Lord Best report

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    #16
    leaseholder64,

    The new regulator is supposed to be self financing, at least after the start up period, which probably means that the leaseholders will pay for the cost one way or another.

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      #17
      This has fudge written all over it.

      Suppose that all agents declare an average 5% commission, I can imagine the Government and the new regulator claiming then that they have successfully reduced the rates of commission and acted in the best interests of all leaseholders, even though they would be unable to prove any real savings at all.

      Imagine, two agents A and B with no connection between themselves. There is nothing to stop A from insuring B’s policies and supplying contractors to B and adding charges for themselves, B could reciprocate. Nothing would need to be disclosed to leaseholders, who are unlikely to be aware of any such arrangement. It could be made more obscure by involving a third agent.


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        #18
        ARMA estimate that £1.3 billion of unprotected client money is held by managing agents. So what is proposed? It is suggested that the Government considers making sinking funds mandatory in both existing and new leases, which is likely to add to the figure.

        It is also suggested that the Government should ensure that a sinking fund is “effectively funded such as being underpinned by a professionally certified asset management plan.” Would anyone like to hazard a guess as to who is going to issue the certificates and who is going to pay for them?

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          #19
          Has anyone come across managing agents using their capacity as the appointed secretary to transfer monies between different company accounts?

          I found out by accident that our previous dodgy managing agent was putting forward to the directors that money could be transferred from our account..in particular the insurance commission to another account so there would be no paper trail and taxes to pay as HMRC would not know?

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            #20
            Being company secretary doesn't, in itself, give any right to make financial transactions (whereas being a managing agent does).

            Which bank account things are in doesn't really matter, it is how the transaction is recorded in the books.

            Doing something to deceive HMRC is going to be a criminal issue.

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              #21
              Originally posted by Stacker View Post
              Has anyone come across managing agents using their capacity as the appointed secretary to transfer monies between different company accounts?

              I found out by accident that our previous dodgy managing agent was putting forward to the directors that money could be transferred from our account..in particular the insurance commission to another account so there would be no paper trail and taxes to pay as HMRC would not know?
              I am unsure of the relevance of your post on this thread but an agent is not entitled to make decisions, he must seek instructions from the directors of the company. If an unauthorised transaction has taken place, the directors have the power to reverse it.

              If a Company Secretary has acted outside his authority, the directors have the power to warn him or remove him from office.

              I do not understand your comments, a RMC would typically use only one bank account for trust monies and it would be dormant for tax purposes. If it transfers monies outside the service charge funds, it would cease to be dormant and it may create a tax liability. The Company is required to keep proper books of account, so any bank transfer would create a paper trail.

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                #22
                When the dodgy managing agent tried to conceal the insurance commission he instructed the broker to pay him though another account so there was no paperwork. He just produced the invoice saying this is how much we need to pay including IPT tax, he also managed other properties where there was a situation where he was again the company secretary and no directors, the directors for my block would not let me see all the financial paperwork, my hunch they knew what he was doing as he put it in an email that the monies could be transferred to this other account.

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                  #23
                  Originally posted by eagle2 View Post
                  This has fudge written all over it.

                  Suppose that all agents declare an average 5% commission, I can imagine the Government and the new regulator claiming then that they have successfully reduced the rates of commission and acted in the best interests of all leaseholders, even though they would be unable to prove any real savings at all.

                  Imagine, two agents A and B with no connection between themselves. There is nothing to stop A from insuring B’s policies and supplying contractors to B and adding charges for themselves, B could reciprocate. Nothing would need to be disclosed to leaseholders, who are unlikely to be aware of any such arrangement. It could be made more obscure by involving a third agent.

                  Well this goes on already, one of our previous property managers was also a lettings agent so he was putting forward contractors which he knew and had on his books already then charging a 15% project management fee for finding the contractor and managing the leaseholder consultation...did not go to the open market just used his own people he knew.

                  Comment


                    #24
                    Originally posted by eagle2 View Post

                    I am unsure of the relevance of your post on this thread but an agent is not entitled to make decisions, he must seek instructions from the directors of the company. If an unauthorised transaction has taken place, the directors have the power to reverse it.

                    If a Company Secretary has acted outside his authority, the directors have the power to warn him or remove him from office.

                    I do not understand your comments, a RMC would typically use only one bank account for trust monies and it would be dormant for tax purposes. If it transfers monies outside the service charge funds, it would cease to be dormant and it may create a tax liability. The Company is required to keep proper books of account, so any bank transfer would create a paper trail.
                    Not if the broker 1. agrees to negotiating an insurance or any insurance products with an unauthorised non FSA approved property manager. 2. then pays the dodgy property manager through another account where there is no paperwork. So we get the inflated invoice and are none the wiser until I ring up the FSA and they say never heard of dodgy property manager and he can not sell insurance products nor claim any commission as supposed claims handling as he is not authorised or regulated by FSA to do so......oh and the directors when confronted about the situation say " we dont see it as an issue!!!!" and refused to take action against this dodgy company.

                    Comment


                      #25
                      Originally posted by michelle230 View Post
                      For anyone interested -

                      Chapter 6 focus on Leasehold..

                      https://www.gov.uk/government/public...g-group-report
                      Thanks for the link..I shall read it first

                      Comment


                        #26
                        Originally posted by eagle2 View Post
                        ARMA estimate that £1.3 billion of unprotected client money is held by managing agents. So what is proposed? It is suggested that the Government considers making sinking funds mandatory in both existing and new leases, which is likely to add to the figure.

                        It is also suggested that the Government should ensure that a sinking fund is “effectively funded such as being underpinned by a professionally certified asset management plan.” Would anyone like to hazard a guess as to who is going to issue the certificates and who is going to pay for them?
                        Then there needs to be some sort of legal protection like the banks and financial institutions offer...where your money is covered by the FSA up to £85,000..same needs to be done to cover trust monies.

                        Comment


                          #27
                          Originally posted by michelle230 View Post
                          For anyone interested -

                          Chapter 6 focus on Leasehold..

                          https://www.gov.uk/government/public...g-group-report
                          So who is going to Police this as the Councils are failing to prosecute any property managers, throwing it back saying they dont have the resources time and money!

                          Comment


                            #28
                            There are far to many horror stories about leaseholders being miss treated, reform had to happen. BTL Landlords have encountered rogue landlords and P poor Man companies.
                            Most Leaseholders never knew what they were getting into because of nice sales people who even let you use their solicitor to get the deal done. Landlords and their klan have ruined it for themselves. Imo the only profit made on a house or flat should come from the sale of it. Commonhold is the only way, it works in many other countries. An d we don’t see that many leaseholds abroad.

                            Comment


                              #29
                              Originally posted by Stacker View Post

                              Then there needs to be some sort of legal protection like the banks and financial institutions offer...where your money is covered by the FSA up to £85,000..same needs to be done to cover trust monies.
                              The proposal is to commence the legislation that requires the use of a nominated account. The business model of banks is to take risks with your money, and in particular to operate fractional reserve banking, where they cannot handle everyone withdrawing at once without calling in lots of loans. That's very different from the rules for trusts.

                              Letting agents are now required to belong to a client money protection scheme if they take deposits, but I'm not sure that anything similar has been introduced for managing agents.

                              Comment


                                #30
                                Originally posted by desamax View Post
                                Commonhold is the only way, it works in many other countries. An d we don’t see that many leaseholds abroad.
                                Commonhold would not address Stacker 's concerns.

                                Comment

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