Anyone on the forum good at looking at company financials ?

[RogerS]

We're having issues with the lack of management/incompetency/laziness from the company that is running the retirement block (amongst others) where our late mothers' flat is located. I'm no financial expert but looking at the way this company is structured and the way that the shareholders reserve fund is shooting up in leaps and bounds, well, I smell ordure.

Is there anyone on the forum willing/able to cast an eye over the figures, please ? If so then please PM me and I'll give the details.

TIA

 

[niemeyjt]

I assume this is leasehold. Is it possible that a major repair, like a roof, is anticipated down the line and they are accumulating the funds now little by little instead of hitting the leaseholders with a big hit down the line?

See also Leasehold property for more ideas / information

 

[RogerS]

I assume this is leasehold. Is it possible that a major repair, like a roof, is anticipated down the line and they are accumulating the funds now little by little instead of hitting the leaseholders with a big hit down the line?

See also Leasehold property for more ideas / information

No - thats's already been done.

Basically the management company is owned by the MD. They manage a lot of blocks across the UK. The contract signed by my mother unfortunately lets the company treat the flat owners as a cash cow. They cream off 3% from the sale of a flat and yet in the contract there is zero obligation on them to do anything to encourage footfall. Even if you go to an external estate agent, they will still cream off the 3%. Monthly service charges are high (over £600). I'll wager a penny to a pound that they have not done any form of competitive tendering to reduce the outgoings. Why would they? Remember....we are all cash cows.

Currently 11 flats out of 30 for sale. Well aware that Covid hasn't helped but the company has done SFA to get footfall.

So back to basics....digging around in the accounts first to see if there is anything dodgy.

 

[Andy Kev.]

Roger,

there will probably be somebody on here who will be able to provide you with sound observations which might enable you to put some pressure on the firm via a letter or a phonecall.

However, if I were in your position, I would want to consider an appointment with a firm of solicitors specialising in commercial finance and the associated contract law. It could be that the mere sight of a letter from such a legal firm would be enough to shake the company up and if it isn't, well you would at least have taken the correct initial step. The only downside is that it would probably cost you a couple of bob.

Good luck with it, whatever course of action you choose to take.

Andy.

 

[Terry - Somerset]

Some property management companies exploit cash cow leaseholders. There are some pressure groups formed and a simple search will throw up plenty of information on this.

There are proposals for fairly radical revisions to legislation - but these may not happen in timescales helpful to you.

Challenging the management company over their costs is possible, but likely to be a lot of effort for little reward. They know how to prevaricate and roll out their legal teams if a claim is pursued.

It is possible to change the management company. This needs the agreement of other leaseholders and the appointment of a new management company. It is not a trivial job - you need to adhere to a very specific process, and whoever takes this on will need time, patience and resolve to bring to a conclusion.

I do wonder why people bought these apartments in the first place - did solicitors fail to point out the risks and costs, or did people carry on with the purchase despite being informed.

Sorry not to be more help. Each leaseholder may have a different view driven by age, health, finances, circumstance etc and getting common agreement on the way forward may be difficult.

Advice or intelligence from one of the "pressure groups" may leave you better informed as to your options.

 

[RogerS]

Thank you, Terry. I'd never thought of any pressure groups. In fact, things like Exit Fees have been raised in Parliament and there have been several reports etc as I've now discovered.

This for instance.. https://assets.publishing.service.g...900001e1/Property_management_market_study.pdf

 

[flying haggis]

which company are we talking about as there may be others on here in the same boat. might the company have someting to with the device to hold a ship in a position at sea

 

[RogerS]

Not sure who you mean TBH but I'd say that my view of the OP company certainly rhymes with the one you're thinking of.

 

[profchris]

It might be more useful to review the lease. My late parents' house was in a similar complex, and my father became Chair of the residents association and had fun chivvying the management company over service charges.

What service fees can be used for is defined by the lease. If some is put into reserves, I'd be surprised if the company can use them for other purposes.

The actual charges are different, often paid for services by related companies. Hard to challenge, there's no legal obligation to look for best value.

 

[Blackswanwood]

The actual charges are different, often paid for services by related companies. Hard to challenge, there's no legal obligation to look for best value.

Not sure that is entirely accurate. Variable costs can only be recovered from leaseholders ‘to the extent that they are reasonably incurred’ and ‘if the services or works are of a reasonable standard’. You have a right to challenge the reasonableness of your service charge at Tribunal.

There is a government website that gives free advice on how to go about it ... lease-advice.org

 

[billw]

I’d wager that the company is probably subject to small company filing requirements and the Co House information will give you virtually nothing of use.

 

[billw]

Either way let me know the details and I’ll have a look.

 

[Stefan99]

We're having issues with the lack of management/incompetency/laziness from the company that is running the retirement block (amongst others) where our late mothers' flat is located. I'm no financial expert but looking at the way this company is structured and the way that the shareholders reserve fund is shooting up in leaps and bounds, well, I smell ordure.

Is there anyone on the forum willing/able to cast an eye over the figures, please ? If so then please PM me and I'll give the details.

TIA

Roger,
You have a couple options,

1.
you have the right to buy the freehold off the owner if you get together with about 2/3 the other flat owners. This will eventually force them to sell the freehold to you at “Fair market value”

2.
an easier quicker solution “right to manage”
You can fire the managing agent and hire another agent, or form a company and the owners of the flats manage it themselves.
this is MUCH easier and quicker.
you can “sell” this idea to the flat owners because this should reduce the outgoings significantly and hence make their flats more saleable.

the managing agents have a duty to get tenders for all work done. If they don’t legally they can be in the poo....

You could take the accounts to another management agent to look over. It’s possible they might do the work to transfer it to themselves if you give them the right to manage it.


https://www.moneysavingexpert.com/mortgages/buy-freehold-right-to-manage/

 

[nick d]

Hi
I ran into this problem some time ago with a holiday flat we bought. In the end I ended up running the management company, which was owned equally by each of the residents. I have to say that £600 per month sounds extortionate, from memory the flats were paying £1000-£1500 per year and that included around £300 contribution to a "slush" fund for external repairs etc. The main cost was the lift servicing and maintenance which was extortionate. As others have said I would say your best chance is to gain control of the management company, incidentally they cannot request payment unless they are giving you accurate accounts at which point you should have all the ammo to shoot them down. Good luck though its a thankless and miserable task - I never took recompense as no amount of money could have ever made the job pleasurable.
Good luck

 

[RogerS]

Bear in mind that these are retirement flats. With staff and someone sleeping on-site every night. So to be fair some of the service charges are staff costs.

And being retirement homes I can't see any of the residents getting too excited about buying the freehold! Just wish my mother hadn't gone ahead and signed the contract without letting me have a look at it first. Mind you, she would still probably have gone ahead as when she was looking there was a waiting list to buy a flat in this block. Times change, demographics change and that's without Covid.

 

[Terry - Somerset]

A few very negative thoughts.

I am assuming that ideally you would want to sell the flat. With 11 out of 30 unoccupied this will not be easy.

As far as buying the freehold or taking over management of the company is concerned you need to have the other leaseholders on side. I am not clear who has the voting rights in respect of the empty flats - if the management company or the freeholder you will struggle. Bluntly if you are 80 and in poor health why would you want more stress!

The monthly charges depend very much on what it included. I have a flat which is rented out and the annual charges are ~ £800 pa. Many retirement complexes may have wardens, gyms, swimming pool, extensive grounds etc. I'm not suggesting £6k pa is good - but it may not be as bad as it seems.

You need to be clear whether the 11 flats which are empty are still paying their share of the service charges, or whether the total costs are simply being recovered from a reducing number of those still occupied.

The lease will also describe what happens if the service charges are not paid - does the freeholder have the right to evict the leaseholder and sell the flat to recover unpaid serrvice charges.

You need to read the lease very carefully and get some legal advice as to your options. You may be angry about the situation but cool objectivity over what can realistically be achieved is probably better.

Ultimately you may come to the conclusion that a sale at a heavily discounted price is the best option, if only to get closure rather than risk protracted legal wrangling (which may be a waste of time anyway)

 

[RogerS]

I'm pretty much in accord with your thoughts, Terry. I'm really looking for some sort oif leverage to get them to actually do something for the usury that they charge. We're still paying the service charge. Thankfully we're a little bit ahead of the game as the deposit on the aborted sale was forfeited. Would still be nice to be shot of it.

 

[Deadeye]

Sorry to hear of your situation; sadly it sounds pretty usual.

Most of these retirement developments have a combination of tied-selling (or a charge if you go multi-agency), deferred maintenance (a whopping percentage on sale), and pretty spicy maintenance fees with no reduction for vacancy.

Can you let it out? It would at least reduce the bleed on maintenance.

Normally the residents are in a formal Association, which hires the management company. Look up the Memorandum and Articles. Those will set out the obligations. Sadly I expect they will be minimal with regard to supporting the sale, beyond details being available in the site office.

The judgement is whether getting a sale (realistically at a discount to the new ones) at a less-worse price is worth the cost of multiple agency. Given the stress and ongoing bleed, biting the bullet looks more attractive. I very much doubt you'll find anything in the accounts to provoke a better reaction. The threat of agitating with other residents to re-tender the management contract might work...but equally they may have a 10-year contract and laugh at you.

Read the documentation and insist on any scraps that are detailed though.

 

[Richard_C]

After the leasehold on new houses scandal and the seemingly unfair maintenance charges on new housing estates far more people, and solicitors, are awake to the impact. My daughter is on the first time buyer trail and isn't even looking at new houses or houses in unadopted roads - why place your future costs in the hands of a for profit company. That might make it very hard to sell, unless it appeals to a specific market which is under supplied with property, which retirement/sheltered might be. If there are other flats for sale nearby at lower charges, you have a problem.

A tactical decision, is it wise to start a potentially public complaint, which you might have to declare under 'buyers enquiries', or sit tight, keep quiet and get it all over with ASAP however unfair it might be.

Although fees seem high to you, the worry-free aspect might have been of high value to your mother, hard to measure in £££ but it wasn't all wasted money.

If I were buying I couldn't even begin to calculate the discount I would try to negotiate. 3% off to start with because that's what I would lose when I sold, then from the sound of it 7200 a year for services I might think are worth half that, so if I live 10 years that's 36k I want to knock off... I know it doesn't work like that but it's a starting point. But that's me, in good health and with a decent knowledge of electrics, plumbing, building maintenance, garden etc. If though I had a decent retirement income and wanted to not worry at all about the building, or about my surviving partner having to worry when I died, etc etc I might think it worth it.

Some retirement complexes had a put option, you could sell it back, losing shed loads of value but at least stopping the outflow of cash. Unusual, but check. The agreement might have something about what happens if you default on fees. It must happen, people die intestate and with no assets, empty flat no income.

Finally, if the rhyming ship stopping company is a housing association, they are regulated. Used to be the social housing regulator, probably renamed. Some though have a regulated and unregulated business arm. Might be worth digging around.

Sounds like rock and hard place, trying to contact other residents or other vendors might be the most helpful first step.

 

[Richard_C]

Oh, and while the financials might tell you a bit, it's impossible to see where the money really goes. Records of payments to contractors, who might be "me" under another name. If they operate a cost plus fee margin, it's not in their interest to keep costs down. If you query 5k to paint a couple of doors... Ah yes, but they were special doors with special paint and we could only work at night so that's why etc etc. Nobody else would quote.