Ferry Quays – Meeting for Residents arranged by Bruton Kiff 18 Jan 2006
Notes taken by Sylvia Biles and transcribed by Nic Doczi (who was not able to attend)
Brief for the meeting: Address residents’ financial concerns, dispel rumours
Provided by Bernie Wales, Bruton Kiff Ltd (BK)
Background: FQ land is owned by Hither Green Developments Ltd (HDG), the freeholder. Ground rent is due from each leaseholder as detailed in their individual leases.
The three block companies provide services, repairs and maintenance for the blocks
Ferry Quays Management Co Ltd (FQMC) is responsible for services etc around and beneath the blocks, it is currently controlled by HGD, will hand control over to resident directors at some point in near future.
Leaseholders pay a separate line item each six months for:
1. Ground rent
2. Service charge to the block company
3. Estate charge to the FQMC company
4. Service charge for a parking space (if applicable, see individual leases)
Fairview/Rialto, the developer appointed original managing agent, Hamptons
Fairview/Rialto sold their interest in the freehold company, HGD to Monument Group in middle 2005.
Hamptons sold their estate management business to County (CEM)
Managing agents administer everything detailed in the leases
Recent problems, mainly financial, due to uncollected service charges. Insurance cover was due to be withdrawn if premium not paid by December. The decision was taken late December that CEM could not continue and were dismissed. Bruton Kiff were appointed on an interim basis with brief to rectify financial disarray and deal individually with residents queries – by 31st March 2006.
Situation revealed on detailed examination of CEM documentation:
· Arrears of £550,000+
· Several unrecorded commercial units from which payments never demanded
· Outdated/incorrect names and addresses
· Errors in car space registration – duplication in “owners” of some spaces
· Unpaid contract/supplier invoices of £150,000+
Current progress
· Many payments (from residents) received already
· Building insurance paid (except £10,000)(subsequently paid by 31st January)
· Enough money to pay urgent creditors
Ongoing:
· CEM management period to be audited a.s.a.p.
· BK management period to be audited a.s.a.p. after 31/3/06 for period ending 31/3/06
· Budget preparation prior to demands in April 06
· BK to ensure sufficient collection of arrears for insurance premium to be paid in due June
· Block inspections daily, by Hugh reporting back to BK
Q (from leaseholders) and A’s (from BK) from the meeting
Q: what is the cost of the interim management?
A: Same fee as for CEM, who will not be paid except what is legally due
Q: What is accountability of CEM, will there be recompense?
A: We will look closely into what is due to them, they won’t have been paid for some time.
Q: Have we taken legal advice?
A: Monument took separate legal advice. BK took legal advice. CEM probably took legal advice (highly likely). Can’t give definitive answer until whole picture emerges
Q: Will fees change if BK appointed from 1 April 06?
A: Budget will be drawn up in light of what needs to be done, then can be specific. Aim will be to provide better value for money – if possible same bottom line figure
Q: What do Audit deficits mean?
A: Each company has a budget worked out on a per unit basis. If budget = actual amount spent, nothing to pay, else any overspend becomes a deficit to be paid.
BK will enquire from the auditors the nature of this deficit (per management company). The budget had not been looked at since the start of the year so don’t know if off budget or not.
Q: I have had an increase of 50% in my demand. Why?
A: Can’t answer, could be that CEM were trying to compensate for under budgeting. Further investigations to be done via the auditors and advice will be circulated in due course.
Q: Why have car park charges doubled in a year?
A: Cant answer till figures analysed
Q: Have things changed since the AGM CEM predicted that collecting arrears would be a long and painful process – will you respond quicker?
A: Collecting arrears is now quicker, our records of occupiers are being corrected. Arrears must be received by March 31st but if you need time to pay, talk to BK. There have been several repossessions and some companies’ in receivership. All leaseholders being actively traced and contacted.
Q: What confidence can we have that recent demands are the true figures?
A: Working from CEM records, they are accurate – so far as we know. Now have the records from day 1. Car park charges are still a problem. A check will be made with the auditors for units never billed.
Q: Can we expect adjustments of future bills?
A: Yes, as they are identified. There are some complex legal issues and the future will be different than the past
Q: Who are the auditors and how can we have confidence that the figures are correct?
A: Auditors check up on significant items only, not all papers are gone through. BK have their concerns as non auditors but shouldn’t mean that residents pay more. On balance, auditors seem to have done a good job in an appalling situation. It would be sensible to have continuity at present. Next AGM can question auditors.
Q: Shouldn’t we look to CEM for recompense – for example, shouldn’t they pay the interest charged on the overdraft?
A: There was no overdraft. Correspondingly as arrears not collected, individuals have gained interest on unpaid charges by having the money in their own bank accounts. Creditors have been spoken to and are on board; e.g. window cleaners are being paid. I am hopeful creditors will not sue.
Q: What is situation with arrears from commercial units?
A: That is the cause of some financial problems, cash flow mainly hopefully not insurmountable.
Q: Are you expecting payment of the audit deficit without explanation?
A: Yes, the information should have been given in the past. We will sue for non payment.
Q: For new build, service charges are high, build quality is quite poor, there is no sinking fund. Can we buy the freehold?
A: There should be some reserve when the dust has settled, some of the buildings not perfect, developer is sorting out some issues, amount of reserve needed will be worked out over the next weeks. Freehold purchase not available while freeholder completing development, but they don’t want to hold on to it and freehold will be transferred in due course, probably without problem.
Q: An attempt to buy freehold of first two blocks ended in a refund of the legal fees.
A: Don’t think sale can be forced, may happen – likely to happen - eventually.
Q: What reassurance can you give me as an investor of BKs independence? Do you have any relationship with the developer?
A: BK has no connection with HGD, or Fairview/Rialto, or CEM. We are independent and impartial. BK have charged same fee as CEM for current work.
Q: Is there a way we can inform others about CEM and what has happened at FQ?
A: Perhaps via ARMA; Leasehold Valuation Tribunal, Leasehold Advisory Service.
Q: Have the freeholders paid all of their service charges?
A: Yes
Q: Can we have an update of service charge arrears?
A: ¼ paid to date; ½ have charges outstanding from last year; ¼ have debts from day 1 (from memory)!
Q: What has happened on the open meeting re planning mentioned at the AGM?
A: Developer has had difficulty getting discussion with Council planners. Whole scheme for Brentford being re-drafted, so meeting probably in March
Q: What are implications of current financial situation on sales?
A: There have been 10 or so re-mortgages, 7 sales, 1 exchange last week, 2 this week. Solicitors are getting answers to questions. There is no problem provided solicitors contact BK in good time.
Q: What retentions do you recommend?
A: We don’t recommend specific figures. We will give information on the areas where an undertaking/retention would be appropriate