A group of flat owners claim the managing agent of their block lost its freehold, meaning they will now have to spend tens of thousands buying it back.
Stephen Simmonds, owner of The Property Shop in St James’s Street, managed the block of ten flats in Lower Rock Gardens and was secretary of the company set up as the owner of the freehold, Beardsley Property Management Limited.
According to Companies House, by 2011 all the directors’ addresses were given as The Property Shop.
In 2016, the company was struck off the register after failing to submit accounts.
When this happens, any freeholds a company owns automatically pass to the Crown in a process known as bona vacantia.
There is a process to reclaim freeholds lost in this way. This does not appear to have happened and instead, a new company was set up within days, called Beardsley Property Management Ltd.
This also had Mr Simmonds as secretary and many of the same directors, all of whose addresses were again listed as The Property Shop.
Brighton and Hove News has spoken to several of the directors, who say they had no idea this had happened.
The situation was only uncovered when a new leaseholder, Stuart Martin, bought a flat in the block last year. He says he believed he was also buying a share of the freehold.
But after querying the costs of some maintenance all leaseholders had been ordered to pay for, he discovered that the current managing company and therefore none of the leaseholders actually owned the freehold.
Freeholders have several critical duties, such as maintaining the exterior and communal areas of blocks, arranging buildings insurance, agreeing to extensions of leaseholds and agreeing the transfer of leaseholds from one owner to another.
The Crown does not carry out any of these duties, meaning that nobody is currently officially maintaining the block, no sales of leaseholds can legally be finalised and none of the leaseholders can remortgage their flats.
It’s not clear how the latter two have legally been done since 2016. It’s also not clear on what basis leaseholders were paying for maintenance, which The Property Shop continued to carry out until last year, when the situation was discovered.
Mr Martin said: “The Property Shop has been acting in incredibly bad faith for our building of ten flats for a number of years and has done numerous things that have come to light.
“We have a solicitor appointed who is having to deal with the government solicitors (The Crown) in order for us to repurchase our freehold.
“As it stands, nobody can sell their flats, or technically remortgage, because of what has been done with our freehold until it’s sorted out.
“We have one owner who has had to out of desperation remortgage another property as she is unable to sell because of this.
“It’s going to cost us thousands and thousands of pounds to remedy everything.”
Julian Clark, one of the directors of the original company, said: “Mr Simmonds dissolved the old company and set up the new without any communication to the director.
“He also made myself a director of the new company without my knowledge.
“No owner of a property would knowingly transfer the freehold to lease. This mess is all down to Steve Simmonds.”
Another leaseholder, Carl Farrar, who has owned a flat in the block for almost 20 years, said: “I have sent Mr Simmonds about 20 emails over the year for various things and not once did he ever reply.
“It wasn’t until Stuart bought his property just over a year ago and looked at this situation with fresh eyes, and thank god he did.
“When I finally got Mr Simmonds to call me after having to tell his assistant I was coming in to discuss the free hold situation, his response was ‘Well, a freehold is not worth anything, you all have long leases and that is all that matters, don’t worry about it’.”
Long-term leaseholder Chris Ryan was also a director of the original company, and says he was unaware that it had been dissolved and his share of freehold lost until Mr Martin uncovered what had happened.
He said Mr Simmonds had been in regular contact with him at that time as he was managing the letting of the flat he owns in the block.
He said: “I thought that I was paying for a service that was (more than) not provided.
“I firmly believe that the current situation in which we find ourselves is due to mismanagement by The Property Shop.”
Mr Martin has reported The Property Shop to both Brighton and Hove City Council’s trading standards department and The Property Ombudsman, both of which confirmed they are investigating.
He has also raised matters relating to buildings insurance, cost and quality of recent building works, statements made on conveyancing forms, withholding of company documents and the current level of company funds.
Mr Simmonds told Brighton and Hove News Mr Martin was a troublemaker.
He said: “I have managed that building for 14 years and we never any any issues. He’s been in the building for a year and he’s caused all sorts of problems.
“There were reasons behind the company being struck off. There will be legal proceedings taken against Stuart Martin.
“I have been in the town for 24 years and never had an issue with anybody.
“The freehold isn’t worth anything. It’s just in limbo.”
Last month, the leaseholders collectively paid £2,400 to the district valuer to get the freehold valued so they start the process of buying it back from the Crown.
This is an extraordinary story, and a concern for anyone living in a flat where they have third-party management representing them, or the freeholder.
I lived in a Kemp Town flat, with share of freehold, and we appointed a management company to run our building, not least because some of the units were rented out. We had money collected each month for maintenance, and we were accumulating a repair fund by the end of each year
But when it came time to paint and repair the building, the management company brought in various estimates, and they came up with a total figure of £40K to carry out the work. There was a 20% ‘project management fee’ , in addition to the charge they already asked us for, each year.
So we sacked them, and did much the same work for 12K – which, as it happens, we already had in our account, as accumulated funds.
There are good property management companies in Brighton and Hove, and then there are those who treat you as a cash cow.
There are so many issues with leasehold and the management of blocks of flats – corruption amongst managing agents, surveyors, builders, solicitors and the like is endemic!
Managed freeholds are just a racket.
Management company go out and get some “quotes” at double the rate they should cost. Builder who wins bank hands the company half, standard practice. If your in a flat with a few other residents, sack the managing agents as quickly as possible. They are nothing but money sponges
The directors sound incredibly incompetent after reading this article.
Hi. I think the problem was that once stricken off from companies house, TPS created a new company using almost the same name but a tiny difference. The directors did not spot the change
He hid his mistake from them – having changed the correspondence address. It put him in entire control.
Looks like the leaseholders were paying the maintenance charges under false pretenses. Goodness knows what would happened if the building had burned down.
Interesting news item, by the way. Nothing wrong with washing your dirty linen in public now and then…..
Ahem I am not a lawyer but that sounds like fraud.
The Property Shop have been poorly managing buildings, tenancies and tenants for a while.
They need investigating as an entire company. They have withheld deposits illegally, left tenants with leaks for months on end, evicted via Section 21 if tenants complain about repairs.
They do not reply when contacted, they threaten the evict of you make a fuss.
The Property Ombudsman should take a deep dive into their practices.
Absolutely agree.
They are unprofessional. They never reply to emails when making complaints, turn up at properties unannounced (not legal), do not follow any sort of formal procedure and try to blindside you, treating tenants as if they are idiots and know nothing. Threatening behaviour of any kind is unacceptable.
The Ombudsman should investigate and it will not have to delve too deep to find how this outfit should not be allowed to operate within the sector.
The legal profession is the most corrupt entity in the land – without a shadow of a doubt.
I have used The Property Shop for over 25 years. As a landlord I have only ever experienced kindness, commitment and professionalism from Steve and his team. Some of the comments here seem disingenuous at best and deliberately cruel at worst. The Property Shop is probably the largest independant letting agency in our area and manages hundreds of properties at any one time. A great many tenants are looked after by TPS and the respect and service they are given compares favourably with the corporate agencies locally.
In the end, we have had to pay £50,000 + solicitors fees to repurchase our freehold in the end. All 10 owners have taken legal action against The Property Shop, we have just had a CCJ awarded against The Property Shop, Trading Standards are making significant progress with their investigation and I am in regular communication with the The Property Ombudsman for their investigation too.
So much for the freehold being “worthless” as Mr Simmonds put it. I wouldn’t trust him to run a bath.