Posts Tagged ‘Leasehold Problems’

How Freeholders and Managing Agents Can Abuse Leaseholders Legally

Tuesday, November 22nd, 2011

In this piece LettingFocus.com looks at how freeholders and their managing agents can abuse leaseholders and LettingFocus founder, David Lawrenson,  explains why he tends to avoid leasehold properties.

I contributed to an article for “The Times” the other week, which looked at the various ways leaseholders can get “turned over” by unscrupulous freeholders and their managing agents.

Here, based on what landlords and other home owners have told me, is my personal list of the six top abuses carried out by rogue freeholders and their agents:

1. Making leaseholders pay the freeholders’ own legal costs used in fighting other leaseholders or even for themselves in court! Yes, they can really do this, providing it’s allowed for by the terms of the lease.

2. Overcharging for arranging insurance or for replying to routine administration enquiries from conveyancers or mortgage lenders. Home owners need to be particularly careful to check what’s covered by the insurance policy and what the level of excess (deductible) is. I have seen one policy which had a £5,000 excess for any claim – which makes it about as much use as a proverbial chocolate teapot for most claims.

3. Not repairing a building properly on purpose in order to ensure more expensive repairs result later. See also “4″ below.

4. Doing unnecessary work on the building to profit from extra management fees. The discovery, in the 1970s, of the dangers posed by asbestos was a particular godsend for bad freeholders – allowing them to arrange for the carrying out of “urgent,” unnecessary and / or over-priced asbestos removal from a block.

5. Abusing or “ringing” tendering processes for repair work with builders – i.e. backhanders for inflated costs for works. For most works of any size, a freeholder will need three builders to quote for work, so a crooked freeholder with a number of properties could share the work out between each of three friendly builders and ensure each job costs more than is necessary. Of course, that assumes the three builders are in any sense “real” rather than being sham legal company constructs existing solely for the purpose of quoting for inflated work.

6. Overcharging landlords for “consent to let.” In my experience many leases do not require a leasehold-landlord to notify the freeholder, let alone to pay costs for this. That does not prevent lots of them from trying it on, though and, with more property than ever being let, this is a popular money spinner for the abusive freeholder. I have a freeholder who tries this on every few years and when I point out to them their error, they claim it was an honest mistake. Clearly it’s a mistake they are not learning from. This freeholder is big in the capital and now has a considerable “history” on line as regards this form of abuse.

Why I Avoid Leasehold

Personally, as an investor, I only buy leasehold if the block is low rise and if there is already a management company owned and run by active leaseholders (who ideally also live in the block or development) and who have the power to hire and fire the management company.

If the above requirements are not in place but the block is low rise with no lifts and the freeholder is a local authority, I might consider buying a leasehold property but only if more than 50% was now in owner occupation (i.e. occupants had previously exercised right to buy.)

Other reasons I tend to steer clear of leasehold properties are:

1. They are more time consuming than freehold with regards to what one needs to do to enforce one’s rights and to stand up to abusive freeholders and their agents.

2. I don’t like not being fully in charge of my investments.

3. Noise and other antisocial issues are more common with flats and soak up too much of my time.

Lots of freeholders and their agents are good. To avoid ending up with a “freeholder from hell”, ask other leaseholders before you buy and check what it says about the agent and the freeholder on line.

ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy and advice.

Services to Businesses and the Public Sector

We are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords.

We also write for property websites, speak at lots of property events (send an email to david@LettingFocus.com to find out about our next event) and we are regularly quoted by the media.

Services for Private Landlords

We also help landlords and property investors by showing how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the right of this page = where, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF OUR MAIN SITE

Click here:  http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press please click: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

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Copyright of Blog: David Lawrenson 2011. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

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Posted in Consent to Let, Consent to Let Fees, Consent to Let Scam, Freehold Scams, Freeholder Cons | Comments Off

Consent to Let Scam How Freeholders Rip Off Leaseholder Landlords with Consent to Let Fees

Tuesday, October 4th, 2011

Summary: Landlords are being ripped off by freeholders for “Consent to Let” fees that the freeholders are not entitled to levy.

Readers of this blog will know that all things being equal, I far prefer to buy a freehold property rather than a leasehold one. The many reasons for this are explained at length in “Successful Property Letting – How to Make Money in Buy to Let” and I don’t have the time to go into them here.

But I do actually have two leasehold properties. Both meet my criteria of being self contained (in small blocks, no messy noisy hallways, with long leases.)

One of them is an ex local authority block which is a mix of owners and council tenants. The freeholder and block manager is the arms length housing management organisation (or ALMO) appointed by the local borough council.

This ALMO organisation is about the very worst organisation I have ever come across for repeatedly lousy customer service sustained over a number of years. They are really only good at sending glossy leaflets and doing surveys asking leaseholders about how they are performing (though are clearly incapable of reading or acting on the results.)

If I have a problem with this property, I now go straight to the Chief Executive for action, because their staff are too incompetent and anyway, always seem to be off sick, on holiday or on training courses. But, being quasi government, since they are appointed by our council, at least they are not out to rip me off with silly demands and inflated service charges.

Rip off Freeholder

My other leasehold property is managed by an active management company appointed by residents, which is always  good as it gives the leaseholder more control and it means we can fire contractors if they are not up to scratch. It’s a shame we can’t also fire the freeholder.

The freeholder is a private company and is actually the one I refer to in “Successful Property Letting.” (Sorry, I do not give their name even in the book.)

Not for the first time, I have had another demand for money from them for “Consent to Let” fees, which they are not entitled to make.

They have asked for £260 for a “Retrospective License for Consenting to Let.” This is because I had been found guilty by them of the hideous misdemeanour of not telling them I was letting my property. (I guess these Sherlock Holmes’s figured this out as my correspondence address is different from the property address.)

The trouble (for them) is they have no right to collect these fees as there is no provision in the lease for requesting “consent to let.”

Leaseholder Fight Back

So, I have just sent them this letter

Dear Sirs,

Further to my telecon with “Sarah” re my let property at XXXXXXXXXXXXXX

I have told you before on at least 2 previous occasions that there is no requirement in the lease for me to ask you for “Consent to Let” on this property.

A quick search on Google reveals that this is a mistake you just cannot seem to help making and which is annoying many other people too, and which has been posted about on some well known consumer focused personal finance websites.

To put it right, I am hereby formally asking you, by 15th October 2011, to write to all leaseholders in the development (I will check to see you have done this because I know a few other owners) to tell them all that your letter was sent out in error and that you will repay any and all sums that you have collected for this consent for which you know full well you were not entitled to make a demand for.

Please let me know what action you will be taking. Yours sincerely David Lawrenson

Deafening Silence

That was sent three days ago and so far there has been complete silence from them (which was exactly what happened the last two times they tried this on.)

The question I have is this: How many landlords don’t check their lease and just pay up. And even if there is provision in the lease, how many are daft enough not to challenge the outrageous levels of these charges.

Well, we know 900 of you currently read this blog every day of every week  and some of you will have been victims of this con trick.  So can you help as I think this is something the press would be pretty interested in?

If you have had a similar experience and especially if you would like to expose it in the press, please drop me an email and get in touch. (I may get back in touch with you or simply pass your details straight onto a journalist who will pick up the story. I regret I cannot reply to every email. If you do not wish a journalist to contact you, please do say so in the email.)

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Advice and consultancy.

Services to Businesses and the Public Sector

We are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords.

We also write for property websites, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We also help landlords and property investors by showing how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF OUR MAIN SITE

Click here:  http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press please click: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER which goes to 3,000 people just  send an email to david@LettingFocus.com – We do not spam or sell our mailing list to advertisers. Please put us on your “white list” to ensure you receive our emails.

PRODUCTS FOR LANDLORDS: Landlords Resources

GET THE RSS FEED FOR THIS BLOG: Click Here

Copyright of Blog: David Lawrenson 2011. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

TWITTER PAGE For my thoughts on property, personal finance, plus as well as other random things from sport, to 80s and 90s Indy Music, to tsunamis and politics please see our Twitter page.

LINK TO THIS BLOG OR TO OUR WEBSITE

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Posted in Consent to Let, Consent to Let Fees, Consent to Let Scam, Freehold Scams, Freeholder Cons, Leasehold and Freehold Matters | Comments Off

Buying a Leasehold Flat, Guarantors in Tenancy Agreements. Plus Local Authorities Survey Private Landlords Housing Benefit Intentions

Tuesday, August 31st, 2010

Next Property Investment Seminar and Networking Event

A bit of a quiet week this week, though I was quoted in the FT again:  http://bit.ly/9o5NZ0 so, with not much news to report, I thought I would offer up some random observations from my working week as a speaker and commentator on the world of buy to let and letting property.

Local Authorities Research Private Landlords LHA Intentions

At last, I see, some local authorities have followed my exhortations and actually gone out and surveyed private landlords to find out their intentions post the new LHA or Housing Benefit changes. I received no less than two surveys in the same day from different London boroughs.

A good start, though in our view both boroughs missed the chance to ask all the right questions and because of the structure of the surveys, some of the survey results may be ambiguous. Still, the fact that the councils have done the surveys is better than sitting there wringing their hands and trying to second guess what landlords will do.

Why I Don’t Buy Flat Conversions in Single Block Victorian Houses with More Than One Other Flat

When I do speaking engagements the two things I get asked about most are problems with leases on flats and problems of tenant guarantees.

Looking at leases, if you have read my book you will know my views on these already. Buy the Book at Amazon

I say in the book that “……whilst many lease arrangements work just fine, in nearly every newspaper there is a column in the property supplement where frustrated leaseholders (and some freeholders) seek advice from the paper’s solicitor on how to solve some problem or other with the working of their lease. Their questions are usually about how to get a freeholder or managing agent to do something they should be doing anyway, how to stop other leaseholders from doing things they shouldn’t, how to extend a lease, buy the freehold or take over the management. The fact is there are quite a few flats – especially conversions – where the building is managed badly. Typical problems are noise, crumbling exteriors and filthy common areas. Given that the law on leasehold has changed frequently in the last twenty or so years suggests it needed fixing. Things today are better than they were, but for many leaseholders there are still problems.”

Most of the queries I get are from frustrated leaseholder and co-freeholders of flats which are in single block properties that have been converted from a large house or small commercial building into flats.

All too often the leases on these types of properties are badly drafted and there is no mechanism for collection of service charges or even insurance or for doing maintenance.

Enforcing your rights can be hard and time consuming and this is the reason why, as a landlord, I never now even bother look at buying flats in these types of conversions. And there are many investors and leasehold experts who share my view.

But If You Must Buy One……

Of course, I fully appreciate that, due to financial constraints, for many first time buyers and investors there is no option but to buy a flat in a Victorian or Edwardian conversion block.

If this is you, then try to buy one where there is just one other flat in the block (preferably with an amenable owner who is not mad) because you will at least have a starting chance to put things right if there are problems. If you have to get three or more other leaseholders (some of whom will inevitably be absent landlords) on your side it gets a lot harder to get the freeholder or other co-freeholders to join in actions with you or get anything done.

If you are thinking of buying this type of flat, your priority even before you move ahead on the legals is to get hold of and scrutinise the lease first. Find out how long there is left on the lease (amazingly many estate agents won’t even know which is kind of stupid as it has a huge bearing on price), how many other flats are in the arrangement and what the arrangements are for collection of service charges and doing maintenance work.

If you don’t like the answers you get, then avoid! And if you need more advice on leasehold and freehold, there is a small section in my book. Plus, you really also should get in touch with “Lease”, the Leasehold Advisory Service at http://www.lease-advice.org/

Also look at  Leasehold and Freehold which is an article where we look at why extending a lease is often better than buying the freehold.

Guarantors

The large and rapidly increasing number of queries I get about guarantors is a sure sign of the recession. As recession bites, more tenants will find it hard to prove an income to a landlord and therefore need a home owning guarantor to say they can play the rent in event the tenant can’t.

But signing up a guarantor is an area that is fraught with problems for landlords. You can all too easily make a muck-up of the guarantor process which means you cannot actually enforce the guarantor’s guarantee! In other words, the guarantee is worthless.

We will look at this again in a forthcoming blog post but you may find this short article useful at our website:

http://www.lettingfocus.com/pages/myarticles_Guarantorsintenancyagreements.html

House Share Rents Appear to be Down

According to the latest data rents are up overall but anecdotally we have noticed that the rent level for rooms in shared houses are more down than up, at least here in London.

This is another sign of recession and one we think that is caused by people who may have lost their jobs turning to letting out a spare room in their house (which is tax free up to £4,500 per annum.)  The extra supply is driving these kinds of rents down.

I would expect to see this drive down rental levels on HMOs and student accommodation. Next Property Investment Seminar and Networking Event

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, local authorities, social housing providers, institutional investors in the private rented sector and insurers – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities by advising on LHA issues and finding private landlords (private rented access schemes, local letting agency models etc.) I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Advice on a one-to-one mentoring / coaching basis or through our (very occasional) group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can also use the tags and categories at the bottom of each post to read blog posts on related posts or click on the categories pull down menu over to the top right. (If you want to find relevant posts from before 30 April 2010 you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you.)

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

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Posted in Buy to Let and Landlord Tips, Guarantors in Tenancy Agreements, Housing Benefit, Leasehold and Freehold Matters, Letting A Room In Your Home, Local Housing Allowance | Comments Off