Peverel property management faces tenant rebellion over service

Excessive fees and poor service are some of the accusations residents level against Peverel. Now they are taking action

The Peverel tenants who are fighting back

• 
• • Patrick Collinson
  • The Guardian, Saturday 12 February 2011
  • Article history


Tenants Frank Gadd and Bernard Allwork of Church Crookham, Hampshire. Photograph: Graham Turner for the GuardianThree years ago Frank Gadd saw a two-bed maisonette for sale near Fleet in Hampshire that seemed perfect for his retirement. Yes, it was small, but it was affordable and it was relatively new, so maintenance would be minimal.

“When I saw it, I thought what a lovely place to be in,” says Gadd, now 67. “But after just eight or nine months I felt I’d made a mistake. It was grim.”

It wasn’t the property that was a let-down. It was the huge service and maintenance charges Gadd was being forced to pay out of his modest pension. The bill hit £4,400 a year for a run of four maisonettes with no common parts. This year, after taking on the agents, he will pay just £200.

Gadd’s story is one of despair both at the lack of service and excessive costs for things such as buildings insurance. And his tale may not be unfamiliar to leaseholders and flat dwellers around the country.

His managing agent was a firm called Solitaire Property Management, which in 2008 became part of the Peverel group of companies. Peverel is one of Britain’s most controversial property companies. It owns or manages hundreds of thousands of properties across Britain, under brand names such as OM, Consort and Pembertons Property Management. It looks after 65,000 retirement homes, largely at McCarthy & Stone developments. It runs security company Cirrus, which installs CCTV and entry systems for flats, and Kingsborough, which organises buildings insurance.

Behind Peverel and a web of connected companies stands multimillionaire property tycoon Vincent Tchenguiz, whose flamboyant spending – before the credit crunch at least – was legendary.

Aside from the Rolls Royce (at one stage he reputedly owned five), he boasts a £10m-plus luxury yacht, called Veni, Vidi, Vici (I came, I saw, I conquered). His brother Robert also built a huge financial empire, much of it based on loans from Kaupthing Bank in Iceland.

As Iceland’s financial system collapsed in October 2008, many of the loans were called in, wiping out a large swathe of Robert Tchenguiz’s business empire, and also affecting Vincent.

But far from the yachts on the French Riviera, numerous tenants of properties around Britain ultimately controlled by Tchenguiz are furious at the charges they pay, and the service they receive.

One website alone, where tenants share stories about their treatment and what they can do about it, has received nearly 120,000 visitors over the past 16 months. The awkwardly named The Truth About OM Property Management (formerly Solitaire Property Management) & Peverel Group Companies, was set up in 2008 by a disgruntled Solitaire customer

When he spoke to Guardian Money it was on the basis that we only publish his first name: Adam. “I was fed up with being palmed off with various stories, services not being provided yet the fees kept going up. But it soon became apparent it wasn’t just me.”

The site is now peppered with allegations, although they are firmly rejected by Peverel. In a statement, it said: “Solitaire Property Management only became part of the Peverel Group in mid 2008. Given Solitaire’s poor history, immediate changes were made by Peverel to improve the company, including centralising customer service management and closing poorly organised regional offices … Since taking control of Solitaire we have made it our number one priority to make a fresh start with residents who felt they had been let down by Solitaire.”

But some leaseholders continue to press ahead with tribunal claims. In the coming months, a tribunal will hear a £2.6m claim for overcharging alleged by more than 300 leaseholders at the striking St George Wharf development on the river Thames. Residents of five blocks in Nottingham, called City Heights, set off fireworks to celebrate wresting control of their development from Peverel after a long legal battle. Across the city, residents at Weekday Cross have won £730,000 at a tribunal, although Peverel is appealing this.

Every tenant’s story is different, but there are a number of strands that feature regularly among complaints.

Service charges Residents, many of whom are on fixed incomes, talk of rampant charge inflation. In the Weekday Cross development, also in Nottingham, the service charge on a flat went up 75% in just two years.

Service provision Residents say they understand the need to pay service charges, but allege that services are not provided. Often it is the mundane details of daily life. In Gadd’s case, he claims the person supposed to cut the grass didn’t turn up for six months. In other instances it’s about critical repairs and security.

At Weekday Cross, residents allege promises were repeatedly made but not kept, and in August 2009 at a leasehold valuation tribunal, Solitaire/Peverel were ousted as managing agents.

Insurance costs Some residents claim they are overcharged for buildings insurance, which is usually arranged for Peverel by its sister company Kingsborough. Residents say premiums can be as much as double the rate on the open market, driven up by commissions of up to 40% earned by Kingsborough for arranging the policies. Peverel says it regularly tenders risks to the open market and is legally allowed to obtain commissions.

Transfer fees When the owner of a retirement home dies and the property is sold, a seller may be charged 2% of the value of the property. Peverel says the fees are passed on to the landlord, and it does not benefit. But often the landlord is a company called Fairhold, which although not part of the Peverel Group shares a common beneficial owner – the trustees of the Tchenguiz Family Trust.

Late charges Residents allege that accounts may be filed late, and that as a result, they are faced with “balancing” charges, sometimes years after the work has taken place.

Legal representation Individual residents complain that taking on the legal firepower of the Peverel Group is a daunting prospect. One individual says he was faced with nearly 1,000 pages of legal documentation sent just 72 hours before a tribunal, and stood alone against teams of lawyers and barristers acting for Peverel.

Peverel replies

We understand how important a person’s home is to them and for more than 25 years, we have taken great pride in our service to residents. We adhere rigidly to industry best practice, including The Royal Institution of Chartered Surveyors and The Association of Residential Managing Agents standards. But as a market leader, we often bear the brunt of criticism for things that not only affect the whole property management industry, but are beyond our control.

Service charges are collected from residents so communal areas and grounds can be maintained, buildings insured and utility costs paid. The money residents pay goes into a development specific ‘trust’ account and is spent on their development alone.

Charges are dictated by the lease, a document drawn up by the developer. All charges should be explained by the buyer’s solicitor, but when they are not, the property manager is the resident’s first port of call.

That doesn’t stop us striving for better practice. For years we have lobbied for greater regulation to raise standards across a largely unregulated industry. Any business faces challenges as it grows, and when Solitaire Property Management (SPM) became part of the Peverel Group in mid 2008, it quickly became apparent it had a number of serious operational and customer service issues that would take time to resolve. Peverel took immediate steps. A three-year, £4m improvement plan was set in motion, customer service management was centralised, poorly organised regional offices closed and Solitaire’s entire senior operations team changed. One of the first actions taken by PPM was to introduce a formal customer complaints procedure for Solitaire. Some of these complaints went as far as tribunals. As part of our commitment to correct errors made under a previous management, we have accepted many of the rulings.

Since taking control of Solitaire we have made it our number one priority to make a fresh start with residents who felt they had been let down by Solitaire.

All properties formerly managed by SPM came under the control of our OM Property Management division on 6 January 2011. As we begin the final year of our improvement plan, we are confident former Solitaire customers are now seeing industry-leading standards of customer service, value for money and transparency.

Tchenguiz forfeits £220m offshore companies

• Banks have control over web of property interests
• One firm, Peverel faces £2.6m claim for alleged overcharging

• Simon Bowers
• guardian.co.uk, Sunday 13 February 2011 19.01 GMT
• Article history
  

Icelandic bank Kaupthing called in £1.8bn loan to Robert Tchenguiz, above. Photograph Micha Theiner/City AM / Rex FeaturesA complex offshore corporate structure created by Mayfair real estate tycoon Vincent Tchenguiz to hold Britain’s largest property maintenance and residential freeholds business, has been quietly surrendered to lending banks.

The freeholds and maintenance contracts are spread across the UK and include thousands of McCarthy & Stone retirement home developments as well as several luxury residential complexes on the banks of the Thames such as St George Wharf in Vauxhall, Charter Quay in Kingston-Upon-Thames and Putney Wharf Tower.

Tchenguiz effectively forfeited shares in a web of holding companies valued at more than £220m two years ago having pledged them, just months earlier, as collateral in an ill-fated attempt to stop Icelandic bank Kaupthing calling in a £1.8bn loan to his brother Robert.

Despite Vincent’s efforts, the loan to his brother continued to sink into negative equity and was called in as Kaupthing itself collapsed in October 2008. The collateral backing the Tchenguiz loan was later seized by the bank’s liquidators.

The assets underlying shares surrendered by Vincent Tchenguiz amount to a multibillion-pound property empire. It includes a portfolio of residential freeholds which earns hundreds of thousands in ground rents from tenants and leasehold transfer fees from those who sell.

Vincent has also effectively lost control of Peverel, a controversial group of companies which offers property maintenance, repairs and other additional services such as CCTV and buildings insurance.

Accounts filed by UK companies do not make clear that the property tycoon has lost control of holding company shares but the full picture is laid bare in court papers filed as part of a legal claim being brought by trustees to the Tchenguiz Family Trust (TFT) against Kaupthing.

As reported in Saturday’s Guardian Money, recent years have seen a groundswell of frustration among tenants, variously claiming unreasonable rises in service charges, buildings insurance charges and leasehold transfer fees.

Some disgruntled tenants claim Peverel companies have also failed to adequately carry out maintenance and repairs. A website, thetruthaboutsolitaire.co.uk, set up by angry tenants, has had almost 160,000 visitors in the last 16 months. Solitaire Property Management is part of Peverel.

Meanwhile, residents at St George Wharf, a 900-apartment luxury riverside development overlooking Parliament, have for years been in dispute with landlord companies, including Tchenguiz-linked firms, and Peverel group service companies. A claim for £2.6m in alleged overcharging, supported by more than 300 residents, is to go before the leasehold valuation tribunal in May.

Much anger has been directed at Vincent Tchenguiz as company accounts for relevant UK-registered businesses state that the ultimate controlling party is the TFT, where the property tycoon is an adviser and a beneficiary.

But court papers from an ongoing case reveal shares in 14 holding companies incorporated in the British Virgin Islands, and a further four UK firms, are under the control of receivers acting for Kaupthing.

Unfortunately for Kaupthing creditors, however, the shares may not hold the value they appeared to promise three years ago. The vast majority of assets within the complex web of companies are already pledged to other banks – Deutsche Bank, Bank of Scotland (now part of Lloyds Banking Group), Merrill Lynch, BayernLB and Allied Irish Banks (UK) – under pre-existing long-term senior loan agreements.

Moreover, these agreements contain so-called “change of control” clauses which give these banks the right to call in loans if Tchenguiz fails to keep control of the corporate structure. Receivers from Grant Thornton, appointed by Kaupthing, could therefore officially take control of the underlying businesses at will. They have not technically done so, however, for fear of triggering a chain of defaults which could leave the shares that Kaupthing took as security from Vincent Tchenguiz three years ago valueless.

According to court papers filed by TFT trustees, Kaupthing’s decision to appoint joint receivers over several companies’ shares has already triggered various events of default. The papers claim Vincent had repeatedly warned Kaupthing liquidators of “the ruinous impact of … the appointment of receivers … on Kaupthing’s security position.”

The document claims that, while negotiations are still ongoing, “in effect Merrill Lynch have, as a direct result of the events of default, assumed control of the underlying portfolio, [the parent company behind the Peverel group].”

The bank has converted the loan from a long-term agreement to an overdraft repayable on demand. A 1% additional default rate of interest is being charged, adding pressure on the group to maximise the earnings it can extract from tenants’ service charge contracts.

Similarly another big loan, arranged by Lloyds and advanced against part of the ground rents empire, has drifted into trouble. Lloyds, the taxpayer-backed bank, is charging a 1.75% additional default interest on the loan. According to court papers filed by TFT trustees, despite ongoing attempts to restructure the Lloyds loan, the bankers “in effect have … assumed control”.

Homeowners ripped off by managing agents charging sky-high fees

By Lauren Thompson
Last updated at 10:51 PM on 26th October 2010

A million homeowners in flats and retirement homes are being left at the mercy of managing agents who charge exorbitant service fees while ­providing poor maintenance.

These property owners are being exposed to a multi-million-pound rip-off by an unregulated industry.

They range from more ­vulnerable elderly residents in sheltered accommodation to wealthy ­businessmen in multi-million-pound riverside flats.

People power: Neil Healey successfully fought a two-year legal battle against ­Solitaire Property ­Management, now owned by Peverel, and got £156,000 in unfair service charges refunded to residents

Complaints include:

• Overcharging.

• Fees that rise inexplicably every year.

• No explanation of what charges are for.

• Managing agents using their own ­companies to provide hugely expensive insurance and ­maintenance services.

• No regulation to protect people from shoddy practices.

Michelle Mitchell, of charity Age UK, says: ‘These companies have a free rein to ride roughshod over residents and hold them hostage to a range of unfair ­practices due to the sector’s lack of ­regulation.’

Some of the worst examples are seen in sheltered ­accommodation, where ­vulnerable older ­people can pay huge charges for wardens and alarm systems.

Age UK has serious concerns about managing agents failing to obtain ­competitive quotes and instead using subsidiaries of their own company to ­provide ­insurance and maintenance work. This, in turn, leads to ­unnecessarily high service charges.

More than two million people are thought to own leasehold ­properties, with just over half being those who bought former council homes under the Right to Buy scheme.

It can be difficult for residents, whether in sheltered accommodation or normal flats, to know if the same company runs their ­managing agent and the firms they use to ­provide services.

For example, the ­biggest player, Peverel Limited, owns dozens of managing agents, including OM Property ­Management, Solitaire Property Management and ­Pembertons Residential.

Peverel and its subsidiaries manage 200,000 ­leasehold ­properties across the country, from ­million-pound apartments in central ­London to modest retirement flats.

Peverel also owns ­Kingsborough ­Insurance ­Services, which arranges ­building and contents cover; Cirrus ­Communication Systems, which installs CCTV; and CarelineUK, which provides emergency alarms in retirement homes.

All of these are used to provide services in Peverel-managed properties — although Peverel says it carries out a ‘strict ­tendering process for all contracts’.

Residents have complained that insurance premiums, in ­particular, are kept ­artificially high because of large ­commission fees. For example, Kingsborough obtains ­buildings cover but only acts as a middleman bet-ween Peverel and Oval, the insurance broker.

In return, it adds commission fees of up to 33 per cent on ­insurance premiums and this cost is passed directly to residents.

A spokeswoman for Peverel says: ‘Kingsborough receives a ­commission from the insurer and Leasehold Valuation Tribunals have determined that this is reasonable.’

Residents at Stow Court in ­Cheltenham, a block of 44 flats managed by ­Solitaire (owned by Peverel), became so fed up with sky-high ­insurance that they got a quote from an independent ­broker to ­compare costs.

Solitaire had been charging them £7,057 per year — but ­similar cover could be obtained through local firm Lansdown Insurance Brokers for just £2,165 — saving a staggering £4,892.

A spokeswoman for Peverel says: ‘Oval compared the two ­premiums and found the ­alternative quotation provided substantially less cover. Oval was, ­however, able to reduce its ­premium to £4,062 — a 42 per cent reduction on the ­previous year.’

A group of angry residents have set up a website called The Truth About Solitaire (soon to be OM Property Management) & Peverel Group Companies (including Consensus Business Group ­Companies), which has a wealth of information for ­leaseholders wanting to take on their ­managing agent.

James Butler, of Landmark Leasehold Advisory Services, says: ‘Several pieces of ­legislation, including The Landlord and ­Tenant Act 1985, make it a legal requirement for managing agents to openly tender contracts.

‘Sadly, some agents routinely flout the law by using firms owned by or linked to them to provide ­services. Ultimately, it is the ­residents who end up paying the increased costs.’
Charities such as Age UK have lobbied the Government for years to enforce regulation of ­managing agents and are confounded by the lack of protection for ­residents in leasehold properties.

Leaseholders can club together and boot out their managing agent under a process known as Right to ­Manage. The agent’s consent is not needed and there is no need for ­residents to prove mismanagement.’

It can be a lengthy and complicated process. Go to www.lease-advice.org for more information.

Bob Suvan and his neighbours exercised their Right to Manage a block of flats in Regent’s Park, ­central London. Mr Suvan was fed up with the way Peverel managed his three-bedroom flat and was being charged almost £5,000 per year in service charges.

So he set up a management company, BlocNet, and has reduced service charges in his building by 20 per cent. Find out more about leaseholds at www.thisismoney.co.uk/leasehold.

CASE STUDY

Neil Healey, 33, successfully fought a two-year legal battle against ­Solitaire Property ­Management, now owned by Peverel, and got £156,000 in unfair service charges refunded to residents.
Mr Healey (pictured) took the ­property giant to a Leasehold ­Valuation Tribunal (LVT), the dispute resolution service, on behalf of 165 apartments at City Heights development in ­Mapperley, Nottingham.
He was fed up of Peverel’s poor ­management and service charges of £1,600 per year on his two-bedroom apartment, as well as extras.
Mr Healey says: ‘From the minute I moved in, I had ­problems.’
And from January 1, 2011, the entire estate will be managed by Mr ­Healey’s new company, ­Mapperley Property Management.
A spokeswoman for Peverel says: ‘The LVT related to service charges levied by Solitaire ­Property ­Management between March 2004 and March 2009. ­Solitaire became part of the Peverel Group in mid-2008.’

Read more: http://www.dailymail.co.uk/money/article-1324001/Homeowners-ripped-managing-agents-charging-sky-high-fees.html#ixzz13a1ZYYVi