‘Fleecehold’ companies under fire for rogue practices

MPs have called for action to regulate companies involved in ‘fleecehold’ property management agreements.

The demand comes after MPs said they had been inundated with complaints from constituents forced to pay inflated service charges for properties they lease.
In one case a woman living in a small retirement community in Exmouth is paying an extra insurance premium to guard against terrorism.
One of the companies heavily criticised during the debate was FirstPort, which manages more than 300,000 homes across the country and has an office in Exeter.
A company spokesman said FirstPort supported moves towards a new framework of regulations for the industry.
The debate in Westminster Hall was led by South Devon Liberal Democrat MP Caroline Voaden, who said she wanted the government to bring in more regulation and new legislation.
“The issues raised repeatedly by constituents cause not just frustration, but in some cases serious distress,” she said. “The situation for both leaseholders and freeholders has become so bad that such estates are now commonly referred to as ‘fleecehold’ instead of leasehold.
“Every type of resident—leaseholders and freeholders—is affected by rogue practices. Residents are being ignored, dismissed, intimidated and, frankly, fleeced by management companies that are not subject to any kind of regulation.”
She said she had been shocked to find out how many of her fellow MPs were dealing with constituents with similar problems, and said at least half of the MPs on the Liberal Democrat benches were supporting residents whose properties and estates were managed by FirstPort.
“We must have some kind of legislation to bring these companies to book,” she added, saying that of 1,100 people who had signed petitions on the subject, 94 per cent were unhappy, and said service charges were unfair.
Mrs Voaden went on: “Respondents talked of shoddy workmanship, years of delays in getting repairs done, charges for gardening where no gardens exist, charges for new windows when windows are not replaced, charges for buildings insurance when there are no communal buildings, charges for new light bulbs when there is no communal lighting – it would be funny if it were not so serious.
“They talked of broken lifts, flooded car parks, leaking ceilings, including one that has been leaking for nine years, exorbitant insurance charges – the list goes on and on.”
She said services charges were going up way beyond inflation, with no clear explanation of what the increases are for.
“At Camomile Lawn in Totnes, residents were told that the annual contribution to a reserve fund had been increased from £2,000 to £8,000 a year – over 265 per cent,” she said. “Service charges were raised 23 per cent based on a 10-year plan, but the plan was not shared with the residents, even when they asked.
“Accounting costs went up 55 per cent in one year with no explanation given. This is a classic example of poor communication and a refusal to engage constructively with residents who want to understand the basis on which financial decisions are made.”
She also said the ‘sharp practice’ of imposing penalty charges for late payment of bills also had to stop.
Other Devon MPs also joined the debate with their own observations.
Newton Abbot Liberal Democrat MP Martin Wrigley said: “In Teignmouth FirstPort has been buying up other management companies, and the sinking funds – the contingency paid by residents – appear to have disappeared. They have been sunk.”
And Richard Foord, the Liberal Democrat MP for Honiton and Sidmouth highlighted the case of one of his constituents in Exmouth, whose insurance premiums payable to her management company had risen from around £100 a year to as much as £900.
He said: “It is because she is being charged for every single eventuality, including terrorism. Now, we do not have a great deal of terrorism on the retirement estates of mid and east Devon, so I can be certain that a large cut is being taken out of that fee.
“We need transparency so we can all know why that is happening and where that money is going.”
A spokesperson for FirstPort said: “We welcome the opportunity to engage in discussions and debates about the changes and challenges facing our industry, and to contribute to shaping how we can work collaboratively with MPs to raise standards and better support customers.
“Since the start of the year, we have held a number of constructive meetings with MPs – both in Westminster and at properties across the country which have given us the opportunity to highlight the improvements we are making to better serve our customers.
“During the Commons debate, some specific issues were raised, and we will be following up on each of these individually, meeting residents on-site where appropriate to work towards a resolution.
“We fully support the government’s proposal for a clear regulatory framework for property managers. We believe this will help drive higher standards across the industry while giving customers greater confidence in those entrusted with caring for their homes.”