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Archive for the ‘Consumer affairs’ Category
Friday, September 2nd, 2011
Letting industry launches a kitemark-style scheme to safeguard money handed over as a deposit or as rent
A kitemark-style scheme has been launched to reassure tenants and landlords worried about losing money handed over to a letting agent.
All agents displaying the SAFEagent mark will already belong to a client money protection scheme operated by the National Approved Letting Scheme, the Association of Residential Letting Agents, the National Association of Estate Agents and the Royal Institution of Chartered Surveyors. These pay out in the event of the agent going bust or misappropriating money that has been handed over as a deposit or rent.
Membership is voluntary, but the government hopes promotion of the SAFEagent mark will encourage more to join.
The SAFEagent scheme, established by the letting industry but supported by the government, has already registered more than 1,200 offices. Tenants and landlords can locate agents in their area who are registered with the scheme at its website.
Nick Cooper, chair of the SAFEagent steering group and managing director of letting agent Northwood, said: “We have robust procedures in place to make sure those signing up to the scheme have client money protection cover. The cover is annually renewable, and we know when each firm’s renewal date is.”
Several lettings agents have collapsed in the past few years, he said, resulting the loss of clients’ money.
While the scheme will not stop disputes between tenants and landlords over the return of deposits, it should ensure anyone who uses a SAFEagent registered agent will not suffer loss as a result of their agent’s actions.
Cooper said: “We want every person who is looking to rent a property to ‘play it safe’ and be aware they can protect their money. The message is simple – be safe … choose a SAFEagent when you rent. Remember, your money may be at risk if you do not use an agent that is part of a client money protection scheme.”
The scheme is backed by organisations including housing charity Shelter, the NUS, and the Trading Standards Institute, and the Residential Landlords Association and the British Property Federation have allied themselves to the campaign.
Housing minister Grant Schapps said: “This is exactly the sort of measure the private rented sector needs – simple and sensible changes that are driven by industry and designed to deliver results.
“If there are any lettings agents who haven’t already signed up to SAFEagent, I would urge them to do so immediately so they are not left behind when consumers vote with their feet.”
Posted in Business, Buying to let, Consumer affairs, Consumer rights, guardian.co.uk, House News, Housing market, Money, News, Property, Renting property, UK news | Comments Closed
Friday, August 19th, 2011
Fortunate fortysomethings can handle the recession; the price is being paid by people in their twenties
Are you in your twenties? Then you’re paying a colossally high price so that people in my age bracket – 40-plus – can enjoy a rather pleasant recession, thank you very much.
If you were born between 1980 and 1990, bad luck. You probably can’t find a job, as graduate unemployment heads to 20%, and school leaver joblessness approaches 50%. If you do land a job, your wages won’t get you far. Your train fare to work is going up 8%. Need somewhere to live? Rents are hitting one new record high after the next, up 7% in London over the past year. Any spare cash? Save it for the gas bill, up another 15%.
How about buying your own place? Forget it. As Britain’s biggest firm of valuation surveyors revealed this week, mortgage approvals for those on low incomes are becoming virtually impossible to obtain. The idea is that once you’ve been clobbered by stupid rents, train fares and bills, you’re supposed to save up for a 30% deposit if you are going to qualify for a loan. Oh, and pay off a £20,000 debt (soon to be £60,000) from university. Fat chance.
Now let’s look at it from the standpoint of someone in his forties. The generation who didn’t pay to go to university. Who were able to buy a home at bargain-basement prices in the mid-1990s. Who have, for the most part, kept their jobs through the recession. And who now are basking in ultra-low interest rates on their tracker mortgages. For many, it’s been the same as a £500 a month pay rise. Even better, those rates are going to stay low. Thank you, Ben Bernanke at the Federal Reserve for telling us that rates in the US will stay at virtually zero through to mid 2013. The Bank of England will follow suit. It’s why mortgage rates this week hit a record low. But even those record-low five-year fixes won’t tempt me, not when I and many others can joyfully carry on with our juicy sub-2% tracker deals.
The truth is that if you’ve kept your job and have a tracker mortgage, this recession has barely touched the sides. It was like this in the 1930s, too. Yes, there was Jarrow, but if you kept your job, many people never had it so good.
The generation in retirement today don’t quite see it that way, complaining about paltry returns on savings, steep council taxes and soaring household bills. But at least many of them are still on final-salary pensions. The idea that today’s young will retire on a guaranteed two-thirds salary is fanciful in the extreme.
What do we do about this lost generation? Nothing, it seems is the answer. The chancellor, George Osborne, thinks that lopping the 50% tax rate for the rich is the way forward, his ideal society one of the have-yachts and the have-nots. Meanwhile, the likes of my generation and income are snapping up house alarms and window bars as our cities become ever more fearful places.
I would be the last person to condone the hateful criminals responsible for the mindless destruction I witnessed in my part of south-east London. But if we step back a few paces, and consider how we are abandoning that far larger, law-abiding, younger generation, we should be ashamed of ourselves.
Posted in Consumer affairs, Editorial, Family finances, Graduate, Guardian careers, House News, Money, Property, Recession, The Guardian, UK news, Work & careers | Comments Closed
Friday, August 12th, 2011
We want to change estate agents but the cost of pulling out almost matches its sale fee
My Mum has Alzheimer’s and my family has a power of attorney. She has recently moved into care and we need to sell the house and invest the money to help pay for her care fees. The house has been on the market since early March with very few viewings and no offers. We have even followed the estate agent’s advice and dropped the price from £350,000 to £320,000 and now to £300,000.
We are considering changing estate agent, or even auctioning the property, but I have looked at the terms of the contract my brother signed and there does not seem to be any limiting period. If we sell to anyone else, with or without their help, we are fully liable for its 1% fee.
If we pull out without selling, for whatever reason, we are liable for a range of charges including £50 cancellation fee; £350 for the photographs and glossy brochure; £35 for each insertion in a newspaper (probably one a week); £20 per viewing (about five in total); £100 per internet listing (the contract suggests there could be 14 of them); and a £20 sale board. I estimate this could already be in excess of £2,000. If the situation continues it will be in their interest not to sell it.
Meanwhile, time ticks by, we are still not getting income from the value of the house, and mum’s care continues to cost almost £700 per week. AS, Hebden Bridge, West Yorkshire
You are still worried so have asked for the agent to remain anonymous, which we respect. The agent confirmed that your contract is open-ended and that charges accrue indefinitely. However, you were mistaken that the £100 for the internet listing could be charged 14 times – you will only be charged once, removing £1,560 from your bill (including the VAT that would have been due) – a significant difference, leaving you with a bill for under £500. The agent said its fees are also low, at 1%, which is designed to balance out its hefty withdrawal fees.
You have also asked for a statement of costs so far, and have checked the price local papers charge to run house sale advertisements – finding that the estate agent’s fee is broadly in line.
We checked with a reputable estate agent, who agreed that there should not be separate internet listings, as the likes of Rightmove charge agents a single flat fee per month to list as many properties as they like, although more can be paid for premium listings. Most agents who do glossy details get them for a few hundred pounds.
The property ombudsman says that if sellers decide not to continue with the sale, they may have to pay some charges to cover costs already incurred – and this depends on the original contract between the seller and the estate agent. If anyone does dispute this amount, they can contact Citizens Advice. But if they have agreed to the terms of the contract, it is highly likely they will have to pay – unless those terms are grossly unfair, at which point they might win if the case was taken to the courts.
We welcome letters but cannot answer individually. Email us at consumer.champions@guardian.co.uk or write to Brignall & King, Money, The Guardian, 90 York Way, London N1 9GU. Please include a daytime phone number
Posted in Consumer affairs, Consumer rights, Features, House News, Letters, Money, Property, The Guardian | Comments Closed
Thursday, August 4th, 2011
Consumer group says 2.4m people have had a dispute with a builder or decorator in the past three years, as it urges consumers to take precautions
Householders should always have a written agreement in place with a builder or decorator in case a dispute breaks out, consumer rights organisation Which? has said.
The warning came after a survey showed that at least 2.5m people have had a dispute with a builder or decorator in the past three years, with a quarter forced to take formal action.
The consumer group found that the most common disagreement was over the quality of work, while other major complaints included traders not turning up when agreed, delays over completion, and properties being left untidy.
A quarter of people failed to receive a written quote from their builder or decorator before work began, and 4% were even asked to pay the full amount for the job upfront.
Trader disputes left two in five people out of pocket, with a quarter feeling they were owed at least £500, and one in 10 saying they had lost more than £1,000.
While most people talked to their builder or decorator to try to resolve the dispute, 15% had to seek the help of a professional body and 18% were forced to spend more money by taking the trader to court.
Which? executive director Richard Lloyd said: “With the cost of living climbing, many people are spending money on home improvements rather than moving house. Being left hundreds of pounds out of pocket after a bad experience with a builder can be a huge blow for families already feeling the pinch.
“To avoid problems you should always have a written agreement between you and the trader. And it’s important to do your homework – make sure you get several quotes before deciding who to use, choose a recommended trader and check they are a member of a professional body.”
How to avoid cowboy builders and decorators
1. Find a trader through word of mouth or personal recommendation from friends and family.
2. Try to obtain three detailed quotes before starting work, ask for references, and do not be afraid to verify them by asking to visit previous clients with the trader.
3. Get a signed contract that fully sets out the costs, the work to be completed and start/completion dates.
4. Do not pay all of the money up front – payment should be made on satisfactory completion of the job. Request a written schedule of when payments are to be made.
5. Do not go for the cheaper option of paying in cash rather than a properly invoiced job that may include VAT. Paying by credit card where possible offers extra protection if things go wrong.
Source: Which? Legal Service
Posted in Consumer affairs, Consumer rights, guardian.co.uk, Home improvements, House News, Money, News, Property, UK news | Comments Closed
Monday, August 1st, 2011
Halifax to give would-be homeowners a £600 incentive if they save with the bank and take out a first-time buyer mortgage
Would-be first-time buyers who are trying to build up a deposit are being offered a cash bonus if they do their saving and borrowing with Halifax.
First-time buyers who take part in the bank’s Head Start Home Saver scheme will receive £600 if they pay into a savings account for 10 months in a 12-month period. The money will be put into their account when they take out one of Halifax’s first-time buyer mortgages.
Customers can choose from any of the bank’s savings accounts, except its Christmas saver. These include the Halifax ISA Direct Reward, paying a rate of 2.6%, and the Web Saver Reward, paying 2.8%.
The bank’s first-time buyer mortgage range currently includes a two-year fixed-rate loan with a rate of 3.79% for borrowers with a deposit of up to 20% of the purchase price, a rate of 4.64% for those with a deposit of between 15%-20% and a rate of 5.99% for those with a 10% deposit.
The deal is similar to Nationwide’s Save to Buy scheme, although that offers buyers the opportunity to apply for a 95% mortgage once they have saved enough.
To coincide with the launch, the Halifax has published research showing that although three-quarters of non-homeowners hoped to buy a property, just 14% were making serious efforts to save, including changing their lifestyle to cut costs.
“We know from our own research that for some customers to get on to the ladder, their savings behaviours need to change,” said Simon Kenyon, Halifax savings director.
“The offer is available for customers who have already been saving for a deposit as well as providing an incentive for those customers who want to get on the ladder but have yet to develop that savings behaviour.”
Since the credit crunch, first-time buyers have been struggling to access the housing market as mortgage lenders have cracked down on loans for those with small deposits. Although banks and building societies have begun to reintroduce 95% loans, lending criteria remain strict and rates are much higher than on loans for those with larger deposits.
David Hollingworth of London & Country Mortgages said the deal would “help foster some savings habits which first-time buyers do need to get to grips with”.
“The market is not going to come back to very high loan to values in a hurry, although we have seen some more 90% and 95% mortgages recently,” he added.
He said that while the Halifax deal was more flexible than Nationwide’s in terms of the savings accounts on offer, it was not offering a route to a 95% mortgage, and the 5.99% interest rate on a two-year fixed-rate could be beaten “at a distance”.
Chelsea building society, for example, is offering a rate of 4.39% for two years with a £195 fee and £500 cashback, although that is available through its branch only, while HSBC has a two-year fixed-rate deal at 4.99% with a £599 fee. At these rates borrowers may soon save enough to offset the £600 reward.
Hollingworth said the crucial thing for anyone considering the Halifax or Nationwide schemes was to remember that opening the savings account would not guarantee them a mortgage.
“Lenders clearly aren’t going to give you a mortgage just because you have their savings account. You could be saving for a couple of years and find you don’t meet the lending criteria.”
Posted in Business, Consumer affairs, First-time buyers, guardian.co.uk, House News, House prices, Housing, Housing market, Money, Mortgages, News, Property, Society, UK news | Comments Closed
Friday, July 29th, 2011
Endsleigh asked to arrange my contents cover when I move and made it sound like something my letting agent insists on
My husband and I are moving house so, as usual, the letting agents did reference checks, and the company they used was Endsleigh. Since then, both my husband and I have been sent numerous emails, calls and texts from Endsleigh saying “your letting agents have asked us to contact you to sort out your contents insurance”.
They rang today and said “your letting agents [or it might have been landlord, I can't quite remember] have asked us to contact you to arrange your contents insurance for your move to Tooting”.
I said I was quite capable of arranging my own insurance, thanks. “But your agents have asked us to arrange this for you.” I repeated: “No thanks.” “We’ll go back to them and tell them that, then.”
I’m no expert, but this sounds like mis-selling to me as the implication is that I’m obliged to purchase contents insurance off Endsleigh.
In our contract there is no obligation to purchase contents insurance, let alone specifically from Endsleigh – but such was the implication in the calls/texts that I had to physically check our contract to make sure.
I’m fairly sure, were I not quite so savvy on marketing, I’d have just assumed it was part of my contract and let them flog it to me. It this standard practice? CB, Tooting, London
Endsleigh said it was happy to clarify why it approached you, reiterating that it works in partnership with your letting agent, Samuel Estates.
In the tenant reference form that you filled out for Endsleigh, there was a consent box asking whether Endsleigh should contact you regarding contents insurance. A spokesman said he had checked your form, and you had given permission for the firm to get in touch.
The spokesman continued: “I can see that CB was then sent a text message, giving advance notice that Endsleigh would be calling her – or giving her the option to ring us should she wish to set up contents insurance more urgently. We also sent her an email, explaining our partnership with her letting agent and the reason for getting in touch.
“CB subsequently had a telephone conversation with Endsleigh, in which she made clear that she was not interested in our contents insurance cover.
“I would like to assure her that all our telephone sales representatives are given scripts to follow, to ensure compliance with regulatory guidelines, and I am satisfied that our representative acted properly. As she did not express any interest in our product, it was flagged that we should not contact her again regarding it.”
You remain unhappy with this response because it does not address your concern, which is that Endsleigh implied your landlord/letting agent had asked it to arrange this insurance. This seemed to imply that taking it out was in some way mandatory.
We sought clarification from Endsleigh. A spokesman said the firm disagreed with CB and it was clear its service was merely an offer.
We welcome letters but cannot answer individually. Email us at consumer.champions@guardian.co.uk or write to Brignall & King, Money, the Guardian, 90 York Way, London N1 9GU. Please include a daytime phone number.
Posted in Consumer affairs, Consumer rights, Features, Home insurance, House News, Insurance, Letters, Money, Property, Renting property, The Guardian | Comments Closed
Friday, July 29th, 2011
Endsleigh asked to arrange my contents cover when I move and made it sound like something my letting agent insists on
My husband and I are moving house so, as usual, the letting agents did reference checks, and the company they used was Endsleigh. Since then, both my husband and I have been sent numerous emails, calls and texts from Endsleigh saying “your letting agents have asked us to contact you to sort out your contents insurance”.
They rang today and said “your letting agents [or it might have been landlord, I can't quite remember] have asked us to contact you to arrange your contents insurance for your move to Tooting”.
I said I was quite capable of arranging my own insurance, thanks. “But your agents have asked us to arrange this for you.” I repeated: “No thanks.” “We’ll go back to them and tell them that, then.”
I’m no expert, but this sounds like mis-selling to me as the implication is that I’m obliged to purchase contents insurance off Endsleigh.
In our contract there is no obligation to purchase contents insurance, let alone specifically from Endsleigh – but such was the implication in the calls/texts that I had to physically check our contract to make sure.
I’m fairly sure, were I not quite so savvy on marketing, I’d have just assumed it was part of my contract and let them flog it to me. It this standard practice? CB, Tooting, London
Endsleigh said it was happy to clarify why it approached you, reiterating that it works in partnership with your letting agent, Samuel Estates.
In the tenant reference form that you filled out for Endsleigh, there was a consent box asking whether Endsleigh should contact you regarding contents insurance. A spokesman said he had checked your form, and you had given permission for the firm to get in touch.
The spokesman continued: “I can see that CB was then sent a text message, giving advance notice that Endsleigh would be calling her – or giving her the option to ring us should she wish to set up contents insurance more urgently. We also sent her an email, explaining our partnership with her letting agent and the reason for getting in touch.
“CB subsequently had a telephone conversation with Endsleigh, in which she made clear that she was not interested in our contents insurance cover.
“I would like to assure her that all our telephone sales representatives are given scripts to follow, to ensure compliance with regulatory guidelines, and I am satisfied that our representative acted properly. As she did not express any interest in our product, it was flagged that we should not contact her again regarding it.”
You remain unhappy with this response because it does not address your concern, which is that Endsleigh implied your landlord/letting agent had asked it to arrange this insurance. This seemed to imply that taking it out was in some way mandatory.
We sought clarification from Endsleigh. A spokesman said the firm disagreed with CB and it was clear its service was merely an offer.
We welcome letters but cannot answer individually. Email us at consumer.champions@guardian.co.uk or write to Brignall & King, Money, the Guardian, 90 York Way, London N1 9GU. Please include a daytime phone number.
Posted in Consumer affairs, Consumer rights, Features, Home insurance, House News, Insurance, Letters, Money, Property, Renting property, The Guardian | Comments Closed
Thursday, July 28th, 2011
Report says fraudulent claims cost insurance industry about £2bn a year and reveals outrageous cases of cheating
Insurers uncovered 133,000 fraudulent insurance claims worth £919m in 2010, meaning the public registered 2,500 fake claims every week – a rise of 9% on 2009, according to figures from the Association of British Insurers. It said the number and value of detected insurance frauds had risen by more than 100% over the past five years.
Fraudulent claims cost the insurance industry an estimated £2bn a year, adding an average £44 a year to the insurance bill for every UK policyholder. The scale of the problem has provoked insurers to set up an insurance fraud register early next year, which will contain details of insurance cheats.
The most common frauds involved home insurance with 66,000 bogus or exaggerated claims discovered by insurers, followed by 40,000 dishonest motor insurance claims. Motor frauds were the most costly, totalling £466m.
The ABI said one claim for back injuries sustained from a fall while working in a nightclub was rejected when Facebook images showed the claimant performing gymnastics and training for a charity run.
A woman’s claim for facial injuries she said resulted from a falling toilet roll holder in a fast food outlet was rejected when it was shown that the holder would have had to have fallen upwards to cause the injury.
A claim for injury said to be caused by falling over a wall was rejected when it was proved that there was no wall at the scene of the alleged incident.
Nick Starling, the ABI’s director of general insurance and health, said: “Fraudsters continually look for new ways to con insurers, so we are upping our game. Early next year, we will be setting up a national insurance fraud register, which will contain details of all known insurance cheats. And at the same time the first ever national police insurance fraud investigation unit will begin its operations, making it harder than ever to commit insurance fraud.”
Glen Marr, director of the Insurance Fraud Bureau said the organisation wanted consumers to report anyone they suspected of committing insurance fraud via its Cheatline: “At the IFB, we have access to a significant volume of industry data, use sophisticated and powerful analytical software, work in partnership with insurers, law enforcement and regulators, and have no shortage of reports being received from consumers of their knowledge or suspicions of those concerned with defrauding the industry, through our Cheatline facility.
“It’s important to underline that some of those concerned with insurance fraud are also involved in criminal activities where there is harm to local communities.”
Posted in Business, Consumer affairs, guardian.co.uk, Home insurance, House News, Insurance, Insurance industry, Money, News, Property, Travel insurance, UK news | Comments Closed
Tuesday, July 26th, 2011
Falling costs plus generous feed-in tariffs mean return is higher than ever – but payback will fall in April
Are you a homeowner with some spare cash? A 20%-25% collapse in the price of rooftop solar power units in recent months has turned the government’s feed-in tariff scheme into one of the most lucrative financial propositions for households with the right sort of property.
The scheme was introduced in April 2010, when the Labour government introduced generous feed-in tariffs to encourage households to install solar photovoltaic systems. Back then, anyone spending, say, £13,000 up front to fit a 2.5kWp system to their home was paid 41.3p per kilowatt hour (kWh) generated – enough to earn them a typical annual income of £900 a year in payments, on top of a £140-a-year saving in reduced electricity bills.
It was described as a good investment because payments for each unit of electricity generated were guaranteed for 25 years, paid tax-free, and set to rise each year in line with inflation.
If you were planning to stay in your home and had a suitable roof (unshaded, at a pitch of about 40 degrees, and facing between south-east and south-west), the main question was how big a system to install – assuming you could raise the installation costs. The bigger the system, the greater the financial return.
However, you shouldn’t worry if you put off doing anything because it has emerged this week that waiting has worked in your favour.
Solar experts say that as a result of the installation costs coming down, the investment value of the scheme has become even better. These lower installation costs, an inflation-linked increase to the feed-in tariff payments and the prospect of rising electricity prices all mean the guaranteed returns are now above 10% a year, depending on how you calculate it. And if you install before next April – when new payment tariffs look set to come into force – you are guaranteed the tariffs for the next 25 years at the old rate.
Gabriel Wondrausch, who set up Exeter-based PV installer Sun Gift Solar, says the cost of systems has come down dramatically in 18 months. “We’ve been supplying PV systems for almost five years now and the prices have been on an almost continuous downward path,” he says. “A year ago we were selling a large 4kWp system for around £16,000. Today that same one is costing less than £13,000.” (Two years ago the cost would have been closer to £20,000.)
Wondrausch says the volume of sales has been a major factor in UK prices coming down, as has the reduction of feed-in tariffs in Germany, Europe’s biggest PV market. The panel manufacturers, it seems, price their panels according to the returns consumers can expect, and have been lowering prices as a result.
Solarcentury, one of the UK’s biggest solar companies, confirms the view that prices are falling. And even British Gas has reduced the price of its PV systems. A spokesman says business efficiencies and efficiencies in the supply chain mean costs have fallen by about 20% since June last year. “A typical 2.5kWp system cost around £13,383 last year,” he says. “Today it would cost around £10,450. We also need to consider that panel efficiency has increased – panels are 10% more efficient than they were.”
Wondrausch points out that the generous tariffs won’t be around for ever. In September the government is expected to unveil a new – significantly less generous – scheme for those installing PV systems after April 2012, suggesting that if you want to do it, now is the time to act.
Originally, it was thought the payments for new installations would be cut by 9% from their current level of 43.3p per kWh generated.
Solarcentury says the industry is currently awaiting publication of the government’s proposals for tariff cuts. “There is no doubt that the proposed cut for new installations from April 2012 will be higher than the planned 9%,” it predicts.
Meanwhile, if you are thinking of installing a system be prepared to spend some time researching the company you are using to carry out the work.
Cathy Debenham, who runs website YouGen.co.uk, says there is growing evidence of dubious sales tactics in the solar PV market. She recently came across one company that claimed you could make money by installing a panel on a north-facing roof, which is nonsense. The consumer group Which? warned that some claims made by firms selling solar PV could not be substantiated. Its advice is that consumers should be wary of any company that offers a quote without visiting the home to carry out a proper survey, or one that makes grandiose claims about the income you will receive.
Debenham’s site is a good starting point if you’re looking for information, or for a good installer who comes with recommendations from other users. The Energy Saving Trust site has lots of information too.
One thing to ask your chosen installer is which panels they plan to use. Wondrausch, who was one of the first to install PV panels in the UK five years ago, says the panels vary significantly in the electricity they produce – by as much as 12.5%.
Posted in Consumer affairs, Energy, Energy bills, Environment, Features, Feed-in tariffs, Home improvements, House News, Household bills, Money, Property, Renewable energy, Solar power, The Guardian | Comments Closed
Monday, July 18th, 2011
MP accuses London property management company of exploiting safety concerns to raise costs
An MP this week hit out at a property management firm for demanding that flat-dwellers pay for pricey “terrorism insurance”.
Leaseholders in Walthamstow, east London, have been told they must pay around an extra £68 a year, on top of their buildings insurance premium. When one complained, he was told that “terrorist activity has in the past been present in Walthamstow”. Three people living in the area were convicted in 2009 and 2010 for their part in an airliner bomb plot.
It is not clear how many people in Walthamstow have received the demand, though it could be as many as 2,500. Residents of other areas may have received similar demands.
Local Labour MP, Stella Creasy, has accused the company, Freehold Managers PLC, of “seeking to exploit concerns about terrorism to justify increasing the cost of buildings insurance for local residents”. She has called for “an immediate apology” to the residents of her constituency.
Freehold Managers rejects her claims, saying Walthamstow “has not been singled out as a terrorist hotspot”. As a prudent landlord, it adds, it insists all its properties are covered, in line with guidance from the Royal Institution of Chartered Surveyors (Rics).
A spokesman for Freehold Managers told Money that the ultimate beneficial owner of Freehold Managers is the Tchenguiz Family Trust. Mayfair property tycoon Vincent Tchenguiz’s sprawling empire was the subject of a Money investigation in February into allegations of excessive charges at several subsidiaries. In early March he was one of nine men targeted in dawn raids by the Serious Fraud Office as part of its investigations into the collapse of one of the Icelandic banks. Vincent Tchenguiz was released without charge on the day of his arrest.
Those affected are leaseholders of “Warner” properties in Walthamstow, built in the late 19th and early 20th centuries. Freehold Managers has confirmed it manages about 2,500 properties in the district – mainly flats and maisonettes.
A longstanding Warner flat resident, who asked not to be named, told Money he received a letter from an insurance broker, Oval, which stated that he needed to pay £68 for a separate terrorism insurance policy. This would be in addition to his buildings insurance, which cost around £240.
He contacted Freehold Managers to say there was nothing in the terms of the lease to say he must have this cover.
The man received a reply from the company stating: “When these leases were written, terrorism on mainland England was non-existent. In this day and age it is prudent for the landlord to cover any insured peril relevant to their portfolio. The LVT [Leasehold Valuation Tribunal] in the past has confirmed it is reasonable to include terrorism … Please find attached a newspaper article showing that terrorist activity has, in the past, been present in Walthamstow.”
The article, from the London Evening Standard in September 2009, reports on the case of a man from Walthamstow, and two others, who were sentenced to life imprisonment after being convicted of planning to lead a squad of suicide bombers in smuggling liquid explosives aboard transatlantic airliners. In July 2010, two more men from the area were found guilty of conspiring to murder in connection with the same plot.
The resident says: “Last year there was no terrorism insurance as a separate policy, but this year they’ve introduced it. I don’t know one example of any terrorist blowing up their own property in the UK. I imagine every Warner property is affected by this. I’ve talked to all my neighbours and they’ve had the same policy included.”
The resident contacted his MP, Creasy – herself a former Warner tenant – who says she is “furious”, adding: “Their representative suggested they believed residents should pay a terrorist attack premium purely for residing in Walthamstow, using an incident from several years ago which did not refer to any activity in the locality to justify this slight.”
While the resident says that, as far as he is aware, this is the first time he has been billed for terrorism cover as a separate policy, other residents may have been paying it for a few years. On a Facebook page, one says: “Well done Stella for bringing this into the public domain. I, along with everybody else, would love to have all our terrorism payments paid back. I believe we’ve been paying for two to three years.”
A spokesman for Freehold Managers told Money that the “ultimate beneficial owner” of the company was the Tchenguiz Family Trust. This owns a large number of residential freeholds. However, Freehold Managers manages freeholds that are not owned by the trust, but by third parties. The freehold of the Warner properties is owned by an unnamed unit trust.
He says that since 1993, terrorism cover has been specifically excluded from most buildings insurance. That year, the government established Pool Reinsurance to cover the risk. “As a significant manager in Walthamstow, and throughout the country, Freehold Managers tries to ensure it adheres to best practice,” he told us, adding that Rics guidance stated that “serious consideration should be given to taking out terrorism insurance”.
He adds: “Any prudent party responsible for taking out adequate insurance … would consider the Rics guidance … as, in the event of an incident, the consequences of not taking out this insurance could be severe to the residents, who would be required, under their leases, to pay for the reinstatement of the property, but without the benefit of any insurance to cover the costs.
“There is also a requirement from insurers to insure whole portfolios and not just selected, or perceived at-risk, properties. This is dictated by Pool Reinsurance … I hope this clarifies why, as a prudent landlord, we insist all our properties are covered.”
The spokesman also highlighted an LVT ruling from 2005 which stated that “we do not find it unreasonable in this day and age for a prudent landlord to include terrorism cover, even though the property might be in a quite (sic) residential area”.
• This article was amended on 18 July 2011 to clarify that soon after his arrest Vincent Tchenguiz was released without charge.
Posted in Consumer affairs, House News, Household bills, Insurance, Money, News, Property, Renting property, The Guardian, UK news, UK security and terrorism | Comments Closed
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