Julian Knight: Managing agents rip off too many leaseholders

 

It is one of the great hidden rip-offs in our society: managing agents and the charges they levy on leaseholders.

I first came across the issue a decade ago when friends of mine started to complain that they were being charged through the nose by a managing agent for their block of flats, with seemingly no comeback and no control over how much they were being asked for.

I looked into the market and soon saw massive abuse. I found cases where managing agents were routinely employing suppliers such as insurance brokers or lift-maintenance firms that were actually part of their own group – in other words they had a common parent company – and were then offering work to these firms without any tendering.

I also came across one particularly shocking case where a managing agent was looking to charge a leaseholder £30,000 for a new fire escape, which it turned out was to be supplied by a company owned by the brother of the freeholder (who appoints the managing agent).

Not surprisingly, the leaseholders challenged this state of affairs at tribunal and provided evidence that they could source the said fire escape at a cost of just £3,000. This was one of the rare occasions where a tribunal actually worked and the freeholder and managing agent were sent packing.

More tellingly, there has been a swathe of court cases across the country where managing agents have been found to have effectively ripped off leaseholders, normally through overcharging over a long period for buildings insurance.

The legal protection a leaseholder has against rip-off freeholders and managing agents is minimal. When the work is worth more than £1,500, there has to be some sort of tendering process, but that actually only covers a small fraction of the work that leaseholders are charged for.

There is a tribunal system but managing agents often have a squad of lawyers ready to pounce whenever their right to levy charges is challenged – and the presence of QC silk can have a disproportionate effect on the outcome.

The final sanction that leaseholders have – to take over management of the property themselves – very often doesn't come to pass because many flats are owned by investors rather than owner occupiers and they can be both hard to contact and slightly indifferent.

By the way, if anyone refuses to pay the charges levied by the managing agent, this can – and does – lead to a loss of a home that the leaseholder has bought with their hard-earned cash.

Why am I telling you all this now? Well, the Office of Fair Trading (OFT) has said that it is now seeking views on its planned study into residential property management.

Frankly, I groan inwardly when I see the OFT set about this sort of thing, as the organisation is desperately slow in what it does. What's more, it already has a lot of evidence about the problems in the sector following a separate investigation into the activities of one of the biggest managing agents.

But it is what it is and I can only hope that this is the first step on what will no doubt be a long and winding road to better regulation of a sector that has an impact on the finances of some five million Britons living in leasehold property.

Ill tidings at Christmas

I have had a huge response to last week's exposé in this column about firms that are offering individual voluntary arrangements (IVAs).

Several people working on the front line of debt advice have contacted me to say they are glad the issue of high charges levied by IVA firms is getting an airing.

I have also had the debt-management industry predictably coming back at me. Apologists have pretended that their service is almost indistinguishable from that offered by debt charities.

Well if they are so charitable in their dealings, how can they afford to employ so many sales people (sorry, debt advisers) and spend a fortune on advertising and public relations?

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Recruitment Genius: Experienced Financial Advisers and Paraplanners

    Negotiable: Recruitment Genius: This extremely successful and well-established...

    Guru Careers: FX Trader / Risk Manager

    Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

    Day In a Page

    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
    Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

    No grace of God for Katy Perry as sisters act to stop her buying convent

    Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
    Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

    Residents just want water and power in a city chosen to be a ‘smart’ metropolis

    The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
    Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

    Something wicked?

    Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
    10 best sun creams for body

    10 best sun creams for body

    Make sure you’re protected from head to toe in the heatwave
    Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

    Nick Bollettieri's Wimbledon files

    Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
    Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

    There is more than a shiny trophy to be won by England’s World Cup women

    The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map