Sheltered Accommodation

Laura Sandys Excerpts

Wednesday 17th November 2010 Westminster Hall

[Laura Sandys (South Thanet) (Con)]

It is good to serve under your chairmanship, Mr Davies, and I would like to thank my hon. Friend the Member for Stourbridge (Margot James). The minute that I saw this debate listed in the Order Paper, I felt that I had to participate. For many years, my hon. Friend the Member for North Thanet (Mr Gale) and I have been running a local campaign. We have formed a group called the Thanet eight. It is eight buildings with over 1,500 residents who live in flats that are owned by one company, and were originally managed by the same company—Peverel.

Those residents are by definition not young, and their objective in buying their properties was to have safe, secure and affordable homes, possibly for the rest of their lives. The reality has been different with increased charges; expensive and sometimes unnecessary renovations; a lack of consultation of residents; the attempt to block the creation of active residents associations; a reduction in services, particularly house manager support; and disproportionate penalties if a property is sold or rented.

Age UK has recently raised this matter and completed a very comprehensive report highlighting four key issues that my local residents certainly experience: unfair transfer fees when a property is sold or rented; escalating service charges, compounded by a lack of transparency about what people are paying for; very expensive rents for house manager flats—mentioned by my hon. Friend the Member for Stourbridge—which do not reflect the market value at all; and the use of companies that are owned by the management companies to undertake work or provide services on behalf of residents.

In particular, I should like the Minister and the Government to examine what I call the vertical integration model. These businesses are being run by subsidiary companies where the group company owns the majority of the companies that provide services to these residential blocks. That throws up very interesting and questionable issues. I hope that those companies’ ownership of that vertically integrated supply chain causes concern to the Office of Fair Trading. The method by which they operate the vertically integrated business model is certainly of concern to consumer groups and, as I said, has been the subject of an Age UK report.

In my experience, the freeholders and management companies, which are all owned by the same holding company, own lift maintenance companies, buildings insurance firms—mentioned by my hon. Friend—building and maintenance operators, window cleaners and internal communications fitters. That might on the surface suggest that such a company knows its business well and understands all the different aspects of running sheltered accommodation, but is that really the case or is the vertical business model precluding competition, reducing choice for residents and creating incentives for the management company to propose and sometimes impose renovations, refurbishments or additional services that residents have not requested and do not desire?

[Penny Mordaunt]

It is not just the Office of Fair Trading that needs to be concerned. If a lift is not fixed or the night warden is not there, that will lead to potentially massive bills for the public purse. I am thinking of more hospital admissions, more people falling over and so on.

[Laura Sandys]

I very much welcome that intervention; I totally agree with my hon. Friend. We need to consider the holistic cost—the overall cost—of how in the future we will look after people who are getting older. Many years ago I wrote a paper called “How we keep the new old young”. That will be a big challenge for us. I am referring to how we keep people mobile and independent and ensure that they have the resources to be independent for as long as possible.

I now want to talk about the emotional impact and the worries and concerns of my local residents in Thanet, who have put their life savings into these small flats and do not have other resources. There is an emotional and physical impact from their concern about what will drop through their letterbox next week from the management company telling them that they owe another £1,500. That creates more health problems and anxiety and deters older people from making the independent choice and going for what is, on paper, excellent sheltered accommodation and a structure that gives them security for the future.

[Jim Shannon (Strangford) (DUP)]

I appreciate the opportunity to comment on this matter. The coalition Government are considering the removal of the mobility part of disability living allowance for people in homes. Does the hon. Lady not agree that the removal of such an award puts a financial pressure on people in homes as well? The pressure is not just physical, but financial. Being members of a caring society, as I am sure we all are, does she not agree with me that that would be a backward step?

[Laura Sandys]

I am talking about sheltered accommodation, not residential care, but I understand that the issue is the component of DLA that relates to mobility. Local authorities do provide those services and need to provide them to ensure greater mobility and as much independent living as possible within a care home. We need to consider carefully how we maintain independence, mobility and active life for as long as possible. I have in my constituency one of the highest percentages of people over 60 in the country. They feel that they can and should participate actively in life, but sometimes and particularly when predatory management companies are involved, they and certainly their resources are put under strain. I thank the hon. Gentleman for his intervention.

I shall give an example of what has happened in my area. Initially, for some of my local buildings, expensive refurbishment projects would be commissioned by the managing agents with the justification of needing to keep the buildings in good condition and ensuring that the residents’ investment was being built on. With no comparative quotes having been produced, those refurbishment projects went ahead, incurring significant additional service charges for the residents. Yes, that was their choice, but it was on the recommendation of someone they trusted—the management agent.

As time has gone on, my local residents have stopped trusting their management agents. They have started to see a pattern as they start to question refurbishment. Now, the management companies are looking to undertake works priced just below the threshold at which they must consult the residents. Over a two-year period, a series of quite similar projects have been priced just below that threshold, so the firms can procure from their own companies at high cost and without consultation of residents. Those costs, which are passed on to residents, total thousands of pounds. The residents are elderly and often on low incomes and have no recourse.

Buildings insurance is also an interesting area. The majority of the buildings in my area that are under management with Peverel have been reinsured in the last four years—not exactly a time when property prices have been rocketing. Those properties have been revalued with increases of between 40 and 60% in the last four years. The insurance company is owned by the holding company of the management company. The premiums have been passed on to the residents. Equivalent quotes obtained by my local residents have brought down the value of the properties in the current market. Some of my residents question whether the building’s value has gone up to support those companies in their market valuation and the presentation of their assets to borrow further money to buy more residential homes.

The vertical integration of these companies, the lack in many instances of competitive tendering and the cumulative cost of small refurbishments that are just under the threshold for consultation make for a very insecure and uncertain future for many residents and must be addressed. Many people from these blocks have taken up the opportunities afforded to them under the Commonhold and Leasehold Reform Act 2002, but have the management companies made it easy for the blocks to self-manage? In fact, they have stood in the way of the setting up of residents groups and contested the right to manage, citing numerous barriers. My residents have ended up in tribunals and having to employ experts and lawyers. The law is there to liberate those residents, not to wrap them up in red tape or to place on them the expense of lawyers. All those things have been put in the way to thwart their right to self-manage.

I support my hon. Friend the Member for Stourbridge in the key points that she has put to the Government. I urge the Government to review the regulations on private retirement sector housing and to ensure that the code of conduct is properly enforced. Residents in my constituency should have access to recourse and to the rights enshrined by law. They need the future security that they and their families so deserve.