How Did PMC’s Come About?
By admin | March 12th, 2010 | Category: Past Articles | 17 commentsThe whole Property Management concept is a money making industry, but there are still many questions about how PMC’s have appeared to become the ‘norm’ in many new developments.
Fortunately, one of TheTruthAboutSolitaire admins was in discussion with ARMA and asked the question of ‘why it appears that all new developments are managed by PMCs?’
ARMA explained that when developers started building estates that had a mixture of houses and flat’s, there was a responsibility to look after the shared area’s e.g. private roads, common areas.
Originally, this responsibility was the developers. However, developers will only want to build the homes and move onto the next project, rather than having to maintain and deal with resident issues. In addition to this, some councils didn’t have the budgets to be able to adopt the developments and therefore, someone had to be responsible.
This is where the Property Management Companies stepped in, to take away this responsibility from the developer / council, which has led many of us to the situation that we are in today.
So who’s to blame for our predicaments? Well, the developers are the ones that (we assume) tender the contracts to become the PMC, but surely they undertake some form of due diligence and research the performance of the companies in question?
We also feel the Council / Government, should also be held accountable for PMC’s – because it’s the pressure of government saying we need X amount of homes to be built, which is resulting in the local councils having insufficient funds to adopt these estates / developments.
Therefore, TheTruthAboutSolitaire is very tempted to collate contact details of all the major developers that appear to have links with Peverel (links as in, they have appointed PPG to maintain other sites) for contributors to make their feelings known to them.
The only way we feel that PPG / CBG companies can be affected, is if revenue streams dry up. If developers realise that they are not performing and is possibly tarnishing their reputations, surely they’ll want to distance themselves and appoint an alternative PMC.
We welcome your comments on this, but on a semi-positive note…..
ARMA mentioned that regulation of the industry is currently at an advance stage and apparently has the support of all political parties, come what May (literraly) - should we have a new PM / Government.
This is good news and hopefully one that will see the likes of Peverel / Consensus Business Group become unstuck. However, the nature of things such as this, we’re sure that there will always be someone / a company, that will try to bend the rules.
Fingers crossed – regulation will be the answer to our prayers.
Don’t forget, the Downing Street Petition deadline is the 15 April 2010 – which means we have just over four weeks to gain even more support. Currently we have 1256 signatures and thanks to support from CARLEX, we hope that this figure will increase even more by the 15 April.
If you haven’t already done so, click the link below to add your support.
Admin you are bringing a very important grass root issue. Thank you.
My research shows that now day a Council can hold a builder for ransom. Sometime it appears they will only pass the new development plan if the builder offer something for the Community facility like shops, community centre or even I have been told near me might be a new library.
In Compass Point the Community centre was built which I have been informed has not been used once by the community. Solitaire charged us for maintenance but it turned to derelict building. Solitaire bought the lease for 125 years most probably for nothing and then borrowed money against the building for their personal use. The plans have been submitted to Council to turn the Community Centre to residential property. Now I am being told Council want to turn it children crèche that means my immediate neighbours and mine life will be more hell. We are already suffering by anti social youths who keep breaking into the community centre for their personal use again and again.. Most probably our roads will be adopted if already not by the council which will bring more undesirables in our development to access the crèche. The youngster will have warmer place to come and play with toys too. The innocents suffer while rich get richer by renting out the building.
In Millennium Dive we bought the flat on the plan. There was one gate to be erected on the road to stop the intruders. But we have now painted on the ground Private Road but to make it safe have cameras, four gates. Who is behind this intensive unnecessary maintatnce work? Have Peverel advised Red Row, the builder what to do so they can earn 15% of the commission more on the expenditure and maintenance? Has Council advised the builder not to put one gate in beginning of the development?
In my opionon the builders, who only wants to build developments, are in between the PMC and the Council so somehow need to make all of them aware the truth so good foundations are laid to create a better society where we are all proud to live in.
I agree that this post covers some very important issues – namely he relationship between developers, local planning authorities and the appearance of large UK-wide Property Management Companies.
All are answerable for the situation that has arisen and the torment that this has and is causing so many leaseholders across the UK.
May I also draw attention to the issue of the selling off of the freeholds by the big developers once they have completed work am their sites and the last properties have been sold. The law on Right of First Refusal is currently woefully inadequate in its protection of the interests of the leaseholder.
It would be interesting to know how much money has been spent by individual leaseholders in fighting their corner on all these issues. This is money that leaseholders are having to spend after they have forked out for all the routine costs involved in house purchase. Some might say that the situation so created has also provided “rich pickings” for all the professionals involved.
Visitors to this site may be interested to know that Peverel OM Ltd (part of ppmg – Peverel Property Management Group) were advertising for a “Key Client Estimator” at the tail end of 2009.
Amongst the main responsibilities of the job were:
“To liaise with developers, solicitors and customers during the initial stages of management;
To calculate reinstatement costs and insurance premiums and instruct insurers appropriately;
To prepare sales literature for site sales offices;
To produce financial information sheets relating to the purchase of the freehold of managed developments.”
Area of responsibilty : All new business
Key Interfaces: all internal departmenst; developers; insurance brokers; solicitors; customers.
So I think that proves the first point I make in my second paragraph above.
The post was advertised as “Permanent”, so Peverel are clearly optimistic about the future and the new business they are planning on picking up from the big developers.
Oh…and yes…the salary? £17,000 per annum.
May I put a different view and it’s not simple.
Admin writes “developers will only want to build the homes”
In my opinion some do and some don’t. When we bought our present flat it was the first time we had lived in London and we were a little nervous. We were buying off-plan and in trying to gauge our future neighbours asked the developer “Who is your target market? Yuppies? Empty Nesters?” The answer was a mumble. We asked who appoints the PMC? Answer the freeholder. “Who owns the freehold? We have not decided yet. You might.”
In progressing the RTM I now know the developer sold the freehold to OM a year before we asked the question. OM co-wrote the lease. I also know that 70% of the flats were sold to punters in Hong Kong who were the real target market. The developer was not building homes but ‘Financial Units’
Three or four years ago we decided to move to Manchester. We put a deposit on a city centre flat, again off-plan. As far as we could the PMC arrangements looked OK. It was a large development by a national developer marketed by Savills, one of the best known names at the top of the market. The manager of Savills advised us to go to a solicitor in an inner-city suburb that is a bit of a twilight area. “Lots of buyers have gone there and they can do you a good job for £250.” Needless to say we went to a proper solicitor who had acted for the City Council when they sold the land. During the transaction we and the solicitors discovered that all the 1 bedroom flats had been sold to a firm of punters in Ireland who resold them to punters 5% down. The idea was to sell out before completion at a profit. We discovered that investors, presumably encouraged by Bradford & Bingley, Halifax, and Northern Rock were buying 20-30 flats each and that less than 5% had been sold to people who wanted to live there. Again the developer was not building homes but Financial Units. So if we bought and when it came time to sell who was going to buy our flat? This did not seem a good place to live so we paid the solicitor his fee and walked away. Exactly the same situation is true in Liverpool, Leeds, Nottingham, Cardiff. This is where the banks have lost a fortune and where your taxes have gone. It is also the environment where genuine PMCs have been squeezed out by those with no scruples.
Nicky Vogg is right to say that the construction of many city centre flats is encouraged by local government who provide the land in exchange for the developer doing something else. It’s called ‘Planning Gain’. However the councils do not properly realise that during the last decade quite often it is the slums of the future that were constructed.
When I wrote different view I didn’t mean from Archangel as we must have been writing at the same time. I think we share each other’s opinion.
Neil,
Your point of view is not different as there are so many brances
one can only focus a few at a time.
We are being drained from various angle to line the pockets of the modern
scrooges and sadely I see no difference then Charles Dickens
Times.
Neil.
Thanks. And also to Nicky for her interesting views.
I agree that we are addressing the same issues, but you have added some very interesting information from your personal experience.
Following on from the issue of the developers selling on the freeholds as soon as all the properties are sold (or not in your case?, I would like to add s few more comments on PMCs and the changes that they have gone through.
Once upon a time leasehold apartment properties were managed by bona fide companies, often referred to as Managing Agents, whose primary purpose – on behalf of and under the instructions of the leaseholders and for a fair fee – was to manage properties. Then somewhere along the line (and probably at the same time as those apartment blocks in Manchester etc that Neil refers to)companies like Peverel were bought up by investment speculators who saw them as handy vehicles that could serve a useful role beyond their primary purpose, namely to provide income streams against which loans could be raised on the international money markets. So suddenly that primary purpose became a secondary purpose – hence the loss of customer focus that has led to all the woes being reported on TTAS.
Returning to the point about the selling on by the developers of the freeholds as soon as the apartments are sold – I am firmly of the opinion that I was not told a material fact when I purchased my flat -i.e. that it was the intention of the developer to sell on the freehold. Had I known that this freehold sale was already “in the pipiline” I may well have decided not to go through with the purchase.
Archangel,
I wrote “the developer sold the freehold to OM a year before we asked the question.”
We asked the question in 1995 and the developer had sold OM an option to buy the freehold in 1994, before it started construction. I only became aware of this fact while researching how to effect an RTM. So in answer to Admin’s question “How did this come about” it probably started in the housing slump caused by Nigel Lawson’s boom that crashed in 1989.
Like Archangel I would not have proceeded if the developer had answered my questions honestly and I had not already spent a lot on legal fees. Because of this experience we decided a few years ago that it was less painful to lose the legal costs than suffer another Peverel situation. In answer to some of my written questions they wrote in 1995 “under recent legislation residents have the right to buy the freehold”. They knew, but I did not, that they had sold over 70% of the developments to investors which would at that time therefore have disqualifed such a sale.
With reference to the managed services they wrote “You can be reassured over costs and who carries work of proper quality because of various statutory requirements . . .the position of leaseholders responsible for service charges is well protected” I can hear you all laughing now.
I used to work for Merrill Lynch and have to apologise for it financing VT to purchase PeverelOM. The people in ML who did this were the same team (actually a tiny number of people in relation to the company) that financed the breakneck expansion of Northern Rock. It was a different team that bankrupted Royal Bank of Scotland. Their idiotic activities were part of the stupidities that lost the company 1.5 times its whole capital.
I agree with Archangel that companies like the Consensus Business Group have as much interest in providing good property management as the Glazers have in football (soccer) ie none. These owners are overleveraged and in order to pay the bondholders the costs have to be cut by reducing the number of estate managers, the service charge increased, and creative profit opportunities sought in various scams. This is why Andy is whistling in the wind. It also makes the whole situation very difficult to correct.
I am so thankful to TTAS for giving us the platform to discuss and expose CBG and others exploits.
Archangle and Neil, you are highlighting the problems and how they originated which is much appreciated.
If some of the MPs( expenses scam) are saying we are above law & cannot be held accountable by a legal case that shows the integrity of our law makers. We are trying to take petition to the Government, 10 Downing Street and will see if it brings some results. It will be interesting to find out if CBG has donated money to any of the Parties.
I still say that we need to make the buyer educated that leasehold properties are open invitation for exploits if they do have right criteria and force the builder to make changes as follow or property saleability is undermined:
1.Already created owner Association in the lease.
2.Already formed Limited Company to run by the Association board.
3.The Management Company to be hire and fire by the Association board.
4.The Management Company have their own insurance and to be held liable like any other tradesmen.
5.The land is automatically is given back to the owners and cannot be sold to third party.
To avoid too many changes to the current lease system so it is not mucked up again is to just change the names to:
Owners hold from “leasehold”
Owners from lessees
Owner Association from lessor.
Finally have a template of the Ownershold ( Current lease) for builders to use so on one else can change for exploitation.
Nicky,
I like your ideas on how leaseholders could be brought into the management structure of their dvelopment at the point of purchase and how the freehold should be an integral part of the property. AND once all properties on the sites have been sold the owners should have the whiphand, not the developers or the managing agents. Buy-to-let landords (whether they live in Hongkong, Harlow or Harlech) should be made aware of the joint responsibility they hold with regard to the common ownership and duty of care to the common parts of the estates.
With regrad to POLITICAL DONATIONS – take a look at the article that was on the front page of the business section of THE DAILY TELEGRAPH on Wednesday 10th March (available online and also CARLEX have quoted the article in full on their site) Entitled “TCHENGUIZ SELLS LAMBORGHINI AS RECESSION SPARKS COST CUTS” it states in the penultimate paragraph ” The company (Vincos) made no political donations, after donating £50,000 to the Conservatives the year before.
Interesting….
INTERESTING – I GOT A NEW NAME FOR US
“ADMIN BIG BROTHER”
WATCH IT AS WE WILL CATCH IT IF YOU MAKE A WRONG MOVE.
Neil,
Thanks for that additional info on your freehold situation and Merrill Lynch.
Interestingly I found online the Merrill Lynch International’s March 2000 Offering Circular for “Peverel Funding Limited” (incorporated in the Cayman Islands) £103,000,000 Secured Notes.
This was, of course, before Peverel was acquired by CBG. But in relation to the title of this post, I quote the following details on the origins of the Peverel Group.
“The Peverel Group has its origins as part of the McCarthy & Stone group of companies, which incorporated Peverel Managment Services Limited in 1982 to provide property management and ancillary services to private retirement housing developments undertaken by McCarthy & Stone. In June 1993, Peverel Investments acquired the majority of the freehold and long leasehold reversionary interests relating to retirement housing developments owned within McC & St group. The management buyout occurred in October 1993 and the interests so acquired still produce the major part of Ground Rents and Transfer Fees attrituable to the portfolio. In November 1995, the Peverel Group was acquired by Peverel Holdings Limited, the majority shareholders in which are Holiday UK Limited Partnership (“Holiday”) and Westminster Investments (UK)Limited (“Westminster”), a member of the Westminster Health Care Group, which is prominent in the nursing home, behavioural and diagnostic health care industry in the UK. Holiday is an affliate of Holiday Retirement Corp., one of the largest operators of senior housing developments in the United States. On or after the closing date, Holiday or an affliateof it intends to acquire, directly or through a wholly-owned subsidiary of it, the interest of Westminster in Peverel Holdings Ltd. Alternatively, such interest may be acquired directly by Peverel Holdings Limited by way of a redemption or purcahse thereof.
The Peverel Group has grown since November 1995 by the acquistion of additional freehold and leasehold reversionary interest portfolios as described below. In particular, Peverel Property Investments Ltd (formerly Care UK Investments Ltd), the business of Haven (formerly operated by Care UK Group of companies), O.M. Limited and its subsidiary undertakings and certain companies within the Retirement Care/Meridian Group of companies have been acquired, and the Peverel Group operations have expanded to include non-retirement housing.
Broadly, the Peverel Group operations comprise the following principal activities:
(i) owning freehold and long leasehold reversionary interests in respect of both private sheltered housing developments and general residential housing developments;
(ii) the provision of property management services as the agent appointed by the freehold or long leasehold reversionary owner with respect to 2,163 developments and 70,123 flats (as of 31 December 1999)in return for payment of management fees recoverable from tenants /lessees; and
(iii) the provision of additional services to residents of the developments in question, including, in the case of sheltered housing developments, property re-sales and the provision of an emergency monitoring service known as Careline”
30 MARCH 2000.
Sorry it’s so long-winded, but it’s the full background history. As Neil says above CBG acquired Peverel in 2007, with finance arranged by Merrill Lynch again. Heaven knows how many loand have been raised against the same income streams?
If you have managed to read through the above you will see that all CBG / Peverel-controlled properties are all linked together including those that CARLEX is campaigning for.
Archangel,
This is stunning. I have googled and found it.
A few points.
1) Peverel freeholds are based in the Cayman Islands to avoid tax.
2)As you say this was the prospectus in 2000 to raise the money for Holiday Retirement Corporation to buy Peverel. There was a posting on the PeverelAction website last August, which I downloaded in November, which stated that Holiday Retirement entered bankruptcy in December 2006, presumably because it could not service the loan. Peverel was then bought by CBG in early 2007 with, as you say, a new loan organised by Merrill Lynch. I can date my rapid increases in service charge to this point.
3) When we bought our flat I did a search on OM, our original property manager and bought the accounts. In June 1994 OM’s freeholds were valued at £1.4mn. The accounts did not give ground rent income but lets say they could have been £70,000. In the year 2000 Peverel’s ground rent income was £4.7mn, over 65 times bigger. So rebranding as OM Property Management is dishonest.
4) The £1.4mn freeholds of OM Ltd were valued by a director called David Anthony Billson. Do you suppose he is related to Andrew Billson, present Managing Director (Operations)?
5) Since 2007 CBG has bought other businesses, such as Solitarire, yet in 2000 the number of properties owned was larger than those quoted by Andy.
Neil OM Property Management is mearly a section(trading name)
for Peverel OM LTD. As it is not LTD, therefore, will not be
listed in the Companies House, however, we can make payments to
either of the them-Peverel OM LTD or OM Property Management
What is going on here?
Compare the meerkat
Andy 3 March 2010
“OM Property Management manage around 1,200 privately owned residential developments in England & Wales which correspond to nearly 70,000 individual properties.”
Consensus Group website 14 March 2010
http://www.consensusbusiness.com/
“The Group is also the owner/manager of nearly 300,000 residential freeholds throughout the UK, making it one of the largest owners of residential properties in the UK.”
“Vincent has a strong track record of innovation and, based on his experiences in radically changing the ways in which UK commercial and residential property is financed.”
Well I must say my service charges have been radically changed.
Of interest to Carlex
“A significant part of our portfolio comprises units in the sheltered housing sector where particular attention, sensitivity and good estate management practices are imperative.”
Archangel has inspired me to dig a little. This is what we are dealing with and we can safely ignore Andy’s ridiculous statistics. It looks as though Archangel’s £100mn bond from 2000 was refinanced in 2007. This is really similar to the way Glazers took over Manchester United. It used to be illegal to borrow against something being taken over but Mrs Thatcher changed the law.
Financial Times 08/06/2007
http://ftalphaville.ft.com/blog/2007/06/08/5071/vincent-tchenguiz-breaks-new-ground/
“Mr Tchenguiz, chairman of Consensus Business Group, completed the purchase of Peverel . . . Merrill intends to sell a portion of the £500m debt package to investors. . . Peverel, which owns some 57,000 UK property freeholds . . . Mr Tchenguiz said Consensus would now own a portfolio of 300,000 freeholds, with another 200,000 under management”
Reuters 02/12/07
http://www.reuters.com/article/idUSL0243628120071202
“Tchenguiz said his Consensus Group has agreed separate credit facilities with Bank of Scotland and Merrill Lynch . . . He said 200 million pounds in debt was agreed with Bank of Scotland and was secured against part of its extensive portfolio of residential property ground rents, while another 450-million-pounds facility was agreed with Merrill Lynch to help fund the growth of the group’s residential services firm, Peverel.
Merrill Lynch also agreed to refinance the repayment of a listed debenture worth around 100 million pounds that Consensus assumed responsibility for when it bought Peverel for around 500 million pounds in March, Tchenguiz said.
He said the credit lines gave Consensus the firepower to add to the 600,000 residential properties and 300,000 ground rents under its management by around 50,000 units each next year.”
Neil,
Glad to see that my hundreds of hours of “key word” internet searching is proving useful.
Thanks, Nicky, for clarifying the “OM” name change – yes, we have been officially notified – in the small print-that the new name of Om Property Management is a “trading name”.
With regard to your question about the identity of the director who did the valuation of the OM freeholds, I suggest you take a look at the comment by Nigel Wilkins, the Chair of CARL to the latest post on CARLEX site.
And with regard to your last comment, I have another interesting document – in pdf format – may I pass it to you via TTAS admin?
[Admin Edit]
Feel free to email it to the usual address and we’ll publish a report.
Archangel & Admin,
Yes please. I spent a reasonable amount of time in November looking at this after realising that I was not alone in my views on Peverel. Not sure I understand the comment about CARLEX. The last posting is the Property Week article-is that what you mean?
Nicky
It looks to me like Peverel is trying to present itself to the public by using as many different names as possible to counter the success of TTAS and CARLEX.