Property Management

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.