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Leaseholders complain about ‘excessive’ fire safety charges

1 June 2020

THE LEASEHOLDERS at the Parklands development in Kirkby claimed that management company Regent Property Management [RPM] is ‘ripping them off’ over fire safety works costing £302,000.

Liverpool Echo reported on claims by leaseholders that the company were ‘ripping them off’ and had ‘refused to provide information’ on a £302,000 fire safety works bill handed out in October 2019. This broke down to about £2,000 per leaseholder in the development’s Willow Rise and Beech Rise buildings, with the bill coming after Merseyside Fire and Rescue Service (MFRS) issued enforcement notices for both high rise blocks.

The buildings ‘needed major work done to improve fire safety’, with residents arguing that costs charged by RPM were ‘excessive’ as they already pay over £2,000 a year in service charges, and ‘very little of the work has actually been done’, despite work beginning in November. Works included replacing all 160 fire doors across both blocks, with resident Michael Jones stating he ‘could count only nine fire doors in Beech Rise and 18 in Willow Rise that had been replaced so far’.

Work was still ongoing but had been delayed by the COVID-19 pandemic, and Mr Jones said that the ‘extortionate’ charges meant the company ‘are ripping us off’. The news outlet had seen documents showing RPM had paid itself £25,000 in ‘unspecified “professional fees” […] recovering the money from leaseholders’, with RPM’s successor company Epworth Property Management (EPM) claiming this was a 12.5% fee charged to compensate the company ‘for the time it spent on the project’.

Of the total, £86,000 was for a ‘contingency’ fund including £45,000 for ‘fire door replacement’, £20,000 for ‘relocating services within risers’ and £1,000 for ‘waste disposal’, alongside £20,000 marked only as ‘contingency’ with ‘no indication of what this was for’. Despite asking leaseholders to pay before work began, EPM said ‘it could not say’ how much had been required ‘as the project had not been completed’.

The contingency funding came on top of a £45,600 bill for ‘communal fire doors’ for both blocks, as well as £20,300 for replacement riser doors and £46,800 for work on the risers. Liverpool Echo pointed out that under law, landlords ‘must allow leaseholders to inspect copies of accounts, receipts and other documents supporting invoices’ for such projects, but had been told by leaseholders that RPM ‘had failed to provide them with more detailed accounts’.

This included ‘how the money was spent, the quotes the company had received for the project, or invoices from the contractor carrying out the work’, with Mr Jones pointing out that ‘we’re getting stop signs in front of us when we try to get anywhere or get any information. It’s not good’. EPM denied this was the case, and said leaseholders ‘are able to access the relevant documents’, with leaseholders ‘resorting to legal action’ to have the charges ‘declared unreasonable and reduced’.

With some having already lodged a case with the property tribunal, RPM was replaced by EPM in January this year, but RPM’s former director of property services Alexander Rowell runs EPM, with attempts to reach RPM ‘unsuccessful’ as it ‘appears to have effectively shut down’. Mr Rowell said that EPM was ‘unable to comment about any matters in regards to [RPM]’, but gave an ‘extensive’ response to leaseholder allegations.

He stated: ‘As the development is around 14 years [old], it is hardly surprising that things are at the end of their useful life and that costs would start to increase. In addition, fire regulations have become significantly tougher post-Grenfell and the cost of dealing with fire related issues has become significant.

‘The two tower blocks, namely Beech Rise and Willow Rise at the development named Parklands in Kirkby have fire enforcement notices in place primarily in regards to breaches in fire resistance in the riser shafts of both tower blocks.’

He added that RPM had contracted Mitie to carry out the fire safety works, with the £86,000 contingency agreed by the managing agents, contractors and surveyors due to [the] bespoke nature of this project’, and stated that he was ‘unable to say’ whether any of the contingency fund ‘had been used’ because the work was ‘ongoing’.

On the £25,000 paid to RPM, Mr Rowell responded: ‘As the works fall outside the base management fees and the standard management agreement there is an ability for managing agents to charge for their time, in this case Regent Property Management charged 12.5% excluding VAT and disbursements based on the winning tender cost.

‘While this is a significant cost, the process of complying with Landlord and Tenant Act 1985 (as amended) regulation is considerable including serving notices on all 160 Leaseholders multiple times, carrying out consultation, appointing the professional team and the contractor, managing and monitoring the project and collecting the funds in a timely manner such that the contract terms could be met.’

The leaseholders claim that this would ‘incentivise’ RPM to ‘select the most expensive tender in order to maximise the fees it could charge’, though Liverpool Echo said information provided by Mr Rowell indicated RPM ‘chose the cheapest of three quotes’. He also commented that leaseholders ‘are able to inspect all of the records to satisfy themselves that costs have been validly incurred’, despite leaseholders stating that this ‘was not the case in practice’.

They also said they were ‘withholding payment until they were satisfied that [RPM’s] costs were valid’, with Mr Rowell responding: ‘It is critical to also note that the actions taken by both [RPM]and Parklands (Kirkby) Management Company Ltd in regards to the speed of starting the works and process made since, including during the period since [EPM’s] appointment in late January 2020 has avoided [MFRS] closing the building leaving all 160 flats in the two tower block empty until the works are completed and signed off by the relevant parties.

‘At present the leaseholders’ debt in the two tower blocks in regards to the current fire project amount to in excess of £47,000 from a demand of just over £302,000, dating back to late November 2019. It is, therefore, the Leaseholders in the block that are putting the occupants lives at risk as the contractual obligations for payment to the contractors may not be able to be honoured due to their non-payment of the project costs by their own Management Company.’

Leaseholders complain about ‘excessive’ fire safety charges