsborough, those funds have to have been passed to Peverel/OM. Not only would that mean a significent amount is placed beyond the trust protection, but provided no one finds out, Peverel/OM would have access to those funds, free of charge, instead of their (possibly) 7.9% overdraft interest rate.
Judi Runciman states that funds held by Kingsborough for insurance payments are held in a statutary trust, which is seperate from other Kingsborough funds.
However, the Kingsborough accounts make no mention of Client Monies. Judi Runciman refuses to provide any details of the trust our money is held in, she does say the accounts have been audited, but resfuses to say who audited the accounts.

We therefore have large sums of money not accounted for.

I now turn to the question of claims. As it is to be expected, part of the premium is based on the claims history of Peverel/OM developments.
How can we know our development claims history?

When i asked for the Ravenscroft claims history i was given a list of claims, without full details. One claim that stood out was for around £49,000 for a burst pipe.
Nobody on the Ravenscroft Development can recollect such a claim. This does not mean it did not happen, but when i asked for more information, Judi Runciman told me that it was “Confidential”

So, we are in the situation where claims could be made, which effect our premiums which Kingsborough say is “confidential”.

We would not know, nor could we verify if a claim was actually made, or a claim was actually part of the block insurance?

Indeed, if a claim was genuine and let us say the repair cost £380, since the excess is i believe £500 , without any accountability, how would anyone ever know that a claim had actually been made, and that Kingsborough/Peverel/OM do not charge the excess, pay the £380 and pocket £120?

Apart from visitors to this site, I would suggest very few people have ever heard of Kingsborough. If they have a claim they contact Peverel/OM, so it would never occur to anyone what may be happening.

In conclusion. Kingsborough employ 10 people. They share Peverel/OM facilities. They(through Oval) solicit 19.5% commission before inviting a quote from an insurer.

The basis they pay money to insurers appears to be contrary to the bank statements provided by Peverel/OM.

No account is made of the money after it is transferred from our service charge trust accounts by Peverel/OM, Kingsborough refuse to account for the funds after they receive them. (At this point a warning to Peverel/OM) In light of this and given you administer the accounts, do not even attempt to try and “engineer” the accounts to fit the “facts”.

In the first place accounts will be compared and second of all, someone within your empire is watching every move you make.)

We now find out claims are confidential, so no accountability there.

Do others share Michael’s take on things?

These truths are not just hearsay or what ‘we’ have discovered – its all based on written correspondence that Judi Runciman has e-mailed to TTAS’ very own Michael Epstein.

Before we start with the truths, we must warn you that this is a very very lengthy report and that there may be some ‘grammatical’ errors in the e-mails that we quote, that have been sent/received by Michael Epstein and Kingsborough.

Now that that’s out the way, lets crack on and publish some very important information that residents who include disputes about insurance in their LVT / RTM cases – will definitely want to refer to or include some of the facts we publish.

Below, we’ve published the paper trail of correspondence between Michael and Judi Runciman, that many people have contacted us about asking for copies of.

E-Mail from Michael Epstein (ME) to Judi Runciman (JR)

On the substantive points regarding the insurance I can now inform the residents that I am satisfied that this development was insured, which was their main concern.

I do have a bit of disquiet regarding commissions. Of course, everything has to be paid for, I understand this. That said 19.5% does seem a large amount. I understand many LVT’s have ruled 14% to be more appropriate.

I have also been given to understand that Oval claim 5%, which would appear to leave you with 14.5%. Given the fact that my development was insured for many years before Kingsborough existed, and what you have told me as to the scope of your operations, could you explain what you actually do for your commission?

E-Mail from JR to ME

As you say the total commission is 19.5%. Oval retain 3.45% of this and Kingsborough receive 16.05%.

LVT’s look at each case individually as you are aware and various amounts of commission have been stated as acceptable by them depending on the amount of work the broker undertakes for the insurance company. In our case they are generally looking only at the commission that Kingsborough receives, rather than the amount Oval receives as well. In some of the LVT’s we have been involved in a figure of 15% has been stated as what the LVT finds acceptable but equally at some of our LVT’s higher amounts have been accepted by the LVT so it does not seem unreasonable to me that we receive 16.05%.

You make the comment that 19.5% commission seems high to you. I am confident if you were to question other brokers who deal with this type of insurance, or indeed any type of insurance, as to how much commission they are paid you would find commissions in excess of 30% are not uncommon, I come across them regularly when I am quoting for new business so it is my opinion that a total commission of 19.5% is very much on the low side and indeed the FOS (Financial Ombudsman Service) have stated that in their opinion ‘where any administration is carried out commission can rise to 30% – 50% quite quickly, dependant on the work carried out’

I appreciate your development was insured before the days of Kingsborough who have been looking after the insurance requirements of OM since 1999. Since this time Kingsborough have been acting as the broker for the insurances required by the developments managed by both OM and the other property management companies within the Group. I have attached a list of many of the functions we perform on either a day to day basis or as and when required which I hope will give you an insight into the daily workings of Kingsborough. You will appreciate this is not exhaustive, I have kept this as succinct as I whilst still giving an overview of our functions.

What must be remembered is these functions have to be carried out, if not by Kingsborough then by someone else trained and competent to do so and if this was the insurance company then they would require the relevant staff and resources to enable them to carry out such tasks and to provide such staff and resources they would use the monies that they current pay to us in commission. The down side would be they would run the business in such a way as to integrate into the types of system they run for the whole of their business whereas Kingsborough tailor our systems and procedures to suit the needs of the property management company.

E-Mail from ME to JR

Thank you for your informative reply.

Based on what you have said, were we to arrange our own insurance in the hope of saving money, in your opinion to save us making a mistake (Grass Greener Syndrome)
in order to receive a similar service that you provide, how many employees do you think should be employed by the insurance company to meet our needs?

I know you have already been extremely helpful, but I would be grateful if Mr Allen from Zurich and yourself clarify a small divergence between you.
You state that premiums are worked out and then payment and commission terms are negotiated, he says that is all part of the negotiations.

I realise you probably cannot speak for OM, but given your explanation over the 60%/40% payments, could you possibly venture a reason as to why accounts shown to me by other developments, appear to support insurance money being taken out of trust funds in a different manner. This being so, could you speculate as to where this money is being held?

You make mention of companies that would not offer insurance. Purely as a matter of interest, when i apply for any insurance one of the first questions i am asked is “Have you ever been declined insurance?”

So does the fact that some insurance companies declined your business have to be declared? When deciding risk factors, would an insurance company take notice of the financial circumstances of the company placing insurance? If so, would a weak position lead to higher premiums? Would you be good enough to enclose the quotes you received from other companies before deciding on Zurich?

In a previous email i mentioned the comment from Collette Keane, which you responded to. From the candid nature of your replies and from experience of dealin with Collette Keane, I am inclined to your answer as being true. Just as a matter of interest Miss Keane mentioned that the Ravenscroft Estate had a poor claims record. Can you confirm this estates insurance record?

E-Mail from JR to ME

I cannot speak for how an insurance company would handle your business if it were to be placed with them directly or how many staff they would feel they need to be available to manage it. Your policy would be handled by a team of people within the property underwriting department and claims would be handled by the claims team under the normal service level of the insurance company and it is unlikely you would be allocated a dedicated claims assistant, you would deal with any member of the team who happened to pick up the phone. It would be very much like dealing with an insurer who provides you with your personal insurance – you are one of many.

You will appreciate it is difficult for me to speak on behalf of anyone else, be it an insurance company or a broker. However I can advise that in respect of the current arrangement we have a team of people, both in Kingsborough and Oval, who know the portfolio in depth, are dedicated to the portfolio both for administration and claims and there is a dedicated loss adjuster service.

We are in a position, with our in depth insurance and portfolio knowledge, to challenge any decision made by either the insurance company or loss adjuster on behalf of the property manager or residents if there is any disagreement or grey area. We recognise the importance of having dedicated people with in depth knowledge in the property sector who are trained regularly and monitored in line with the requirement of the FSA.

On the point of arranging your own insurance and the grass being greener, it is not only premium you must consider, it is cover too. Over the years Kingsborough have firstly insisted on a very wide wording for the policy we use and secondly continued to improve the breadth of cover as time has passed. This has resulted in certain aspects of cover being considerably wider than is normal to receive from a standard block of flat policy. I will give you just one example to save boring you – alternative accommodation is normally given as a sum equal to 20% of the buildings sum insured, we have ensured that insurers provide 40%.
I apologise if the words I used have confused the situation at all. Let me try to explain more fully. I believe you are referring to my comment ‘Commission and payment terms are not a part of the discussion until such time as the successful insurer has been chosen’

I am looking at this from the point of view of Kingsborough and was providing my response on behalf of Kingsborough. Once all quotations have been obtained by Oval a discussion then takes place with Oval as to the level of commission Kingsborough will receive for that insurance year and payment terms that are available from the successful insurer. Oval will have dealt with the negotiations with insurers on these two points during their negotiations with them and will provide Kingsborough with the relevant information at the time Kingsborough enter into the above mentioned discussion with Oval. It is then for Kingsborough to discuss the level of work we undertake on behalf of the insurer and to agree the commission based on this with Oval. However Oval will already have agreed the total commission that the insurers will pay for the insurance year prior to our discussion with Oval. I hope this makes the matter entirely clear.

You are totally correct in that I cannot speak for OM, I have neither authority or responsibility for OM and I am afraid I cannot comment on the matter you have raised as this does not relate to Kingsborough. You will need to discuss this matter with OM.

The insurance under which your development is insured is brokered on a portfolio basis – the underwriting and attitude of underwriters to this business, which is viewed by them as commercial business, is entirely different to a one off household/motor policy or indeed other individual insurances. The reasons for ‘no quoting’ would not be viewed in the same way as a one off policy. It is true to say that one of the reasons that a no quote may be received is that the insurance company do not like the level of claims under the portfolio but such claims relate to the whole portfolio and not to just one house/car etc. This is not the only reason an insurer may no quote the portfolio, it may be that they are unable to meet the criteria we have set in part or whole and as such they realise that if they cannot meet such criteria there is little point in offering terms.

It must also be remembered that even for one off household or motor policies there is a difference between insurance being ‘declined or terms imposed’ and an insurance company not wishing to quote for the risk. To give an example, there are a great many companies who would ‘no quote’ a young driver who wishes to insure a high performance car as the insurer approached does not wish to write this type of business but this is not in the eyes of another insurer who specialises in writing this sort of business, a reason to be of concern to them. A declinature that would be of concern would be for a serious reason such as the insured had received a criminal conviction, the risk had been changed and posed a higher hazard than the normal risk etc. It is of course prudent for an individual (who has no insurance experience or knowledge of what is a material fact and what is not) to disclose all no quotes to any insurer they approach to ensure that the insurance company have full disclosure of all facts and can then advise if they feel this is a material situation or not and the individual cannot therefore be accused of withholding facts at a later date.

Kingsborough are subject to the rules of the FSA, which are extensive and we have to demonstrate to the FSA twice yearly that we are complying with such rules and are independently audited each year and these auditors are obliged to report to the FSA, as far as the money rules of the FSA are concerned, that we are complying with their requirement.

Insurance companies would be concerned with any broker that was not performing to FSA standards but the level of profit a broker makes is not of concern to the insurance company as the monies that are paid to us for payment of premiums are held in accounts that cannot be touched other than to pay insurance premiums, these are statutory trust accounts as I believe I have mentioned to you in the past. The insurance premium quoted by the insurance company does not in any way take into account the weak or strong position of any broker, the premium is set on the underwriting criteria I have mentioned in the past to you which includes claims made by the site on a block by block basis. If an insurance company were in any way concerned at the conduct of a broker they would refuse to deal with them – full stop – they would not penalise their clients by increasing the premiums.

As I have said in the past the insurance under which Ravenscroft is placed is a block policy brokered on a portfolio basis and as such there are no individual quotes for individual sites in the presentation to or the response from the insurance companies approached. It is not therefore appropriate to provide to one site the whole presentation and response for the entire portfolio as it would be meaningless to one site.

I am attaching the claims experience relating to Ravenscroft for the insurance years 01.07.07 to the present day. You will see claims have been paid out totalling £50,700. The premium paid to the insurance company for the same period for buildings (excluding insurance premium tax and terrorism premiums) is £49,954.58. So you will see the loss ratio of your site is in excess of 100% – you have received more back in claims payments than you have paid in by way of premium and there are still 3 months of the current insurance year to run so the amount paid out in claims could potentially increase further if more claims arise before renewal date.

E-Mail from ME to JR with JR replies in Italic

Thank you Judi,

Let me put a question another way. How many staff do Kingsborough employ in order to provide the service you offer? We have 10 insurance staff plus an accountant and the use of centralised services within the Peverel Group, such as IT.

From previous statements you have made and careful scrutiny of your website it is clear to me that you reserve the legal right to pass on claim management functions to a third party, and that you also reserve the legal right to use a third party to place insurance. You are quite specific that Oval are best equipped to handle brokerage, because of their size and financial muscle. By implication Kingsborough does not have the resources to manage this themselves. I believe my response in my e-mail of 17th April fully covered this point.

With regard to the scope of insurance, i appreciate that you do not want to bore me, however, let me assure you, I have never found any of your communications boring, challenging maybe, but never boring! Having researched the subject, whilst of course insurance policies can be tailored to meet specific requirements, most are fairly standard. I agree that price is not everything, very many estates do seem to have obtained substantial savings on insurance after arranging insurance themselves. Had it just been a few estates, I could accept that, but the number is so great it seems too much to be a coincidence. The basis for most insurance policies is the same, that is they all provide catastrophe perils such as fire, storm, water etc but it is in the detail they differ. I believe my example of alternative accommodation is a useful one, in that a standard flats policy would normally give only 20%. Other examples are the level of cover for day one, trace and access, property owners liability, loss/theft of keys and of course most policies would contain an average clause, whereas our policy does not. No doubt you will appreciate, as I have previously mentioned, our criteria is not just on price but on many other aspects as well, as listed in my previous communications to you. I certainly cannot comment on any site where I do not arrange the insurance or have any knowledge of the breadth of cover that such a site has agreed to accept for the lower premium.

Thank you for the explanation regarding negotiations with regard to commissions. This then means put simply, that it is Oval that carries out all the negotiations with Zurich, once rates are agreed including commissions, Oval will negotiate with you. So for example, if they are offered 20% commission, are you saying you negotiate with Oval as to how you divide the commission? Since it appears from your description Oval do so much of the work, I do find it suprising that the proportion of commission is so heavily weighted in your favour. I confirm Oval carry out the negotiations with Zurich following a discussion with us as to the criteria that will apply, such as policy cover etc. Oval negotiate a commission amount with insurer which related to the works that will be carried out on behalf of the insurance company. Oval and Kingsborough then discuss the level of work that will be carried out by Kingsborough and a level of commission is agreed upon to cover such work. I would disagree that Oval do much of the work. Oval broker the business and carry out the day to day claims handling for the insurer but all other work, including the provision of a bespoke database and staff to run the business are provided by Kingsborough.

Given you place so much business with Zurich, I would find it unusual if a discount is not offered in addition to commission. Can you confirm if you do obtain a discount, if so how much, and is the discount passed to our developments? I can confirm there are no further monies paid to us or Oval in relation to the insurance other than the commission that has been previously advised to you.

As I said, I appreciate you canot answer for OM. I have been informed by an OM representative, that funds for insurance are collected monthly or yearly from trust accounts. Of course that is not within your remit as Director of Kingsborough, but as money for insurance is as you say held in a trust account, you could confirm the frequency that Kingsborough receives those funds. I have advised and it has been confirmed to you by Zurich in writing that the funds for Ravenscroft were paid to insurers 100% of the terrorism premium and 60% of the buildings premium on 19th July 2011 and the 40% balance of the buildings premium on 20th December 2011. I do not understand how I can confirm anything else. You must appreciate I am giving you information in relation to Ravenscroft and no other site, not all sites are insured by Kingsborough, it may be the freeholder/landlord arranges their own insurance and if this is the case the way in which the premium is required by their insurer may be totally different to the Zurich arrangement.

Since insurance money is held in a trust and not shown on your accounts, I am sure you will have no problem in sending me a copy of the relevant accounts and supporting bank statements. I do not wish to be difficult, but a copy of the audited accounts for the trust would be appreciated as well. Every broker has a client account, ours is a statutory trust account as previously confirmed. This account is not reported on in the accounts of the company as the monies are held for premium payment and are therefore not the monies of the broker. The account holds all monies received by the broker for the payment of insurance premiums from every client they deal with and I am therefore unable to provide you with copies of the bank statement. You will no doubt appreciate at this time there are no monies in this account that relate to Ravenscroft as all monies received have been paid to insurers as has been confirmed both by Kingsborough and Zurich.

I appreciate your comments with regard to disclosure to insurance companies. Possibly I may have not expressed myself clearly regarding company’s financial position. I accept what you say, but according to Zurich it is a factor in deciding premiums as a company in financial trouble can tend to be less well managed, and more likely to neglect a maintanence issue which may lead to a claim. We are a broker, we are not a management company and therefore would not be responsible for how well managed or otherwise a site may be. All clients (not the broker) have a responsibility to ensure the buildings they insure are maintained adequately, this applies to an individual insuring their house as well as to a property management company insuring a block of flats. However guidance is provided to the property managers in many guises and ways by Kingsborough, Oval and indeed the insurance company themselves on aspects of risk management.

I appreciate your portfolio position. However, even if it is not development specific, I would like to know which companies were approached to place insurance, which ones did not quote and which of the other companies that did quote and how much their quotes were for, and if offered how much discount and commissions were? At 2010 the insurance companies approached were Zurich (holding insurer), Allianz, Axa, RSA, Travelers, Amlin, QBE and Aviva. As previously advised 3 declined to quote (RSA, QBE, Travelers). Amlin did not respond at all and the other four offered terms. These terms related to the whole portfolio and not just to Ravenscroft. The figures quoted by each insurer would not have a relevance to the final premium set for Ravenscroft and the portfolio figures are therefore not provided to individual sites. The level of commission requested from all insurers approached was the same at a total of 19.5%.

Finally, I thank you for sending me the Ravenscroft claims record. Could you send more details as so far, i cannot find anyone that can remember the amount of claims suggested. I did receive a claim form referring to repairs to an underground carpark repair, though we do not have an underground carpark. The only claims reported are those shown on the claims experience recently sent to you, I am not aware of what the claim form for an underground car park could be as I have checked all claims and they do not in any way relate to such a matter. I am afraid I cannot provide detail of any claims that relate to internals of properties as those details are private between insurers and the claimant. However there are two claims that relate to the communal area. The claim on the loss date of 13.05.09 was reported by OM and related to vandalism to the pedestrian gate and the claim with the loss date of 11.06.09 was reported by the property manager and related to the fencing being cut by wire cutters.

E-Mail from ME to JR with JR replies in italic

I find it hard to believe, that with only 10 members of staff you could physically carry out so much work, without as is your right, passing work on to act on your behalf. With the best will in the world it cannot be credible that you could undertake all the work.

In a similar vein, it does seem incredible that a company with 10 members of staff can produce profits that one employing 4200, of which you are part cannot. All I can do is provide the facts to you, I am afraid I can do no more to assist you to either believe or disbelieve those facts.

With regard to the scope of insurance, provided insurance protected the interests of the freeholder, would you have any objection to individual developments arranging insurance? Presumably, we would still be able to use Oval and rely on their guidence as to the level of appropriate insurance. This is not my decision to make. The lease and management agreement will determine who must place the insurance. This is a matter you would need to discuss with the managing agent.

You make mention of the 60/40 split in payments for insurance, which for some reason you are specific about Ravenscroft, whilst on other issues you refer to the broader portfolio. So, i must ask again, if you pay on a 60/40 basis, does money come into Kingsborough on the same basis from developments that are part of the portfolio? I cannot provide information to you on sites other than the one you have an interest in.

With regard to the trust status of funds held to pay for insurance, these funds have to be in some kind of bank account that is seperate from your own accounts. Why can you not supply details? I have previously advised the account is a trust account and the monies can only be used for payment of insurance premiums in relation to the clients who have paid those monies to us. I am not prepared to provide you with details of a bank account that relates to monies held for all clients of Kingsborough. I have already confirmed to you that this account is externally audited and has always been found to be dealt with in an appropriate manner.

Thank you for supplying me the information regarding insurance companies you approached to place insurance. As you would expect, i will be investigating further. In the meantime, I can see no logical reason as to why you seem unable to supply figures for the quotes you obtained. As I have already advised the premium quoted by those insurers who chose to quote was for the whole portfolio and not just for Ravenscroft. I fail to understand what value giving you these figures will have and I will not be releasing the figures.

I am disturbed by your comment as to the level of commission requested was 19.5%. To clarify, does that mean that when you or your negotiating vehicle, Oval, approach an insurance company you ask for 19.5% commission? Oval would negotiate with the insurance companies approached and would suggest that a figure of 19.5% commission was fair for the level of work being undertaken on behalf of that insurer, it is then for the insurer to either agree or disagree with this suggestion and to agree a level of commission they feel is fair and equitable for the work being undertaken. I believe you are aware that Zurich feel this level of commission is very reasonable.

Has there been a case where an insurer has declined insurance because they would only agree to a lower level of commission? I would appreciate your complete candour on this point, as by now you have realised i will find out eventually! I have been communicating with you since March of this year and all of my communications have contained honest and candid replies. As I have said before I will only provide information if it relates to Ravenscroft and I can confirm to you that no insurance company who has provided insurance for Ravenscroft has refused to quote due to the level of commission that is payable.

With regard to the Ravenscroft claims record, there are claims that we do not recognise. I am not entirely convinced that your explanation holds water.

You say that some claims are confidential between claimant and insurer. This I could understand for a contents insurance claim, but if a claim was made under the block policy, then i would have thought the claimant could not be an individual flat owner, but would have to be made on behalf of the Woodlands Trust, which makes us, thereby me, the claimant. In any event, such a claim would have been handled by the property manager, who has never told us of any problems. I do suggest you revisit your initial answer. Any leaseholder of a property in Ravenscroft is quite at liberty to lodge a claim directly, without involving the property manager, if the damage relates to their apartment. Each leaseholder pays towards the insurance and as such has an interest in the insurance and can lodge valid claims under the policy. If they choose to go through the PM that is their choice but they do not have to. You are not the claimant for an incident that did not occur in your own apartment, the leaseholder of that apartment is. I would not disclose information about a claim you lodged under the policy to anyone else and I would afford all other leaseholder the same privacy. I have disclosed the information on communal claims and can confirm the large claim that is shown was handled by a loss adjuster appointed by the insurance company. I have no need to revisit my answer, it is the same as previously advised.

It is to be noted at this point that Michael had clearly struck a raw nerve with Judi, because she then ended correspondence with Michael with the following.

Please see my responses (above e-mail in italic).

I feel I have provide you with answers to your questions to the fullest of my ability and I will not therefore be able to add anything further to what I have already advised to you. This communication therefore concludes my responses to you on the matters you have raised.

If you are unhappy with this situation you have the right to approach the Financial Ombudsman Service with any complaint you may have which will be investigated by them.

Should you decide you wish to take this route their contact information is shown below.

Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR

Telephone – 0845 080 1800
E-mail – complaint.info@financial-ombudsman.org.uk
Web site – www.financial-ombudsman.org.uk

Tomorrow we’ll be bring you Michaels take on the above.

Once again, apoligises for such a lengthy post – but trust that you are able to pick out key points of information that may be beneficial to any LVT / RTM case.

One of the leaseholders in question also believes that they have been a victim of insurance fraud, because Peverel / OM are saying that a recent flood wasn’t covered by the block policy and therefore the leasehold must pay the excess.

The other leaseholder shares the opinion of OM Property Management that many of us do, whereby they pay service charges – but never see anyone visit the development to undertake work.

Rather than go into details ourselves, we’ll let you read the messages we received directly for you to judge for yourselves.

Development: Woodford Way, Witney

Hi TTAS

We are based in Witney Oxfordshire and purchased a house from David Wilson homes in 2007.

We signed the contract with Solitaire at the time with costs pending etc. OM are now of course the property managers in charge and we have now started to receive invoices recently and yet we have never seen anyone from them doing any work on site and are having a meeting this evening with other freehold and lease holders.

We have 160 properties who are signed up with OM and are looking to gather as much support as possible.

I found your site and maybe as we start to build a group, you might be able to help advise us on the best route forward to release ourselves from their contract and take on a new company with a better reputation?

Where have we heard before that homeowners who bought a David Wilson Homes property have been lumbered with Solitaire and now OM Property Management?

OM Property keep spinning the line about failings at developments were the responsibility of Solitaire Property Management, yet almost three years since Solitaire was “taken” over by Peverel / OM Property Management – the same level of service is being experienced.

We’ve recommended that the above contributor reads our advice pages prior to taking any action as it will allow them consider all the options available to them.

Below is the story of a leaseholder who feels a form of insurance fraud has taken place..

Hi,

I stumbled across your website after I got a letter from O&M management and was after some advice?

I am a leaseholder of a flat with O&M Management and Peverel. They also insure me through Oval Insurance Broking.

Im December 2010 I had a leak that ended up flooding my flat. Solitaire (at the time) had told me it was covered in my mantence insurance and ‘Cirrus’ sent out Lynx Maintenance Ltd to sort out the problem.

At the time I was told I would only have to pay the price of a new pipe and the plumbing bill and that everything else was covered by insurance. Lynx charged me over £300 for the repair and after I asked for an itemised bill the reduced it to around £200 which I payed. After I thought they were being unfair I asked them to leave and got a local builder in to finish the job.

I got a letter today telling me that I (12 May 2012) telling me that ‘During a recent accounts review’ they discovered it was not included in the sevice charge accounts and I have to pay the excess on the insurance was £500 + they Wet Vacuum & Suppling of Dehumidifier charge (from Lnyx) of £216.

I was unware an insurance claim had been made because I could get it fixed for less than £500.

I am not sure where I stand with this and was hoping you may be able to give me some advice or direction on the matter?

Exposing these type of grievances on TTAS is what will end the insurance rip-offs that Peverel / OM run, because how many leaseholders would accept the line from OM and just pay up?

It’s also another case of residents having to fight a battle to get the services that they pay extortionate management fees for.

Maybe Michael Epstein will be able to pass comment on this dilemma, given his experiences with Kingsborough / Oval.

Can you help a potential retirement buyer?

Identifying who a management company is of any leasehold / retirement leasehold property is always difficult.  Especially if the agent selling the property wants to turn a blind eye to the question and denies knowledge of it.

This is the reason for our next question from a contributor to TTAS who is trying to identify the management company of a property in Court Royal, Eridge Road, Tunbridge Wells, Kent.

Here’s there message:

My wife and I have been considering buying an “over 55s” leasehold apartment.Given your essential information we felt we ought to do some checking. Can you tell us how we find out who the management company is? The property we have in mind is Court Royal, Eridge Road, Tunbridge Wells, Kent, TN4 8HT.

If you know who the management company is at Court Royal – do let us know and we’ll update the contributor in question.

Bizarrely the organisations we’ve spoken to are approaching the matter from two very different angles and it’s encouraging that other media organisations are looking to produce documentaries.

It brings the total number of production companies to have contacted us to five and shows that somewhere our fight is being heard.

One of the primary reasons that journalists contact TTAS is because they know we have a captive audience of residents suffering.  Residents who may want to be featured in the documentaries and/or provide research to the production companies.

Without naming the various media outlets in question, we’ve been asked to ascertain whether anyone who has purchased a leasehold / retirement property, also used the one of the many “part-exchange” options that many builders such as Barratts offer.

Another journalist has asked whether those home owners that bought a retirement property could get in touch with them, as they have a few questions to ask about the M&S buying / selling process.

Other journalists are interested in hearing from residents that have leaseholder issues and have gone to Leasehold Valuation Tribunals.

They are looking to obtain LVT case references, where the LVT ruled in favour of residents.  They also want to hear from residents who have won LVT’s, but have then had issues with management companies contesting the outcome / or failing to abide to the ruling.

Peverel Action Group recently highlighted the risks of paying your service charges by direct debit, whereby you’re no longer in control of the payment you make to Peverel and they could easily inflate these, compared to standing order payments that are setup and controlled by leaseholders.

All of which exposes the risks of two forms of payment that many residents probably pay their service charges by.

This leaves residents with only two options 1) by pay by card or 2) pay by standing order.

If you pay by a card that isn’t a Switch Maestro / Debit Card, Peverel will charge you a processing fee.If you want to setup a Standing Order, this will take a lot of communication with and agreement by Peverel for them to allow you to pay by this methods.

This will more than likely put many people off of paying by a secure route and will probably opt to pay their service charges via an unsecured method such as cheque.

You may be thinking right now what options do I have?

Well as always, TTAS have an alternative answer to this conundrum and it is with special thanks to TTAS regular Michael Epstein for bringing this method to our attention.

When Michael had concerns about the where his and other residents service charge payments were being deposited, he put a great deal of effort into investigating the course of service charge payments.

His OM/Peverel property manager apparently kept changing their story and when Michael became aware of the reported cheque fraud – it raised the alarm bells.

With a lack of invoices and proper bank statements (provided by Peverel / OM) that would show payments had been credited to his account and to the trust funds – he discovered that if you have a genuine doubt over payments of service charges reaching your account – it is accepted as a valid reason to withhold payment.

He advised that at the time, his arrears were around £2,500 and he wrote to Peverel to advise them that no further payments would be made until they could provide evidence that his payments were being credited to the correct accounts / trust fund.

Michael also told us that he advised Peverel that should they take him to court, his defence would be based on this concern and that he would show the many e-mails he had sent to Peverel asking to see evidence of deposits being credited to his accounts.

Judging by Peverel’s reaction – it would appear that they were worried by this possibility.  They clearly wanted his money, but knew they could not risk going to court and losing, based on the security of his funds.

The reason for this and to quote Michael:

They knew that defeat for them would be on TTAS within seconds, which would open the floodgates

Therefore, Peverel took a counter measure and soon after he’d receive a letter from Jen Smurthwaite, who was a solicitor working for Dickinson-Dees, who had previously dealt with Michael when she had sent Michael a Harrassment at Work letter concerning Collette Keane.  (This matter we won’t go into)

Jen Smurthwaite told Michael that she and her client (Peverel) understood his concerns and in the interests of building a good relationship he could pay Dickinson-Dees, who would send him a Solicitors letter, showing that his service charges had been paid.  This would be a service at no cost to Michael.

A few e-mails were exchanged between Michael, Dickinson-Dees and Peverel / OM who agreed how a special arrange for him would work.

This special arrangement is one that Michael feels should not just be applicable to him, but to thousands of other leaseholders who have concerns about the safety of their service charge payment and is the reason for asking us to promote this, so here’s how this special arrangement works for Michael:

1. Michael sends a cheque with a unique amount e.g. £66.66.
2. This cheque is made payable to Dickinson-Dees.
3. Dickinson-Dees then cash this cheque
4. When the cheque has cleared Dickinson-Dees account, they make a BACS payment to Peverel.
5. Peverel then allocate payment to Michaels service charge account and trust account.
6. Peverel then send proof of this to Dickinson-Dees.
7. Dickinson-Dees then e-mail proof of this to Michael.
8. At which point the process starts again and another unique cheque is sent.

An example of the reply that Dickinson-Dees send to Michael confirming that Peverel have received payment is listed below, along with links to attachments they also send:

Dear Mr Epstein

Further in this matter, please find enclosed a copy of my client’s bank statement showing your sum of £197.63 being credited.

Please also find enclosed a copy of your up to date statement of account also showing this sum being credited.

You will see that, on your statement of account, a year end adjustment of £74.17 has also been credited. In addition the account shows the charge of £433.09 which falls due on 1 April 2012 to cover the next six month period.

I look forward to receiving payment of your next instalment towards your arrears.

Kind regards

Sent on behalf of Jen Smurthwaite
Property Litigation Department
Dickinson Dees LLP

Attachments: Statement of Account   |  Bank Statement

We’d be stupid to not think that Peverel wouldn’t want payment to be quicker and that this is probably an administration nightmare for them, but if they were to try and end the agreement – it would give Michael further reason to withhold payment.

Therefore, imagine if Peverel / OM were to take Michael to court and the defence he would have:

“I was paying under an agreement drawn up by Peverel to allay my fears over the safety of the service charges, but now they have gone back on the agreement and are refusing to show me my credits”

TTAS also believe that if others share the same concerns as Michael (who has this special arrangement) – why shouldn’t others be able to have their fears allayed by paying by this method?

At the end of the day, leaseholders with concerns towards the safety of their cheque payments are fully entitled to withhold service charge payments and if Peverel are unable to prove that payment is credited correctly – gives you the upper hand.

Should Peverel refuse this request to pay via this means, they are giving you further cause for concern towards the safety of your payments.

Therefore, if you have worries and wish to pay by cheque – contact Peverel and refer to this payment arrangement.

They’ll probably respond with “who is Michael Epstein” and when they do reply with the following:

1. His account number is: 39302030037
2. His development is Ravenscroft in Watford

We’d hate for Peverel to think that we were trying to make their lives harder than what it already is, by suggesting that leaseholders with concerns about service charge payment safety, should request such a payment arrangement.

However, if Peverel are not very forthcoming with providing leaseholders with guarantees about the safety of our payments, then we must take action and demand an alternative – which is what the above arrangement provides.

And Finally…

If ever anyone had doubts about the credibility of TTAS and whether we are making a difference – take note of the following e-mail we received endorsing what we’ve done:

Many, many thanks and for your hard work on your site.

Without your site, I would never have done the RTM for us here at Lady Hamilton Court.

Keep up the good work!!

TTAS has come a long way since our very first post on the 20 July 2008, but it shows that patience is a virtue and that good things come to those who wait.

When we read through the comments on this post, we noted that during the evolution of TTAS at least 10 of those original contributors who commented on this post have managed to escape Peverel by going RTM, LVT or even Petitioning the landlord.

Heaven knows how many other developments we have inspired, but we will not stop promoting the truth about how leaseholders are being exploited, Peverel’s failings, whilst also publishing facts on how to make your lives easier when dealing with Peverel / OM.

If retirement leaseholders being ripped off wasn’t bad enough, imagine our anger when we received a message from a leaseholder who is disabled.

They live at a development in Kent and have noticed a regular occurrence of overcharging by Peverel / OM, which has meant they have had to fight tooth and nail to get refunds… yet six months later the whole process has to start again.

Whether Peverel / OM are aware that the resident is disabled and are intentionally overcharging (in the hope that they be able to get away with it) is a question that we can’t answer.  Although it does once again raise the topic of why leaseholders have to do the job of Peverel’s accounts / auditors to identify errors.

Here’s the contributors correspondence.

I saw your website after Google search for OM Property.

I’m disabled person living in a small one bed room flat in Kent and I thought you might be interested in the problems I have had with OM Property Management.

The first problem I had was a couple of years ago when OM Property delayed sending me an invoice for the half yearly bill and sold my debt to a debt collector which they charged an extra £150. I made a compliant with the debt collector and OM property and managed to get £50 of that back but I paid the rest. I guess in hindsight I should have chased this invoice up but previously in the past they have been consistently late in sending.

The second problem I have and is still on-going started in 2008.

Whilst I was at work a van reversed into my property damaging an outside light and wall tiles. The van driver did the right thing and left his insurance details in my letter box. So fine I called OM up and gave them the details and they said they will sort this. After about 4 or 5 months later the work was carried out which was all ok.

Then in November 2010 I received my end of year adjustment invoice for £490 which at least £150+ over what I normally pay. So I went through their complaints procedure and after many letters and e-mails they finally told me what this was regarding.

So with this I went to stage 2 of the complaints procedure again they tell me this is correct and the reason it’s so high is because of the insurance excess, but my argument was that the work would have been covered by the van driver insurance company. So I went to stage 3 of the complaints procedure and finally they admitted this was incorrect and took that payment off and credited an extra £70 as a good will jesture.

This was fine but then in April 2012 again I get invoice for £490 so again I go through the complaints procedure and am still waiting for their reply. They have credited my online account again but I am worried that in September I will have to go through all this again. They have not replied to me at all so I have now gone to stage 2.

In the letter I got from my Stage 3 complaint they said I could be paying too much as I am currently paying 100% for the building but my building as two flats mine and next-door, so should be paying only 50% of this but I have not heard anything regarding this at all.

I think this company uses bullying methods to get as much money as possible and if I just paid this in full there is no way they would have admitted the mistake they made.

I hope this makes sense and if you have any questions I be happy to answer them I got copies of all letters too.

I would be interested to know your thoughts and any advice you can give me as I said I am disabled living on my own with a low income and I can never tell what the next invoice amount will be.

Many thanks

SB

If one property is continually being overcharged over £150+ per month (and in this case, the resident disputes the charges and gets a refund) – how many leaseholders out there are more than happy to pay these increases?

Multiply the £150 by 10 leaseholders = £1500, 100 leaseholders = £15,000, 1000 leaseholders = £15,000, 10,000 leaseholders = £150,000…. It’s a very clever and simple way of generating additional funds.

What if £150 is the lowest overcharging that they have made and there are more residents being maybe £250, £350 or more??

When will Janet Entwistle and Peverel come clean and admit that things aren’t changing and despite director changes behind the scenes, it remains ‘good old Peverel’  that we have all come to know.

And Finally…

Our sources have been in touch to tell us that within Peverel towers, management are trying to build moral within the ranks by distributing copies of “positive” media coverage.

However, as our source says below – this “positive” media coverage is not quite all it’s cracked up to be and they appear to be slightly distorting the truth.

Thought we’d bring this snippet to your attention – I remember past comments about on site moles and references to the above company being slightly distorting the truth.

Apparently at Peverel Towers, a couple of photocopies of recent articles in the local (to Peverel) Daily/Southern Echo were widely circulated around the office. I think Head Honchos are trying to boost morale by saying ‘look at us, we are good chaps aren’t we?!’

The copies of the article were on a positive slant (nothing wrong with that?!) about how a resident (it does give a name and development in the article so we won’t poke any further) had been saved thanks to Careline’s prompt action when there was an emergency.

A few troops smelt a slight rodent here and decided to carry out a little investigation of their own – the investigation revealed that this resident had NEVER had an emergency situation only a standard smoke detector call (probably down to toast!), the other info on the article was that the information was provided by an external company to Peverel (can’t Remember name) but guess what? More digging revealed that that external company is a PR COMPANY!

Two things: How much was resident paid to distort truth? How much is being spent on trying to turn Peverel’s lovely reputation around? Investigators are slightly gobsmacked that the above company would lie so blatantly! Same Old, Same OLd eh?

This sounds typical of Peverel usual PR tricks and shows how desperate they must be to try and improve things within the ranks.

Morale must be at an all time low if copies of local press coverage is all they have to demonstrate “how good” they can be.  Maybe, Janet / senior management will print off copies of our coverage to show how residents should really be treated.

And Finally Part II

For those of you paying your service charges by cheque, we bring you details of how you can ensure that your cheques are received – whilst also making Peverel / OM’s job a little more complicated.

The reason for these visits was because a number of them are in the process of taking action to escape Peverel / OM, via RTMs and LVTs.

Sadly, due to this we’re unable to name the developments in question, for fear of giving Peverel/OM the heads up on the forthcoming battle.

Although, as part of our discussion with residents, the question of what problems they could face (in the event that they are victorious) was raised.

We had to explain that one of the most recent common complaints reported to TTAS is of the reluctance by Peverel to refund / transfer service charge balances to the new property manager.

This is based on over seventy developments who have been in touch with us to tell the tale of their battle with only a handful of these having had any money refunded / transferred.

More importantly, since the administration of Peverel – they have pretty much told every development that has escaped them that they have no monies in their accounts.

When pressed on the reasons for this, Peverel have made excuses and the most popular excuse being that because some home owners haven’t paid their service charges, they (Peverel) have compensated for this, by using the funds of residents who have paid their charges.

In doing so, it has resulted in the new property manager being responsible for chasing the debt, that Peverel/OM should have chased. Especially as Peverel/OM have always been keen to send debt collection threats to residents, but it would appear that these are actually idle threats.

So, why have/are Peverel being so reluctant to chase debt and not transfer monies to new managing agents?

The honest answer is…. we don’t know and can only assume that it’s because either Peverel/OM do not have the money to refund / transfer fee or they know that by declaring there is no money in the “pot”, that residents won’t question it and therefore, they profit.

In light of this, we want to hear from more residents that have / are in the process of escaping Peverel/OM, to ascertain whether you too are being fed this excuse by Peverel/OM.

Supporters of TTAS have reported that this tactic by Peverel/OM is one they are also seeing more of and know deep down that Peverel/OM are taking advantage of residents.  However, to fight Peverel/OM to get fees reimbursed – it takes many man hours and the cost to residents to get these monies refunded, is always going to be more than what most residents could be refunded.

Meaning that it’s a chicken and egg situation, which Peverel know they can exploit and puts residents off from fighting for the monies they are owed.

Very clever, but more residents need to be aware of this tactic so that when they commence proceedings, they ensure that they know a rough amount of what monies should be transferred to them.

We’ll keep you posted on this as/when we get more information – but spread the word.

Another Case of Cheque Fraud?

We’ve been told of another potential case of cheque fraud, but this time it didn’t involve Solitaire – but Stonedale Property Management.

Here’s the facts we were told:

Hi

Until recently owned a flat in Greenwich managed by Stonedale Property Management – now managed by Alliance following RTM

When we tried to move a year or so back we discovered that a service charge cheque we had understood to have been paid in Sep 2010 had actually been paid into a fraudulent account which had been set up.

When we moved we had to leave money to cover this (just over £3k) with the solicitor. The banks involved (our side Natwest, and thief side Lloyds) wont pay up and we are now being pursued by Stonedale for the money (via the new owners)

We currently trying to get financial services ombudsman to help but its unlikely to be successful as (as we’re not clients of Lloyds) we cant complain about Lloyds only Natwest…who really arent responsible

Do you happen to know 1) whether we do indeed have to pay Stonedale the money…i read somewhere (probably your site) the fraud was carried out by an acquaintance of an employee (doesnt that make them partly responsible) 2) whether anyone else in same boat has been paid by Lloyds (stonedale told us they had but they say differently)

Any advice you could provide would be appreciated.

Yet again, it was a Lloyds TSB account that the cheques were paid into and the property agent is putting the onus on the resident to prove that fees were paid.

As many contributors to TTAS have mentioned of late, payment of service charges by cheque to Peverel/OM related companies are clearly insecure and they haven’t secure procedures in place to prevent cheque fraud.

Therefore, we can not recommend enough that when paying service charges, remember to pay by card or follow the lead of Michael Epstein who pays a third party that verifies receipt of the cheque and then pays it to Peverel.  All of which is at the cost of Peverel and would appear that only Michael does this.

And Finally…

Regulars to TTAS may have noticed the lack of GoogleAds that have played an instrumental part of funding TTAS.

This is because on Thursday we were advised by Google that our account had shown unusual activity, that has resulted in our Google account being suspended.

We’ve used GoogleAds since 2009 to generate nominal funds that helps pay for the hosting of TTAS and to be informed that our account had been suspended for the reasons they stated, makes us suspect that Peverel / OM have played a part in this.

Especially when we reviewed our website statistics and found that a specialist company (won’t name names) has been visiting our site on this date and their key role is protecting brands online.

Now – without wanting to point the finger (and is the reason for not naming the company)  - raises suspicions as to whether Peverel / OM really believe that by getting  our account suspended that it’ll mean TTAS will cease existence?

Who knows, but what this does mean is that we have a number of sponsorship spaces available for alternative property management companies, to advertise their services.

TTAS receives over 15,000 visitors per month and those management companies that already support us have helped many TTAS residents escape Peverel….. demonstrating that TTAS is the perfect platform for unhappy residents to find an alternative managing agent.

Therefore, if you’re interested in advertising your services, please contact us for a media pack via e-mail to admin@thetruthaboutsolitaire.co.uk.

This was the second instance of cheque fraud hitting Peverel / OM / Solitaire, two years on from when we originally reported on it in December 2011.

Imagine our surprise when another resident who lives at a development in Weston-Super-Mare got in touch to report what appears to be the third and fourth cases of cheque fraud at OM / Peverel.

Below is a copy of the correspondence we received:

Hi TTAS

I have just read your article about cheque fraud and I’m worried about whether I’ve been a victim of the cheque fraud you report on in March.

The reason for this is because I also paid the service charge for our apartment in Weston- Super-Mare at the end of October 2011 and the cheque did not go through my account until December.

Then with our May account we had a bill for 1 year rather than 6 months.

I’ve sent all the necessary tracer information and copy of cheque back and front to Peverel / OM and I’m still waiting to hear from them.

I refuse to pay by cheque again, but I’m worried about the number of residents at our development who may also be victims.

The reason for this is because my neighbour has also had the same problem and she is an old lady of 85 who had to deal with this on coming out of hospital after breaking her hip.

Apparently her bank say that it was paid in by Warwick University?  I still do not know whether it actually fraud or incompetence.

Interesting to note that it’s been reported that the cheque has been paid in by Warwick University.  One thing that springs to mind is that doesn’t a senior management member live near Warwick?

Could “someone” on the inside be trying to frame senior management, by this payment?

We look forward to hearing the outcome of OM / Peverel’s reply to the contributor, having supplied proof that payment was made and cleared.

Whether OM / Janet will issue a statement on this potential cheque fraud, is something that we wait with bated breath for… but you would imagine that given the seriousness of such claims, you’d expect them to be very forthcoming in reassuring residents that they are not vulnerable to cheque fraud.

And Finally…

We’d like to extend a special thanks and appreciation to TTAS sponsor ‘Urang’, who have renewed their sponsorship of TTAS for another 12-months.

This commitment by Urang to supporting TTAS, shows that they have acknowledged the predicament that OM/Peverel customers are in and are on hand to help those suffering.

If you are having problems with your managing agent and are looking for an alternative or help in replacing your current under-performing managing agent – feel free to contact Urang if they are in your area or any other members of our TTAS Directory.

Today, we bring you exciting news that may benefit all leaseholders that sublet their property, as they will be able to refer to this LVT decision in any LVT action that they decide to bring against E&M / Proxima to reduce their sublet fees.

A recent LVT decision found the fees charged by Proxima GR Properties for sublet unreasonable, in addition to fees for the registration to sublet being written off.

This could be a monumental day for residents that want to contest such sublet fees and we are very pleased to publish details of it.

The resident in question took Proxima GR Properties to LVT to contest the sublet fees that they were charging on their property at Vanguard House, Martello Street, London, E8 3QQ and was successful.

The reason for this is because when the resident approached E&M (acting on behalf of Proxima GR Properties) to request details of sublet, they were sent the standard Sublet Guidelines that quoted:

£105: Consent is granted for individual sub-letting arrangements meeting the requirements of the terms of the lease, to include the reviw of all documentation by our legal and administrative team, issuing of all consent documentation and the updating of our records

In addition your lease will require that notice of the subletting be given to the freeholder. We have incorporated the form of notice within the application for your convenience. As you will see your lease provides for a registration fee for the notice to be give, our current registration fee is £85. Every time a new tenant takes occupation a registration fee will be payable.

If the same tenant continues to reside at the property the consent will need to be renewed and we only renew this for a further fixed term. The fee payable is 50% of the registration fee”

The guidelines also stated a provision for a global letting fee of £300, however in this instance the resident in question elected to pay for a single licence.

When the resident came to pay for this single licence, they had to make payment of £220 (which they did under protest), in order for them to be able to proceed with the subletting. To this day (and the LVT also shared this opinion), the resident does not understand why they had to pay £220 for this licence rather than the lesser sum of £190 (£105 single licence fee + £85 registration fee) which was due under the Guidelines?

Leading us on to the official “LVT Application”, that was summarised by Robert Lathan (Barrister) which follows:

The Application

1) The Applicant seeks a determination pursuant to Paragraph 5 of Schedule 11 to the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) as to whether the charges levied by the Respondent in connection with the subletting of the premises are payable and reasonable.

2) The Applicant also seeks an order for the limitation of the landlord’s costs in the proceedings under Section 20C of the Landlord and Tenant Act 1985 (“the 1985 Act”)

3) The application was issued on 5 December 2011. The applicant did not include this in the bundle, but it is a document to which I have had regard. The applicant relied on three decisions of Leasehold Valuation Tribunals (LVTs) in support of his arguement that the proposed charges were not reasonable.

4) Directions were given on 24 January 2012. The tribunal identified the following issues to be determined:

• Are the proposed fees either of £190 (single letting) or £300 (global letting) in relation to consent and registration under-letting reasonable?
• whether an order under Section 20C of the 1985 Act should be made.
• whether an order for reimbursement of the application / hearing fees should be made.

5) The Tribunal was aware that there is another application involving the same landlord (Case Reference: LON/OOAF/LAC/2011/0020). It directed that the two applications be heard together on a paper determination. When I come to discuss the reasons for my decision, I refer to this applications as “Vanguard House” and the linked application as “Exchange Apartments”

6) The Applicant has prepared a bundle to which I refer in the decision. The Statement of the Respondent (1.2.12) is at C6. The Respondents state that they do not intend to make any claim for their costs to be paid from the service charge fund and suggest that S.20C does not therefore apply (see [11] of their statement). In a letter dated 16.2.12, the Applicant has responded to this case (at A1).

7) In these two applications, I have been provided with a number of decisions by the parties to which I refer in my decision. These include two decisions of the Upper Tribunal and some 14 decisions of Leasehold Valuations Tribunals. In Vangaurd House, the lessor referred to BIT/44UC/LAC/2005/0003. This decisions not not raise any points in principle and the market in February 2005 seems to have little relevance to that of 2012. It may be that for this reason, the lessor did not include a copy of this decision with their submissions.

9) When I first considered this applications, it was apparent that the further decision given on 15 February 2012 by George Barlett QC in Holding and Management (Solitaire) Ltd v Cherry Lilian Norton and others [2012] UKUT1 (LC) (“the Solitaire decisions”) is relevant to the matters which I am asked to determine. I therefore invited the parties to make any further written representations in respect of this aspect of his decision by 16.00 on 30 March. Neither Applicat nor Respondent has made any representations in this case.

We won’t go into to all the details of the Barristers opinion, but have highlighted the important bits that we believe are of interest to others.

E&M / Proxima quoted that these fees cover the following tasks that are encountered when dealing with ‘Subletling’:

(Point 38)

• Seeking legal advice from in house lawyers in connection with the drafting of all documents including licences offered;

• Perusing each lease and determining the requirements for consent under that lease;

• Requesting proposed tenancy documents, examining these and ascertaining appropriate requirements;

• Engaging in correspondence, e-mail communications and dealing with telephone queries;

• The execution of documents including staff time and additional resources required such as the recording of all information utilisation of IT infrastructure and lease storage and retrieval;

• After grant of consent, all documents are scanned onto the Respondent database, storing copies and charging correspondence addresses

In this case, E&M appear to have dropped themselves in it and is where TTAS believe residents can benefit from future reference to this point in particular, because the resident that brought the LVT countered this claim with the following (which appears to have been the bit that agreed with the Barrister).

Is the proposed single subletting fee of £105 reasonable?

(Point 39)

The applicant suggest that most of these procedures can be standardised by a body as large as E&M. Most are basic administrative tasks. He suggess that the work involved is exaggerated. For example, the need to take legal advice is likely to be a rare occurence. He notes that separate charges for registration and consent would appear to utilise much of the same administrative muscle and that it is difficult to see how these costs break down separately.

(Point 40 – the Barristers conclusion to Points 38/39)

I conclude that the fee of £105 for the grant of consent is not justified. I determine a reasonable fee to be £40 + VAT (if payable). I reach this decision for the following reasons:

i) I am wholly unpersuaded by the Respondents assertion that it would be necessary for a trained administrator under the supervision of qualified legal staff to take around two hours.

ii) The list of tasks said to be involved looks to me to be a list of all the things that could conceivably be done in connection with the grant of consent rather than the things that would need to be done in a typical case or that were in fact done in the case under consideration.

iii) I agree with the Applicant that a large managing agent such as E&M will have standardised these processes.

iv) There is not suggestion that this application for consent was anything other than standard.

v) I am reassured in these conclusions by the decisions of the President. I note that the tasks described by the Respondent are almost idential to those described by the landlord in the Solitaire decisions (see [12] and [13] of the judgement).

There is further cause for concern from the Barrister in regards to the registration fee E&M / Sublet demand and to quote this from the LVT decision The Registration Fee of £85 section, the barrister quotes:

(Point 44)

Secondly, I am not satisfied that the Respondent is entitiled to payment of any registration fee having regard to the terms of this applicants lease. I find that the subletting of the premises under an AST does not fall within the registration requirements of paragraph 27 of Part 1 of the Eight Schedule of the Lease (see paragraph 10 above). The Respondent has failed to identify any other provision of the lease under which the registration fee may be payable.

(Point 45)

In case I am wrong on the second point, I have considered the reasonableness of the fee demanded. It is a matter of regret that the President in the Solitaire andBradmoss decisions was not given the opportunity to consider the reasonableness of the fees demanded for the registration of the subletting, particularly in the context of the related fees in respect to the requisite consents. I accept the Applicant’s arguement that there is a clear overlap between the administrative arrangements for the granting of consent and the subsequent registration of the underletting. I therefore start from the premises that £40 is the reasonable fee for the granting of consent. What further fee would be reasonable for the additional work in registering the underlease? I conclude that an additional fee of £85 is not justified. I rather determine that an additional fee of £25 (+VAT if payable) is reasonable

Immediately, we can see that this resident has been able to reduce their subletting charges from £105 for a single sublet licence, down to £40. In addition to reducing the sublet registration fee from £85 (+VAT if payable) to £25 (+VAT if payable)… a saving of over £125!

Imagine, if one thousand buy-to-let owners who contest sublet fees went to an LVT tribunal and referred to the case above and the cases that were also mentioned in this LVT…. it would see E&M losing out on £125,000, whilst also having to pay compensation to the residents that have gone to LVT.

This is why we feel that this LVT decision is one that potentially could send shockwaves throughout Proxima GR Properties and E&M, because residents now have a decision that they can relate to and clearly spells out that the fees charged by them are unreasonable.

For those of you interested in reading the full LVT decision, please click here.

Other LVT decisions that have found sublet fees unreasonable, are listed below:

Vanguard House v Proxima GR – Case Ref: LON/00AM/LAC/2011/0019
Exchange Apartments v Proxima GR – Case Ref: LON/00AF/LAC/2011/0020
Cherry Lillian Norton v Holding & Management (Solitaire) – Case Ref: CAM/22UF/LAC/2010/0007

All of the above is further demonstration that residents are being exploited by many within the leasehold sector.  To those in power, do you still think that there isn’t a problem within the leasehold sector?

The original contributor who we featured, got in touch over the weekend to elaborate on the the web that they are untangling, as part of their attempts to sale the property or to let it.

As a follow up to this story, we thought it would be in people’s interest to publish more information on this story as it these are real life experiences of a family member acting as Power of Attorney, and what your solicitor may happily agree with if they have been appointed PoA.

An encouraging point to note here is that with a little bit of support from TTAS, this contributor has realised that all is not well within the retirement sector and they are not going to let Peverel / McCarthy & Stone get away with this easily.

We had two ‘valuations’. The first was from the McCarthy and Stone agent, Retirement Homesearch, who gave a written response of £89,000 to my inquiry about six months ago, which was later increased to £95.000. The second figure of about £80,000 was given by the house manager in a casual conversation with my wife a few days ago.

The size and location of one-bedroom flats in the St Piran’s Court development varies and these factors are reflected in the asking price. I am told that there are currently 15 properties for sale and some of them can be seen on the Right Move site. Asking prices vary between £85,000 and £99,995.

When my mother bought the flat, her solicitor pointed out that there is an exit fee, but I don’t remember a ‘golden handcuffs’ clause. I’ll need to go through the paperwork to check details. I also need to check if there are any restrictions on letting.

The least likely reason for the drop in value is having been overcharged. Mum bought one of the two remaining flats in the development and M&S were anxious to get off site, so there were several financial inducements (price reduction, free carpets and offset legal fees). Compared with prices paid by other purchasers in 2002/2003, my mother got a good deal.

However, it’s become clear from anecdotal evidence that management charges are a major factor in dissuading potential purchasers. There is also a potential over-supply of M&S retirement properties in Camborne, as a newer development was built at Carn Brea Court, about 100 metres away, in the mid ‘noughties’. This later property is also managed by Peverel.

Management at St Piran’s Court was poor in the early days and I suspect that, even now, its reputation is still damaged. The first manager, Vic Chadwick, was the focus of some controversy and, even if one discounts the intense gossip that is endemic to such retirement properties, it was clear to me that he did not perform his duties adequately or professionally. In my opinion, he was a bully. As a result, my mother experienced some distress and, although she had no particular dispute with him, some of her friends were very unhappy with the atmosphere in the building. Characteristically, and probably for fear of victimisation, no-one made an official complaint and my mother prevailed on me not to do so on her behalf. However, because of my great concern, I eventually wrote to the Area Manager to express my views.

The exchange of correspondence produced no detectable changes, but some time later Vic left and was, I suspect, eased out or given an offer he couldn’t refuse. There is good reason to suspect that the managing agent failed to exercise its duty of care to residents prior to Vic’s departure.

There have been other managers since that time and I can make no comment on any but one. Vic’s successor, Leigh Curnow, was excellent and did much to restore morale to the community. Sadly, she moved to another (more attractive) M&S development after a few years. I’ve had very little contact with more recent managers, but the development does seem to be better run and I have no complaints.

One contentious issue did arise when Carn Brea Court was commissioned and the St Piran’s Court manager was required to look after both.

Concern was expressed that St Piran’s pay for the salary and accommodation of a full time manager and there were objections to splitting the responsibility between two sites. I’m not sure if this issue has ever been satisfactorily resolved.

At the same time that I wrote to you, I sent an e-mail to ask for details of how the management charges were spent, see below:

Keith Edgar
Managing Director
Peverel Reirement

Dear Mr Edgar

My mother, owns a flat at St Piran’s Court, Trevithick Road, Camborne, Cornwall, TR13 8HT and I have Power of Attorney for her affairs.

As a result of deteriorating health, my mother has not occupied the flat since 2008 and I have now come to the conclusion that the property must either be sold or let. I recognise that any potential purchaser will wish to have full details of likely outgoings, so I would be grateful if you would give me full details, including copy invoices and accounts, relating to the management charges at St Piran’s Court since my mother bought her flat in 2003.

Yours sincerely

I received a prompt acknowledgement e-mail and, yesterday, an envelope containing I&E accounts and invoices to my mother arrived. Perhaps my e-mail should have been better worded, because what I wanted to see were accounts relating to Peverel’s purchase of services. I shall now pursue the matter in the hope that I’ll discover how the money has been spent.

Thanks very much for your interest. I enjoyed reading the item on your web site.

Please let me know if I can be of any assistance in your campaign to bring Peverel and Solitaire to account.

It’s also very important to highlight the comment about Peverel House Managers being deemed as ‘bullying’ residents.  There appears to be a common theme coming being reported of Peverel now and in the past.  Why do their employees feel they have the authority to bully residents?  The same residents that pay their wages!

The contributor didn’t just stop at researching the above and within a couple of hours they were in touch with us again, to highlight finer points they’d suddenly discovered:

Hello again.

Further to my last e-mail, I’ve now spent the afternoon with the M&S/Peverel file. The following points may be of interest:

1. According to the Lease, there are 41 units in St Piran’s Court, one of which is the house manager’s accommodation. Another is, I assume, the guest accommodation. Of the 39 available to tenants, three two-bedroom and eight one-bed apartments are advertised via the Right Move web site. The house manager gives the total for sale as 15 overall.

2. The apartment can be sub-let, but a fee of 1% of the market value/sale price (whichever is the greater) is payable to Peverel, together with any admin etc charges claimed. Notice of 28 days is required and the lease requires that the sub-lessor be approved by Peverel.

3. Sale of the apartment again requires 28 days notice, a fee of 1% of the market value/selling price (whichever is the greater) plus a contingency fee of £1,000. There are no golden handcuffs.

4. The management charges budget for the FY 2002/03, was £57,926, compared to £56,800 for 2002.01. For the FY ended 31 August 2011, the actual expenditure was £90,919.60, compared to a budget of £90,324. The total reserves on 31 August 2011 were £58,926.71, compared to £46,674.76 on 31 August 2010. On 31 August 2011, the balance at bank was £56,294.92. The budget for the FY 2011/2012 is £90,802. One does not need to be an accountant to recognise that the yearly increases are wellabove any standard measure of inflation.

5. The Management Fee for Year Ending 31 August 2012 will be £11,625 plus VAT of £2,325, compared with £7,320 for YE 31 August 2003. For the same years, the house manager’s salary and accommodation were £12,964 from £9,931 and £12,770 from £9,291. As far as I can establish, of the service providers, only Careline has any connection to M&S or Peverel; Insurance is provided by Zurich.

6. I note that Peverel claims confidentiality on the above financial information but, in the belief that the public interest and welfare of tenants will be served by disclosure, I have decided to disregard this condition. I am happy to provide details of accounts and budgets if they would be helpful.

Publicity of St Piran’s Court could be detrimental to the sell of the property in question, but it’s testament of home owners that for them and others to benefit, they have to expose failings by the managing agents.

This is what TTAS is all about – telling the truth about the way we are treated and we will continue to expose the truths until change happens.