Lewisham Homes: Leaseholders fleeced in Decent Homes scandal

This week we take a look at the CEO who turned a profit into a surplus at Lewisham Homes. THEBIGRETORT...

The Lewisham Homes Audit and Risk Committee minutes dated 20 June 2017 record that its board members were seemingly taxed... on the subject of profit.

Auditors KPMG informed that it was common 'within the sector' to use surplus instead. However, ignoring the startling fact that board members, after hundreds of millions of pounds of public and leaseholder spend, and after eleven years of a spending - during which it did not know the correct Shamspeak - its members didn't realise that the term allows a not-for-profit organisation such as Lewisham Homes to, well... turn a profit into a surplus. 

Accounts filed at Companies House record that this profit is due... 'primarily to a reduction in the valuation of projects undertaken' – and last year amounted to a cool £2.3 million. 

That new roof that you leaseholders were informed needed doing; and didn't. That fire door you didn't really need. That emergency lighting; not needed. The fire alarms, are not needed. And that scaffolding they would like you to stay off as they ramp up the price - via their preferred bidder... not needed. But it's all for the public good.

Dodgy sealed bids aside... Don't leaseholders find it strange how the PREFERRED BIDDER always manages to undercut the competitions' bids – only to then ramp up the price once the tender is awarded; and when over-priced scaffolding surrounds the building?

Read on...

Did you know that a Lewisham Homes leaseholder is known as a Lewisham Homes “fleeced” holder?

And, athough the following board minutes do not record it, they are most informative on how that fleecing may be taking place.

Increase of turnover from £34 million to £40 million.

Increase of surplus from £0.97 million to £2.30 million reserve balance.

Increase from £8.3 million to £10.6 million.

Increase of assets from £14 million to £21 million.

*Due primarily to a reduction in the valuation of projects undertaken.

The Risk Committee minutes are not clear on why a little asterisk has been placed just before 'due' and with no corresponding asterisk. 

However the accounts record an increased “surplus” of £2.3m – so there is overvaluing going on at Lewisham Homes to be sure, and so this seems a good spot to place it.

In a further example, 9 JULY 2014 Board Papers/13 under its Financial monitoring report, records: 

“Lewisham Homes’ Major Works partnering contractors MITIE and Breyer spent £31.68m in 2013/14. They made decent a total of 1505 properties. This works out at a cost of £21,048 per unit. With an allowance for anticipated Leaseholder recovery included the cost per unit is £19,162.”

LEWISHAM LEASEHOLDERS have, according to the above, been SUBSIDISING the costs of the decent homes programme.. to the tune of £1886 each unit!!!

But first... sack the auditors... £31.68 million divided by 1505 units = “£21,049 per unit (and not £21,048). So where is that extra £1 per unit and which totals £1505? A leaseholder could pay for a new door with that.

In the twisted shamspeak spoken by Lewisham Homes, the “anticipated leaseholder recovery” subsidised each council “unit” by £1886. (Or £1887 if its Board ever finds the missing £1505!) Adding the Lewisham Homes mismanagement fee, at 10% to leaseholders - 5% for council tenanted properties? - then beleaguered Lewisham leaseholders are unwittingly contributing 10% for council tenant improvements - throughout the borough.

Curiously, in that same report, it was determined that leaseholders, amongst a veritable raft of “improvements”, also needed fire doors replacing. Flat entrance doors were not compliant with “current” fire regulations, it was claimed, and a 'gradual repayment scheme would be offered' to leaseholders for what were expensive conversions. 

However, ignoring the fact that the repayment scheme was not offered to leaseholders, the compliance itself is simply a requirement – in other words not proscribed by law. There is no regulation actually stipulating that a door of a dwelling, built before 1991, must be changed to suit present day requirements. Many are already fire-rated, for twenty minutes. 

But why then should leaseholders choose to gradually repay for something that may not actually be needed in the first place? 

Or, if needed, and there is some debate surrounding this, and they do need changing, why have leaseholders been hoodwinked into believing that the costs should be met by them; and not Lewisham Homes? 

THE BOARD MINUTES

“Although the Housing Act and Fire regulations are not clear on this matter regarding responsibilities. The CEO advised that where leaseholders did not comply, they may be prosecuted.”

In other words the CEO of Lewisham Homes, Andrew Potter, although he knows 'regulations are not clear on this matter', is hoodwinking leaseholders into believing it is clear to him. If not simply wishful thinking.

He is aided by former fire officers. Known as Kilden and Brown, the pair formerly worked for the London Fire Brigade for thirty years. This dynamic duo actually describe themselves as Batman and Robin. - one boasting in Inside Housing how he goes 'above and beyond' (and with leaseholder bank balances too). 

LEWISHAM HOMES CONVICTED FOR FIRE DEATHS

In 2016, due to a tragic fire at Marine Tower, which claimed the lives of two women, London Fire Brigade prosecuted Lewisham Homes for its failings. The trial took an... interminably longgggg time to reach Woolwich Crown Court, and led to a quid-quo-pro arrangement where fire brigade officers, prior to the trial, were invited to add interest to their already fat pensions from the fire brigade by loading the cost of replacement of doors and other fire paraphernalia on the backs of Lewisham leaseholders. 

This conflict of interest actually sees the London Fire Brigade undertake to prosecute - or at least threaten to prosecute - any recalcitrant leaseholder who refuses to replace a door, and has become widespread with ALMOs in the London boroughs. Seemingly in the pursuit of fire safety. 

However, following the Grenfell Tower tragedy, the fire safety advisers have been making hay through the dense smoke. 

Whilst further down the fire ladder it was noted that people leaving the organisation did so due to poor pay; and which the Lewisham Homes Board hoped to compensate via flexible working. So it is unlikely this is the area where PROFITS have been siphoned. 

FOLLOW THE MONEY£££....

In the last tax year 2016/17, whilst CEO Andrew “THE PROFIT” Potter headed his executive management team, the aggregated emoluments, gross taxable pay plus benefits in kind, recorded in company accounts was £710k - for less than a handful of top earners. But since the CEO can appoint directors and dismiss them, and with an unsavvy board, it is hardly surprising. Save to say that the Board members of Lewisham Homes consists primarily of patsies who receive only minimal expenses: so they should not be blamed. 

Andrew Potter, CEO, the HIGHEST PAID EMPLOYEE of Lewisham Homes commenced in 2007 with a salary at £118k. Following austerity measures, ostensibly aimed at those on struggle street, by the 2016/17 tax year his salary had risen to £161k. 

Having lit the blue touch paper, Potter has resigned in a bit of flurry. The ad he answered for his new job was placed just months ago. But as he heads for that very expensive fire door, he is looking at a weighty pay day. And judging by the convenient tax date that this fat cat chooses for his departure, the next return will no doubt record another great pay day.

In April he is headed towards greener pastures at Hastoe Housing Association where he is taking over from Sue Chalkley and, where one suspects, “asset rich” leaseholders may soon be subsidising his next pay increase. Just bolt the doors...

If not, you should beware the incomer... hunting is banned and there's a fox headed their way. So time to get the socks out.

Following the trail...

Back in concrete city, Lewisham leaseholders will have to pick through the burning embers of a very questionable policy. A policy where service charges have seriously bloated the cash tills at Lewisham Homes. 

But, as Ralph Waldo Emerson said: Do not go where the path may lead, go instead where there is no path and leave a trail.

COMING SOON IN THE BIG RETORT... we lift the lid on price fixing.

Eamon McGoldrick: ALMO fatcat in leaseholder slavery row

https://www.insidehousing.co.uk/comment/council-leaseholders-have-too-many-freedoms-54543

Dear Eamon

The “arguments” as you term them (in your article link above) are mainly one sided. They (council leaseholders) end up in the Land Tribunal due to the ALMOs (like yours) directing the leaseholder there. Leaseholders appear as litigants in person – which means the ALMO expensive legal teams, at the taxpayer expense, can run legal rings around them.

Right to Buy leases do contain adequate restrictions. “At all times during the term to comply at his own expense with all the requirements of any legislation relating to the prevention or extinction of fires...” [5^th Schedule, Para 12.] 

 However, it is not, as you infer, a requirement under the Fire Safety Order 2005 to introduce “interlinked” devices into private dwellings. More conveniently connected to the communal areas that your membership controls – and at a growing cost to leaseholders. 

You simply wish to rewrite lease law in order to allow this increased and unnecessary control - not just over the communal spaces but the interior of the flats too. It is true that there is a history of leaseholders refusing access. But, actually, there is also a similar history of council “tenants” refusing access to overzealous council representatives and what they perceive as their constant interference and with it a flagrant breach of the obligation for “peaceful enjoyment”.

Buy-to-let landlords do pay for “essential” fire safety works. So why suggest otherwise?

There is also adequate provision under the Fire Safety Order 2005 for buy-to-let landlords that ensures they undertake their duties on tenant safety. That's why they are also forced to provide an annual gas safety certificate. So what additional requirement would you place in a lease: and why?

The Fire Safety Order 2005 itself was introduced - over a decade ago – so why has your membership not already implemented its so-called recommendations?

Your membership is simply subsidising its Decent Homes programmes via a doctrine of overspend on home improvements and now fire safety. In reality, it is a free ride taken on the back of tragedy. However it is by slyly introducing these charges on leaseholders that also offers your membership the opportunity to increase the size of its own pay or pension package.

Legal action, or the threat of it, is the card to trump all cards. 

However, you are remarkably mute on the fact that the “new” fire resistant doors introduced by some of your members have actually catastrophically failed. That £1000 doors... possibly hundreds of thousands of pounds (of taxpayers money?) has seemingly been squandered in overpriced and defective installations, and solely in an effort to recoup the cost of your members' mistakes. That is why you now target the leaseholder cash cow. [See Lewisham Homes Board Minutes, 20 Jan 2018, Para 4.9 for 'latent defects' and 'front entrance doors' 'not installed to the required standard'.]

But how many ALMOs out there have simply tried to brush items like the door scandal under the welcome mat? Surely Lewisham Homes is not the only one? But then... what's another grand shoved on to the service charge of another beleaguered and unsuspecting leaseholder! It is after all only (his/her) money.

LEASEHOLDER MONEY-SAVING ANNOUNCEMENT: "Closer fitted” doors only become a requirement IF you change the door to a new door - so don't believe Eamon. (Government guidelines state that closers on flat entrance doors are not actually needed.)

But once you convince the leaseholder otherwise... you can then demand fire-resistant door hinges, fire-resistant locks, fire resistant transoms, fire-resistant door frames, and an anti-arson letterboxes – suddenly it's not a door it's PANDORA.

Little wonder that leaseholders quite rightly quiver when your freeholder shadow falls over the communal threshold that hasn't been maintained within its five-year cycle. (But then... no other parts of the property usually have either.)

Neither are your freeholders NOT pursuing leaseholders for charges simply to ease getting the works done, as you claim. They are not chasing leaseholders because they know that they have NO LEGAL RIGHT TO DO SO. Having undertaken much of these defective and sometimes unnecessary works your members, having failed with the leaseholder, will simply pass the inflated cost over to the public purse – along with that 10% management fee added. What a joke!

You boldly state that the 'financial burden falls on others' but neglect to mention that this is due to the incompetence of your membership. And it is they who place the financial burden on the leaseholder and tax payer.

“Of course, leaseholders should have the right to be consulted and receive assurances on value for money, but they cannot be allowed to put the safety of others at risk for commercial and financial gain.“

How very imperious. Your ALMOs do what they have always done – IGNORE leaseholder objections, and then introduce the changes anyway. Thereby, amazingly, creating a surplus in your accounts. A surplus which you have mugged off the leaseholder who has to sell or remortgage to survive the onslaught.

The misplaced virtue shown is that you have the temerity to suggest that it is the buy-to-let landlord - with all the statutes and regulations currently in place - who '...cannot be allowed to put the safety of others at risk for commercial and financial gain'.

THE KETTLE IS BUSY DARKENNING THE POT... I note in the accounts of one of your members that the auditor suggests that they don't record a profit but record it as a... “surplus”? No doubt eventually shown in the bloated salaries of your 'not for profit' members..

On the subject of Airbnb... a council tower block cannot simply “double up” as a hotel. There are rules and regulations in place that prevent this and it is only due to your members not enforcing these that the issue exists. The following paragraph contained in most if not all council leases may assist:

“Not to permit or suffer to be done in or on the Demised Premises any act of which may be or become a nuisance or inconvenience to the Lessors or any other lessee tenant or occupier of any of the flats/Maisonettes or to the occupier or owner of any adjoining or neighbouring property' [5^th Schedule 16 (I).]

A pretty restrictive covenant wouldn't you agree?

If not then how about this one: “Not to use the Demised Premises for any trade or profession or business whatsoever but to keep the Demised premises as private residential premises for occupation by one household only. [17. ] In other words... no Airbnb!

You also ask: “Leaseholders in council-owned blocks are not required to abide by the same rules and as a result you can now have two flats on the 15th floor of a tower block, where the tenanted flat has had 10 boiler services in the past decade and the leasehold flat has not had any checks on the boiler over the same period. How can that be right when health and safety of all residents is the freeholder’s number one priority?”

WRONGGGGG. Councils do not sell properties - in the main they sell long leases. That way they retain control over their portfolio and also gradually increase their coffers when lease lengths decrease. However the leaseholder and or tenants are expected to abide by the same rules both under the terms of the lease and the many forms of legislation that govern them. Health and Safety being but one. The Landlord and Tenant Act another. In fact, your members have not maintained the gas safety certificates in their own bloated portfolios: and this is partly due to the fact that they are far too large for them to manage, or that tenants do not trust them.

A clock that stands still is sure to be right once in twelve hours. On that you are partly right. Right in that to buy a council property was a dream to many. But be honest, Eamon. Ask yourself why so many council tenants that bought under the right to buy quickly sold up - at a bloated open market rate - and then placed as much distance as possible between themselves and your ALMO brotherhood, and sisters. Do explain though where the buy-to-let landlord can 'maximise income and minimise outgoings' after any of the above. To say nothing of the recent changes in tax law on buy-to-let, which prevents them making a “surplus”.

A surplus is the disguised profit your membership makes from leaseholders.  

Added to which the impositions placed by ALMO managers like yourself, so called 'not for profit' organisations - a fact which is contradicted by accounts reading “surplus” instead of profit - also prevents this. Put simply, for the small landlord (and not the ALMO) it is the reverse: income is minimised, whilst outgoings are maximised. A trend that looks likely to continue. 

Finally, purpose-built council flats do not always need wall-to-wall carpets due to the adequate soundproofing – so why blame the leaseholder for not having shag pile ? 

The moral in the tale is that ALMO chief executives (like yourself), in towers made of plastic, should not throw Molotov cocktails.

In my humble opinion.

TheBigRetort

COMING SOON IN THEBIGRETORT... LEWISHAM HOMES TURNS A PROFIT INTO A SURPLUS