The Channel 4 Programme, “Dispatches”, recently aired a documentary somewhat dramatically entitled “Property Nightmare: The Truth About Leasehold”. [If you missed it, catch up with it on Channel 4 On Demand – last aired on 20th August 2012]. Here is the ‘blurb’ from the channel for the programme:
“The economic downturn has made buying property outright more difficult than ever but our obsession with home-ownership has led three million of us to choose the apparently cheaper option: leasehold properties. But purchasing a home in this way can come at a cost, leaving those owners vulnerable to excessive and unfair charging, to the tune of tens of thousands of pounds.
Dispatches reporter Morland Sanders investigates allegations of private landlords, councils, and housing associations overcharging leasehold homeowners for housing works and maintenance, which in some cases are also claimed to be unsatisfactory and unnecessary.
With complaints and cases disputing costs on the increase, Dispatches investigates the government's reluctance to impose greater regulation on the leasehold sector, which is making two and a half billion pounds a year in service charges for maintenance and repairs.”
As you will, no doubt, have guessed from the title the programme focused on perceived ‘bad’ landlords [including Local Authorities and Housing Associations] and managing agents and run down properties and was a fairly one sided affair. In the main, the charges referred to throughout were for ‘major works’ rather than service charges per se and whilst the opinions of spokespersons from tenants’ bodies and tenants themselves were sought and aired there was very little air time given to any response to allegations from the ‘accused’ managing agents, local authorities or landlords.
There was one soundbite from a ‘named and shamed’ managing agent who made valid points about unexpected costs arising from vandalism beyond their control and their offer of payment plans but all in all, it was unevenly handled. Although ARMA were consulted by the programme makers to provide background to the raft of legislation that protects leaseholders this was not made apparent so no attempt was made to outline the methods tenants have to ‘safeguard’ against unfair or unreasonable charges.
No mention was made of The Leasehold Advisory Service [‘LEASE’] the non departmental public body funded by the Government which operates an invaluable free guidance service to leaseholders and landlords on leasehold matters although reference was made to figures attributable to LEASE about the 46 percent increase of enquiries [as opposed to complaints, as was the inference].
The figures as presented are not an accurate depiction: in fact, only 19 percent of enquiries to LEASE are about service charges and it should also have been made clear that of all enquires made around 20 percent are made by landlords and managing agents.
Almost half of the programme was spent on profit share agreements entered into by local authority landlords whereby they retain firms to carry out works and when fees reach a certain level then any profits above that are shared with the local authority and what could be done to outlaw these or at least force the local authority to reimburse tenants for the overcharging arising out of these types of arrangements.
The former Housing Minister, Grant Shapps was interviewed as to whether any regulation of landlords or managing agents would be introduced by the Government to which the reply was negative. Maybe the new Minister, Mark Prisk, [a surveyor by profession and a former property company owner] will try to bring about changes for regulation as, indeed this has recently been discussed in the House of Lords by Baroness Gardner and in the Commons most recently by MP’s Peter Bottomley and Barry Sheerman.
Indeed, ARMA themselves are seeking to introduce a regulatory wing which will operate a fully independent self-regulatory regime based upon compliance and endorsement for their members; ARMA, however, were not interviewed for the programme.
The producers needed to introduce balance to the argument and could easily have done so by outlining some of the options available to tenants to counter the problems with unreasonable or unfair service charges, including the right of set- off; the right for breach of trust; the right to claim for repayment of overpaid service charges; the right to apply to the LVT in respect of service, estate management and administration charges; the right to inspect documents ; the right to management audits; the right to have a manager appointed; the right to vary badly drafted leases and as last resorts the right to claim right to manage their own building or ultimately the right to collectively acquire the freehold from the landlord.
All these ‘remedies’ are available to tenants under existing legislation but none of these were discussed which made the leasehold ownership regime seem like some grotesque money making machine into which unsuspecting ‘victims’ are lured by the offers of right to buy and cheaper prices in general for leasehold properties.
We at SLC know that not all property managers and landlords warrant this type of negative press. We act for many of them - and know them to be excellent, professional and competent managers and owners who strive to provide the best service in the worst economic climate for 70 years. We hope to continue to assist them in their difficult and, at times, what appears to be, a thankless task. We welcome this opportunity to redress the balance.
