A number of holding companies within the Peverel Group, one of the largest residential property management companies in the UK, went into administration this week (Monday 15th March), but the message for the 300,000 homeowners whose flats are managed by Peverel companies is "don't panic".
The Peverel Group is owned by the Tchenquiz brothers who last week were called in for questioning by the Serious Fraud Office in connection with investigations into the failure of the Icelandic bank Kaupthing. The Tchenquiz businesses were one of Kaupthing's largest customers with about £2 billion of loans.
Bank of America Merrill Lynch have demanded that Peverel repay a loan of £124.6 million plus £11.4 million interest within 24 hours, leaving Peverel with no alternative but to go into administration.
However the operating companies, which actually provide the services to flat owners and residential homes, are profitable and will continue to trade normally, according to Simon Appell, a partner in Zolfo Cooper, who have been appointed administrators.
A statement posted on the Peverel Group web site confirms that the operating companies will not be affected by the administration and that normal service will continue to be provided to tenants and landlords.
The role of a residential management company is to provide services such as cleaning, lighting, gardening, maintenance, and repairs to the common parts of estates and developments that are sold as leasehold flats. The management company assesses the expenditure that will be required each year, collects contributions - known as the service charge - from the flat owners, and manages the maintenance and expenditure through the year.
The management company will also usually provide for a sinking fund for expenditure required every few years such as external redecoration. It is not the landlord, but is usually appointed by the landlord to carry out the landlord's maintenance obligations.
Peverel is unusual in that it started life under McCarthy and Stone and was intended to manage their retirement homes. As a result it owns, as well as manages, a large portfolio of retirement homes.
Said Lynn Bowler, residential conveyancing expert with Ward Gethin solicitors "Many people may be worried about the safety of the money they have paid as service charge but there does not seem to be any need for concern. There is no suggestion of misconduct on the part of the operating companies and, since they hold the service charge money as statutory trustees, it should be ring fenced and accounted for down to the last penny."
If you would like further advice on the above or any other property matter, please call a member of our Residential Property Team on 01553 660033.
