Tag Archives: Running A Business

12Oct 2012

Current Property news: Increased Student fees biting deep for Student Landlords.

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By Steve Roulstone

I guess everybody wondered what the effect of the new style Student fees would have and reports have abounded supporting both sides of the fence. What cannot be denied are hard facts and in Stafford there is no doubt that Students have looked differently for their accommodation needs and because of the reduction in numbers, several Landlords have found themselves with no takers for their Student accommodation.

Change of use.

Of course at this time of year it is clear if nobody has come forward yet, then they are hardly likely too for the academic year that has just started and I have had three difficult conversations with Landlords about what options they have in their properties at present. Of course change to family let has been the recommendation on each occasion, but strangely this problem has not occurred in what we have found this year.

No vacancies!

We manage a large purpose built block in Stafford with 68 rooms spread between 14 flats. Our numbers are slightly down on last year, but have held up far better when compared to what seems to be happening in the traditional Houses of Multiple Occupation. Why? Well the cost is less and a Warden is present as well as private room and en-suite facilities. Add its location next door to the main Stafford College and perhaps we have the answers. But because our occupation is still high this is why I suggest they have looked at the market differently.

Market forces.

No doubt there has been a reduction in numbers, because most Student Landlords would manage the property themselves, so if we have seen three empty houses, the Town probably has two dozen! This would represent a marked drop in the overall Student accommodation requirement. But I am also convinced that quality is starting to play a hand as well and it is Market Forces that is driving demand as students search harder for value for money.

Still need for change.

Of course, none of this assists the Landlords of houses that are still empty now, especially if they are looking to move back to Students next year! Some requirements for the general market just do not sit with a more traditional ‘Family’ let. (Not to mention furniture which is hardly ever the best and rarely matching?) Locks on bedroom doors, fire blankets, Card Meters! All of these are better removed and of course rarely can that be done without affecting appearances. But worst of all, that dreaded style of decoration, woodchip wallpaper!

Back to market forces.

I was present in a property yesterday which was very well presented, but had to be honest with Landlords who were already going to see quite a drop in monthly income, from three students to a Family in a 1st floor flat, my advice had to be based on the property they were competing with! Small properties with three types of carpet that can all be seen from most of the rooms will not be well received when judged against the common fashion of using the same carpet throughout. It is comparing against other property that has to be the benchmark.

Conclusion.

The bottom line is in most cases lots of improvements need to be made and cost is always going to be an issue, but to then change back again is going to be a double whammy as for example, hardly anybody has storage room for furniture and would therefore have to buy new. Ironically it could be that very change that might attract Students in a market being driven by services and quality as I believe it now is. Either way, tired or poor accommodation will continue to struggle and the next two years could be a very hard challenge as more Students drop off after three years and the intake continues to fall!

10Oct 2012

Property Landlord advice: Inventory a must for ALL rented property.

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By Steve Roulstone

We just as other Letting Agents must also be finding, have Landlords who are wishing to keep costs down to a minimum in these difficult times when we are all finding pressure on our margins. However, there are some areas that just do not justify cutting corners and the Inventory is one such area.

Deposit disputes in Landlords favour.

There have now been many cases of claims against Tenant deposits that have been successful, purely because of both a well written inventory and sufficient photographic evidence to back up our claim. The Tenants Deposit dispute system itself, after just one year in operation, warned Landlords that the biggest reason they were losing claims was because of an insufficient inventory.

Why?

Explained in the simplest terms, if you wish to claim against a Tenant for painting a wall black during a Tenancy without permission, if you cannot confirm that it was not black at the beginning of the Tenancy, you will lose. Similarly, if you wish to claim decoration allowed was done badly, you would also lose unless you could prove that the decoration at the start of a Tenancy was in good order. We have posted before about the importance and it is explained well in this Blog by Craig Smith

Photographic proof.

Of course photos play a massive part in this, as a house correctly recorded can easily be shown in its original condition, but that does not mean a well written version should not accompany photographs. If a written inventory confirms no stains on a carpet and there are no specific photographs close enough to confirm general level of dirt, this as well as photos confirming the current state and condition should (and have) proven to be sufficient. But of course, if you have both, then no problem should exist.

Cookers and sinks.

Cookers and sinks are the two items that cause most issues, and with experience, we know to ensure they are well photographed at the start and the end of Tenancy. (Only just in front of Gardens where the same rules apply) We have had occasions where even faced with the before and after photographs, Tenants have insisted on allowing the arbitration service to decide, but whilst this is their right and nowadays more common, we have always achieved the correct result on behalf of our Landlords.

Do not cut corners.

All of this explains why we encourage Landlords to have our Inventory as part of their Tenant check in. Of course Fully Managed properties always receive this service, so my comments are better aimed at Landlords who have either always, or in an attempt to cut costs have now decided to manage their property themselves. In the long run this will pay for itself.

Always at the house.

 It is also one of the main reasons why when checking tenants in to their new home, it should always happen at the house itself. Too many times lately we hear of Tenant’s being checked in at the Agents office. I would ask the question how an inventory can be relied upon if you do not go through it with the Tenant at the property.  If at the end of the Tenancy your Tenant objects to charges, it would be very easy for them to state the inventory was never checked in their presence. A risk I would not wish to take on behalf of my Landlords!

29Aug 2012

Current property News: Montague report offers the Key for growth?

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By Steve Roulstone

The Montague report which reviews the manner in which the Private Rented Section is viewed by the Institutional Investment market has been released and is available for download from the Department for Communities and Local Government. The basic idea of the report was to look at why Investors do not look upon the Private Rental sector in the same way that they do Commercial property investment.

 The report is a weighty 28 pages of Summary and evaluation, but holds many good ideas and could just see the way forward for our sector as we struggle to meet the demands of a modern mobile work force. It is in three sections and is going to take at least two posts to comment upon, in this first post, I have selected highlights from the Background and Evidence sections in this post. I will follow this up by looking at the Barriers, Conclusions and Recommendations.

 Growth.

 I am a total advocate for the building industry (Housing) being the vehicle for leading the way out of recession. This is why I am always looking at new build and activity and look to the property sales figures of a guidance for where financially we currently sit. It is therefore nice to see clear figures quoted to support my theory. For every £1m spent, 12 jobs are created or supported and for every £1 invested in construction, £2.60 is generated elsewhere in the supply chain. The supporting sources are listed in the report.

 Local or distant Management.

 It struck me quickly when looking at the Evidence that a market exists, that there was a need to build in assured maintenance. I agree whole heartedly, that any long term scheme should include an organised plan for both maintaining of and maintenance on the property concerned. My immediate thought was to ensure the properties are managed locally and not by some distant organisation, to ensure both a distribution of the Management structure and workload through local contractors rather than the majority of the expenditure remaining in London.

 Across the Country.

 To do this, as the report recognises, there needs to be many differing schemes, which, in order to maximise the effect across the Country, as highlighted above, needs to be spread across the country and not concentrating again in the area that generates ever increasing rent levels; London. It is important in arriving at any conclusion that promotes and encourages Investor growth in Private rented property, that the whole Country sees the benefits.

 Wardens.

 Unsurprisingly, the wish to see Wardens or a Management presence in specific developments is a nice idea, but one that is only reflected for affordability, through the size of the initial development. As an Agent who Manages whole sites on behalf of one owner, exactly the type of site referred to in the report or that would be developed as a result of Investors becoming involved, there is a recognisable limit to the size of what are acceptable sizes of development so as not to have to large an impact on the local market, both by type of property available and by long term effect on local suburbs. In short, there are places that high rise buildings fit in and areas where they do not! Wardens suit large buildings but would cost too much for more localised schemes offering between 20 and 40 units.

 Long Term Agreements.

 I think it is a good idea to generate an agreement that sits well for longer than the current popular Assured Short Term agreement, but by the same token, I see no need to do this by changing the AST. As case of ‘It ain’t broke, don’t fix it!’ But a document built around the normal lease as exists for purchasing leasehold property would be ideal. This could still give the Tenant of this shorter term lease the protection afforded to the leaseholder, whilst reflecting the short term usage and the interests of the Freeholder as well.

 Block Management.

 It is suggested that Management of such buildings would tie in nicely with the current Block Management style and again as this is one of the services we offer I can comment and could not agree more. This would be ideal providing that local Companies were sought for provision of services, instead of the properties being managed from afar. Why do I feel this is important? Because we have grown our business on the dissatisfaction of leaseholders whose representative never visit sites or more importantly, cannot be visited because their offices are in London, Birmingham or Manchester.

 There are some great ideas in this report and I look forward to commenting on the conclusions but if there is one point of caution it is that consideration has to be made as to the spread of housing, which is needed throughout the Country as well as provision of service, which, to avoid complaints about schemes failing to deliver and being unapproachable, need to be sourced close to the buildings concerned.

 More to follow!

13Jul 2012

Property Landlord advice: Why Manage privately if you would not sell privately?

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By Steve Roulstone

As a professional Letting Agent I have always believed that Landlords should use professional Agents to look after their property, these excerpts are from a similar view for Estate Agents and I am repeating them in full to show just how they compare. There are of course many more reasons once a property has been rented for using professionals in their trade, but the reasoning used here in developing a sale cross over very well and I believe make the case better than being adopted specifically for rentals.

Security: Would you normally let a complete stranger wander round your house? A good estate agent will always ensure the correct identity of a prospective buyer prior to viewing.

Credentials: An agent will also establish the ability of the buyer to proceed, following up any chain if necessary. Too many buyers say they are “cash”, only for the seller to discover down the line that the buyer has a property to sell and a mortgage to arrange. Agents are familiar with the many red herrings used by unscrupulous or naive buyers and can quickly sort the panel beaters from the embroiderers.

Viewings: One of the most misunderstood aspects of the sales process is the way in which viewings are conducted. Of course you want to sell your house, but there is a lot of psychology involved here. Anything you say, as a seller, is clearly biased and not based on helping the buyer to understand how your property could fit their needs, because you don’t know the buyer nor do you have any knowledge of their preferences. If anything you could put your foot in it. Many sellers try too hard to sell on a first viewing and distract the buyer with irrelevancies like how the boiler works. A first viewing is simply about the buyer thinking “could I be happy here?” A good agent will explore the property with the buyer’s needs in mind.

Valuation: Vendors are notoriously optimistic when it comes to valuing their property (as are certain agents of course, but that’s another story). The price you paid for your home, the amount you spent on it, the amount you need for your next purchase and the amount you need to cover your commitments are sadly all completely unrelated to the value of your property. In fact, whatever some agents and even surveyors might tell you, even the apparent “evidence” of what has sold nearby can be misleading. Buyers buy by comparison, so your property has to look good in relation to what is currently available for sale. It might appear to be an easy exercise to assess these competing homes, but only an agent knows why these properties have failed to sell. If you simply follow the apparent market then you are likely to end up on the same heap. The most damaging thing would be to allow your property to go stale on the market as it is likely not only to take some time to sell, but will probably end up selling for less than it could have achieved had it been correctly priced from the outset.

In view of the above it is little wonder that there is very little appetite for private sales in the UK especially in view of the relatively small amount of commission British estate agents earn in relation to their counterparts virtually everywhere else on Earth. Whilst there will always be tales of someone who did a great job privately these are certainly the exception to the rule.

My question having read and compared the clauses with our Industry is why the appetite for private rentals IS still so strong? Most problems arise once a Tenancy has started and it is mainly by getting one of the aspects listed wrong in the first place! The problem being that it usually remains undiscovered until later in the Tenancy, when problems arise. Then is the time that Landlords have to deal with the issue professionally and within current legislation and unless they are qualified and I obviously accept that many Landlords are either by design or experience, this is the time that mistakes can be made, but I would venture that there are far more properties under the Management of amateur Landlords than bad Agents! Furthermore, when the Agents are either with a professional body or members of schemes such as TPO then the standard of service must rise dramatically.

P.S The picture with this post is meant to raise a smile, I trust you were able to do just that!

24Apr 2012

Why should a Landord use an Agent – Part 2

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By Mike Edwards

Part 2 of the top reasons why Landlords should choose a Letting Agent are included in this concluding post.

 

6.         They can often get you a better rent

Many letting agents are used by relocation agents and companies willing to pay high prices for the right property. Usually these companies will only use professional agents for sourcing property for their clients. This is because they are aware that they are going to get a consistent responce when being dealt with. Relocation is a part of the industry that is very specailaised and can be drawn out at times, especially when dealing with clients from abroad. They need to know they will be dealt with in a way that will not leave them sorting out issues that most Agents will already be aware of, such as type of agreement and security of deposit.

7.         They will get a proper inventory done and deal with the deposit for you

A really good inventory is absolutely essential nowadays if not the most important document involved and landlords who are taken to adjudication by their tenants will have little chance of winning without one. A good letting agency will often have staff specially trained to do this work and will usually be able to do a much better job than you can. There are also specialist software packages that are marketted at Agents and are sensibly only affordable by Letting Agents. There is also the advantage that if the matter ever does go to arbitration, the fact that the inventory was drafted up by an independent third party (your agent) will often mean that it is given greater weight by an adjudicator than one that was drafted up by you, the landlord. Your agent will also deal with protecting the deposit properly, making sure that all the proper information is given to the tenant within the time limits.

8.         They will deal with checking and referencing your tenant

A good agent will carefully screen and reference all prospective tenants as a matter of course. Not just by way of collecting letters, but through a professional Referencing body. This does not always mean that there are no problems later, but it certainly reduces the chances of this happening. It is a fact that those who have caused trouble in property before as a Tenant, know that they will not be able to pass a proper referencing investigation. Agents may also be able to recognise known bad tenants, and also recognise the signs of a bad or criminal tenant (for example one who is thinking of converting your property into a cannabis factory).

9.         They will deal with any problems that arise during the tenancy

There is a lot of work involved in renting property and it is not all just finding the tenant. Often problems arise at the property – for example minor repairs that need doing.  Tenants also sometimes lock themselves out and need helping. A good agent will also carry out regular inspections to make sure that the tenant is looking after the property properly and that all is well there. 

And finally:

 Finally of course there is the fact that most landlords really don’t want to be bothered with the tedious business of dealing with tenants, and agents take the burden of this away from them. A really good agent can be a blessing to a landlord. At the risk of being accused of agent bashing again, I do need to say here that not all agents are like this. I do feel strongly that agents SHOULD be regulated. If only for the benefit of all the good agents who inevitably, and most unfairly, get tainted by the press reports about the bad agents. The ones that don’t do their job properly and run off with all the money. 

02Mar 2012

Current Property News: Spring Market difficult to call.

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By Steve Roulstone

So we arrive at the time when we start to think of the spring, when Tesco sell more fabric conditioner than any other time of the year, when we all confirm our first sighting of a spring lamb and when the property market looks towards an increase in business as people look to make that move after the winter (said with the full knowledge that next week we are getting winter weather again, at least temperature wise!)

Normal Pattern.

It is normally the case that the spring is a busy market for the rental market and while we have seen more activity since the last cold snap, the question that remains unanswered and will go a long way to proving if confidence in the economy is rising again, is will we see the expected rise in activity or not. Apart from a return to normal temperatures next week, if we do get another bout of winter weather, it will definitely slow movement down, because after viewing property in the dark, nobody wants to spend a day looking at houses with snow on the ground!

Job confidence.

No weather aside, it is the job market which will provide the ammunition as apart from natural movement around Landlords selling or wanting to choose bigger or smaller accommodation, it is people moving with work, which in the main is new posts being filled, that feeds the market and provides a base for any busy period. So the link between a good market, sales or lettings, is clearly linked to confidence in the economy overall.

Nobody knows.

The problem at the moment is nobody knows and whilst we have just gone through a quieter winter than normal, London, which is usually the barometer that the rest of the country follows, has maintained its movement and after a slow period, we usually get a natural climb purely because people catch up on the move they were going to make, but waited to see how matters panned out? (Mainly financial of course) So all the signs are there and not just in trends:

Mortgage matters.

There has also been a rise in all matters surrounding the Mortgage market, with increases in numbers and availability of specialist mortgages, as the ‘Buy to Let’ market is also showing signs of increasing again, which adds fuel to the fire that house prices have stopped declining. In fact stories centred on the mortgage market abound at present and I wonder how many are reporter led and how many are industry fed?

Budget.

And of course with an impending budget and whatever impact the markets take on the content, will undoubtedly play a major part of any increase in activity. For me, it is not so much what is stated, unless the chancellor has some hidden move to stimulate housing, because nowadays most of the changes are heralded well in advance, it is how the financial report on the current state of play of United Kingdom PLC is received that will have the major effect.

Forecast.

Well this is something that I do not normally do, but for what it is worth, I think that we will see slow movement until after the Budget and depending upon those figures and any adjustments made by the chancellor to reflect the performance, it will be after the budget before we see any major change (a kind of Housing Equinox if you will) and this will reflect just how confident the markets are in that performance and the chancellors views going forward, so I am afraid I am sitting on the fence, good confidence, good growth, poor confidence and we will see a steady market for probably the next six months.

12Jan 2012

Current Property News: Mortgage arrears climb as Tenants struggle.

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By Mike Edwards

Arrears are set to rise in the buy-to-let market, as more landlords face having to deal with tenants who cannot keep up their rent payments. According to research by Templeton LPA, a specialist practice of LPA Receivers, the number of court orders to evict tenants is up by 11%. In the last quarter, 24,966 tenants faced eviction notices – an increase of 11% on 22,558 a year ago. The number of tenants in severe financial difficulty has also shot up in the last three months, says the firm and during the last quarter of 2011, there were nearly 11,400 more tenants over two months in arrears than in the same period of 2010 – a rise of 18%.             

At the end Q4 2011, nationally there were 78,970 tenants in England and Wales in severe arrears.              

It is clear that a growing minority of renters are falling deeper and deeper into payment difficulties, and the number of severe arrears cases is rising. While the wider tenant mix has changed since the mortgage market downturn – with a greater number of financially sound yet frustrated first-time buyers – a growing number of tenants are seeing their job prospects affected by the UK’s economic malaise. Arrears levels on buy-to-let mortgages have not yet felt the impact of growing severe tenant arrears and evictions, but this would change this year. In the last quarter of 2011, the number of buy-to-let mortgages more than three months in arrears fell by 7% compared to the previous quarter, representing an annual decline of 17%.
However, at 26,300, there are still more than five times as many buy-to-let mortgages in severe arrears compared with Q3 2006.       
 
Mortgage rates have kept monthly payments low, but there has also been a change in landlords’ behaviour. With capital gains falling by the wayside in the past six months on higher loan to value BTL properties as their values fall  rental income has become the most important component in an investor’s annual return – but it also pays a landlord’s mortgage cheque. As a result, many landlords are being less lenient with tenants facing initial payment problems, and are looking to use court orders to replace tenants quickly in expectation of finding a financially sound substitute – and potentially an increased rent. However it is highly likely that mortgage arrears will climb this year and that both overall arrears and severe arrears will rise. This in turn will feed into increased tenant evictions and hamper a growing number of landlords’ ability to meet their monthly mortgage costs.

29Dec 2011

Tenant advice Rents falling?

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By Mike Edwards

Asking rents have dipped for the first time in ten months, according to a November rent index. The drop is only a tiny 0.4% and so hardly means upgrading the Xmas dinner from turkey to a leg of beef, and means that on average so far this year rents have gone up by 3.5%. This means the average UK rent is now £717 a month but this of course masks massive regional variations, especially in London where the average rent is now 1,033 a month in London. In the index from LSL there appears to be a slight improvement in tenant finances, with 9.3% of all rent late or unpaid at the end of November, compared with 10.1% at the end of October.  Again welcome though this improvement is it is a very small change.              

Interestingly the survey estimates average yields for landlords at 5.3% but warns that landlords stand to make a loss on their properties. The average total annual return per property in November was 2.2%, compared to 1.4% in October. In cash terms, this was an average of £3,726 – equivalent to £7,700 in rent with a capital loss of £3,974. More worryingly despite these times of apparently insatiable tenant demand as would be buyers find themselves frozen out of that market, if property prices maintain the same trend as the last three months, an investor could expect to make a total annual loss of 0.7% over the next 12 months – equivalent to £1,144 per property. In terms of the arrears position although there are fewer tenants actually behind with their payments in some shape or form this in part is almost certainly down to a tougher line being taken by Landlords who themselves are finding their finances under pressure, so they are taking action sooner to ensure any new arrears cases are dealt with promptly.   

But again the picture looks bleak with a deteriorating labour market and unemployment at a 17-year high and likely to rise further. As it climbs, a growing number of tenants’ household finances (and Landlords?!) will come under strain, and overall tenant arrears are likely to climb in the coming year. 

There is no doubt that life for landlords is not as sweet as it looks and although not as hard for buy-to-let investors to secure mortgages as it is for first-time buyers, it is still very difficult. Indeed the apparent increased readiness of lenders to fund BTL again with higher LTV mortgages only make that market look healthy when compared to the residential mortgage market which in historic terms is all but flat lining. But even allowing for a slightly healthier look on the BTL front lending to property investors is still very low by historic standards. There were 34,500 buy-to-let loans in the last quarter this year compared to the same three months in 2011.

27Dec 2011

Current property News: Longhold tenancies and Licensing getting closer.

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By Mike Edwards

Last week, both mayoral candidates, Ken Livingstone and the incumbent Boris Johnson, stirred up the debate on the private rented sector. Livingstone will set up a non-profit lettings agency, covering the whole of London, if elected, and would impose a rent cap of no more than one-third of the tenant’s wage. In polite terms these proposals have generally been received as coming from another planet, and totally unworkable and in fact a retrograde step. Boris Johnson on the other hand, so often considered lightweight and with his own zany comments and ideas, has confirmed his own plans to accredit private landlords and the publication of a rents map to give tenants information about rents in their area.  These proposals have been received much more warmly. 

Longer tenancies, accreditation of landlords, and incentives for landlords to use accredited agents are among new proposals being made by the London Assembly.  In its report, ‘Bleak House – Improving London’s Private Rented Housing’, it  is also calling for landlords to be given tax incentives to improve their housing stock, thought to amount to some 850,000 homes across the capital and which are lived in by one in four London households. The report, from the all-party housing and planning committee, says that a surprisingly high one-third of the properties are below standard, and estimates that one in three private landlords is a ‘rogue’ operator. This problem has always been exacerbated inside the M25 and especially in London itself by the increased numbers of Landlords who manage property themselves instead of using a regulated agent. Several years ago ARLA estimated that 40% of property within the M25 is not let through managing agents. Hence tenants also suffer, as many of the subsequent problems stay below the radar. Indeed so severe is the problem that the Assembly estimates over £1bn is needed as investment into the sector.

The report calls for the Mayor of London to develop a kitemark or accreditation ‘badge’ which sets out minimum standards of private rental housing, together with a publicity campaign to raise awareness of the scheme among tenants. It suggests that there should be standards in the private rented sector that are similar to the decent homes standard for social housing. Naturally and logically the report then urges councils to only place tenants in properties belonging to landlords who meet the standards. It also calls for agents to ensure that the properties they deal with also come up to the standards. Acknowledging that rogue landlords will never be swayed by any amount of incentives or encouragement, the report calls for the Mayor to consider greater use of selective licensing. Licensing requirements could be relaxed, it suggests, where the properties are managed by an accredited agent.      

But it is the call for longer tenancies which, if adopted, could have the greatest impact on the industry, with Assured Shorthold Tenancies a strong focus of the report. It criticises ASTs as not offering tenants sufficient security, with landlords having the right to give tenants two months’ notice to quit after four months, without needing to give a reason. The ‘Assured Longhold Tenancy’ has long been under consideration by The Law Commission and one wonders where they are while all this comment is being made on a subject they were specifically asked to look into. It says families, particularly those with school-age children, need longer security of tenure and it calls on the Mayor to lobby the Government for changes, including giving tenants protection from ‘retaliatory eviction’, possibly via the Localism Act.

The report says £400m is paid to private landlords in London annually by local authorities using the sector to house homeless people. In fact in many ways, London’s private rented sector can be regarded as a success story. The problem lies in the fact that private rented housing is increasingly acting as social housing, but without any of the standards and security. One thing is certain in these uncertain times, and that is families need certainty about where they will be living so that they can settle their children in schools and forge community links.  The London Assembly considers that in exchange for the hundreds of millions of pounds of public money they are receiving, private landlords must be compelled to provide certainty in the form of longer tenancies. They could have a point.

16Dec 2011

Property Landlord advice: Block Management: Who does the LVT really serve?

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By Steve Roulstone

If a Leaseholder of a site managed by an RMC has a complaint about costs and services, the traditional route for that complaint, if the Leaseholder feels the Management Company has failed to address the issues concerned, is the Leasehold Valuation Tribunal (LVT) whose job, as stated in the title, is to ensure that Leaseholders are receiving value for money in both the charges levied, money spent and services provided.

On behalf of the Leaseholder.

Therefore, when a Management Company is the subject of a tribunal bought by a Leaseholder, you would assume that the process is there to protect Leaseholders and ensure they ARE getting value for money and that their interests are being taken care of. Especially for investment Landlords, who have of course utilised property as their chosen route of investment, probably of their pension or main asset to be realised upon retirement. But this has proven not to be the case for a tribunal that has just reached determination by the LVT for all of the leaseholders of the site concerned.

Initial problem.

When the paperwork arrived at our office the first thought that entered our heads was why this action was being bought against the RMC concerned (we received it as the Managing agent of the site in question) and upon investigation, realised that the case the Leaseholder had bought was not only wrong in our opinion, but that it was going to take a lot of time and effort and professional advice to fight it on behalf of the RMC. Indeed specialist knowledge was most important and must be required for nearly every Agent in our position, because such matters whilst not rare are not common occurrences and as the LVT Chairman stated in this instance, rarely reach such complicated levels as was produced by the Leaseholder concerned.

Long story short.

The case itself and the detail surrounding it are not central to my main point here, but midway through the process, having answered in a way that we felt was relevant and confirmed what we believed to be the truth behind the case, we were clearly instructed by the LVT to give more information against every point raised in this complicated claim and in much more detail. This we did, but the outcome was that the amount of time and therefore cost that we were generating to fight the case was rising by the week. Indeed, to put together the response requested by the LVT took a total of 65 hours in one week alone. Add the cost of the professional advice, which required two trips to London by three people on two occasions and the time spent writing, processing and gathering data prior to the week spent compiling the reply and the eventual bill would amount to several thousand pounds. On top of this, the three day tribunal, again for three people just kept the cost mounting up.

To fight or not to fight.

Of course, we could have left the case alone and allowed the tribunal to make a decision based upon what they managed to gather from the Leaseholder alone, but the risk, considering the claim was for over £150,000 was just too great. Then there is the position of the RMC Directors to be considered. I know why such people take up the role of Director and one requirement they should not expect to have is the kind of specialist knowledge needed to fight a case such as ours. An argument of mine during the case was that if all Directors were supposed to be as knowledgeable as the Leaseholder who bought the case against them obviously was, then 90% of the sites in this Country would never attract a Director at all!

To the outcome!

Now here is my point in all this. We won the tribunal on all counts and were given permission to claim full costs through the collection of fees from the whole site. Now the Directors are left having to explain why the Leaseholders will all face an increase of nearly 25% on next year’s Management fee and all because of the actions of one Leaseholder. But if the LVT is duty bound to listen to such cases, then the Management Company must have the ability to claim the cost of fighting the case and their only route is through Management fees as they have no other source of income. So the obvious point is in what way does this outcome protect the interest of the Leaseholders on this site? The answer unless somebody can tell me differently, is that it does not and I know full well, that the costs generated were very reasonable, having pulled in favours and attracted the support of specialists in Block Management for at least one full day for nothing (purely because of the subject matter itself)

Better way.

For me the Management Company should have a better route for recourse and if the LVT can demand such a high level of input from the respondent then they should have more powers in determining where the responsibility of the costs generated should lie. Perhaps if that were the case then those bringing such actions in the first place would take in to consideration the possible implication of their actions before bringing a case, which unless we find out otherwise, will have no more impact on them than the rest of the property owners on the same site!