It is a common and easily misunderstood belief that Estates & Management are development freeholders/landlords.
It is important to note that they are not.
What they are is a service company set up to administer the freeholder's portfolio.
Under just the Fairhold banner alone, there are around 120 different freeholding companies registered.
Since some of those companies are dormant/non trading (perfectly legal) and the others employ no staff excluding directors, clearly they need another company to carry out their administrative functions.
So when a resident receives a demand for payment of any kind it will contain the phrase "Acting on behalf of the freeholder"
This is of great significance and is more than just a matter of semantics.
A landlord/freeholder is entitled to recover all their costs associated with administering to their freehold interests but not profit from it.
Therefore if a lease allows for a sublet fee that is charged at 85 pounds, it must have cost the landlord/freeholder 85 pounds.
A landlord/freeholder can of course use another company to administer sublet permissions. that is part of what E&M do.
However, E&M are not the Freeholder so are not entitled to keep the fees, that must be passed on to the freeholder.
It is reasonable to suppose that E&M have a broad contract entered into with the freeholder to administer their affairs.
So, the question to be asked, is there a separate contract for each individual case, or do E&M act under a broader agreement?
If part of a broader agreement the freeholder would be charged for all administrative services. If separate, the freeholder would have had to be charged 85 pounds and crucially have had to pay 85 pounds to E&M.
Only the freeholder is entitled to recover costs. E&M are not the freeholder, so if acting on behalf of the freeholder can charge a resident, they are not entitled to keep the fees. It must be passed to the freeholder, less any charges.
The dodge here is of course to say the charges for collecting 85 pounds is 85 pounds!
That being the case, there must still be an audit trail to support even such an absurd position.
Indeed if a landlord/freeholder is entitled to recover costs if E&M charge the exact amount for their fees to collect the landlord/freeholders costs, then the landlord/ freeholder is clearly not recovering their costs!
Should a resident receive a demand for payment, they should firstly establish as to the basis that E&M claim to represent the freeholder?
If the resident decides to go to the upper tribunal to challenge fees, the starting point of their challenge before anything else must be the right of E&M to collect fees as they are not the landlord/freeholder and no evidence has been produced to show they have a contract to act on their behalf.
If on the other hand a resident decides to pay the demanded fees, make the payment by cheque made payable to the landlord/freeholder only.
When the cheque is cashed pop along to your bank and ask them to identify as to who cashed the cheque and into what account it was paid as you are concerned that fraud has taken place?
As an example if your freeholder is Fairhold (no3) and your cheque is made payable to Fairhold(no3) only and crossed a/c payee only, if E&M have banked the cheque that is a matter that can and should be taken to the police for investigation.
As an aside, though E&M claim they are carrying out the administration this is unlikely as including directors they only have three employees. Probably the work is being carried out by Fairhold Services Ltd.
For a further insight into the methods employed by E&M readers might wish to Google Early Day Parliamentary Motion (342) Estates & Management?
Currently the Estates & Management accounts are listed by Companies House as being OVERDUE.
