A Brighton MP has cited the case of a troubled local property management company while calling for better regulation of the sector.
Sian Berry spoke during a debate in the House of Commons about what should be included in the final version of the government’s Commonhold and Leasehold Reform Bill.
She said her inbox is “littered with horror stories” from leaseholders who own flats in blocks which are controlled by freeholders and managed by property management companies.
One local company, PS&B, has had its bank accounts holding millions of pounds in service charges on behalf of clients frozen for several months, leaving vital bills such as insurance and utilities unpaid.
The sole director of most of the PS&B companies, Peter Hewett, emailed staff last week to say he was intending to put the companies into administration. There is not yet any indication on Companies House that this has happened.
While Ms Berry did not refer to PS&B by name, she did describe how the lack of proper regulation has left leaseholders in this position exposed to the possibility of significant financial losses.
She said: A large number of leaseholders in Brighton and Hove are in a nightmare situation right now of not being able to access money paid into accounts managed by just one large property management company in sudden crisis.
“Under current leasehold regulations, when a managing agent’s client accounts are frozen, or irregularities are identified that suggest mismanagement of accounts, leaseholders are left exposed to very big financial losses.
“In the private rented sector, there is a Government-backed tenancy guarantee scheme, but for leaseholders there is no equivalent guarantee on service charge accounts and reserve funds.
“Section 42 of the Landlord and Tenant Act 1987 does require property management companies to hold service charge contributions in trust and with a financial institution authorised under the Financial Services and Markets Act 2000.
“Yet the flexibility of how leaseholder money is held in reality means that the sums of money in property management company accounts may far exceed the maximum amounts guaranteed under the financial services compensation scheme.
“Section 156 of the Commonhold and Leasehold Reform Act 2002 adds a requirement for managing agents to hold service charge funds in designated separate accounts, but it is not yet in force.
“This lack of enactment seems to leave wide open the potential for managing agents to hold leaseholder money in a way that falls outside of compensation schemes.
“It cannot be right that leaseholders are left exposed to risk in that way.”
Housing miniter Matthew Pennycook told the Commons he took the issue of appointing a property management company regulator seriously and would “not rule one out” – but offered MPs no promises.
He said: “I want to make clear, I take very seriously the [housing select committee’s] recommendation for a new independent regulator.
“I’m certainly not going to stand here and rule one out – indeed, I am personally extremely sympathetic to it.
“But we will set out our overarching position on the regulation of estate, letting and managing agents in due course.”
We are all very appreciative of Sian Berry’s statement. Absolutely clear and to the heart of the problem. Not so Mr. PennyCook. How easy it is to fob us off with another regulator. Another gate to climb over before they tell us ‘complain somewhere else first’ This is to do with money and there being no insurance for our service charges once we hand them over. Leaseholders must have an insurance scheme like tenants so if landlords and agents syphon their funds off they are protected. Please write to Shula – chair Brighton Leaseholders Assiviation : info@leaseadvice to become part of our support group. Thank you so much Sian.
…… Bandwagon…