Residents kick out entire board on 'fiefdom' housing estate
PUBLISHED: 07:00 11 June 2019 | UPDATED: 11:26 11 June 2019
A housing estate in Wapping is in limbo after its entire board of directors was unseated at a fiery emergency meeting.
South Quay Plaza Estates (Freehold) Limited took over the South Quay estate at St Katherine Docks from Tower Hamlets Council in 2007.
Most of the 299 properties are owned by private leaseholders, whom hold shares in the company and pay around £4,000 a year in service charges.
At an emergency general meeting on Wednesday, May 22, they voted for the eight-strong board of directors to stand down amid a catalogue of complaints about repairs running thousands of pounds over budget, service charges doubling and tenants being taken to court by the management company.
One person told those present: "In 2017 I was invited to join the capital expenditure committee and I signed a confidentiality agreement not to speak to other shareholders. This evening, I wish to speak frankly.
"Our board is doing the best, the best it can do. Their best is arrogance, non-disclosure agreements and secrecy."
Last year both the board and the managing agents, Rendall & Rittner, ignored a letter from the local MP asking them to explain why the service charge had doubled since 2014.
A new board is set to be elected on Monday, June 24.
Since 2009 the chairman of the board has been Tony Winterbottom, a former senior official at the now-defunct London Development Agency.
In 2012 he was named the highest-paid of 21 special advisors to then-Tower Hamlets mayor Lutfur Rahman, receiving £1,000 of public money a day for advice on regeneration.
In a statement provided to the Advertiser, ex-directors said the board had always met all of its statutory requirements.
They added: "We hope the focus of this new board will be on the future of South Quay as a whole, how to tackle some very complicated issues and to maintain the integrity of the residential nature of South Quay."
What went wrong at South Quay?
South Quay is spread across seven sites at St Katherine Docks, among luxury apartments and private developments overlooking the marina.
It was built by the Greater London Authority (GLA) in the 1970s for social housing, with young City workers and other professionals making up a large proportion of early tenants.
In recent years the estate has quietly wrestled with a string of issues which has led to growing anger among residents with the board, notably a repairs project at the 96-flat Nightingale House running over budget with multiple problems.
According to a costing document seen by the Advertiser, the work was due to run for three weeks in February 2018, at a then-estimated measurable cost of £243,319.
More than a year later the final cost of the project is now £362,000, with £12,000 already paid to a surveyors' firm owned by a leaseholder at South Quay.
Issues with the works included the wrong tiles being delivered, tiles being placed incorrectly, staining, and light fittings being ordered that had not yet gone through the testing process.
An ex-board member said: "I tried my best to make the renovation better and was met by arrogance and rudeness. I blanche at the idea of this board running any larger scheme in which our money is being spent."
Last February residents were also notified that major works were on the cards "to maintain the integrity of the buildings".
A costing document seen by the Advertiser shows that the total cost of the works was set to be £3.8m for new windows for every flat, and £3m for replacement cladding and roof covering.
Of this, £1.5m for was due to come out of a sinking fund and individual flats were to be billed for £9,248 to £25,018 each.
At a leaseholders' meeting in April the anecdotal cost of all works was given as £5.5million and leaseholders were told each would have to pay their share upfront, all at once.
Then-director Ian Neal told them it would not be possible to get a bank loan, adding: "The best way is to spread the payments but the longer you spread the payment the longer you delay things."
A 40-page report by surveyors Hallas & Co, commissioned by SQPE as far back as 2014, recommended that the cladding not actually be replaced but painted over, and added that not all the windows needed replacing.
At the same meeting, it was suggested that Tower Hamlets Council, which still owns 45 flats on the estate, could pay up to £1million of the planned renovation works - which are now on hold.
Last week the council told the Advertiser it had not been "officially" made aware of the board's removal or, indeed, of any planned works on the estate.
Aside from the renovations, residents also claimed a lack of transparency had blighted relations at South Quay.
Many residents said they had only started talking to one another since December 2018, when an estate-wide data breach not reported to the ICO meant they all had access to one another's personal email addresses.
At last month's meeting, it emerged that nobody save for the SQPE board knew who the signatory or signatories were to the company bank account.
Further, complaints were raised that the board had not disclosed to the shareholders what it had spent in recent years on legal fees.
One shareholder, an accountant, said: "I am most concerned about the manner in which this board conducts its affairs. There is very little information provided on how money is spent."
Another said: "People need to be able to ask to see documents and examine accounts properly, and see what's being spent."
In recent years SQPE has also taken a number of its own shareholders to court via the managing agent, Rendall & Rittner, which collects the service charges and is instructed to appoint solicitors if a person can not pay.
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The Advertiser has not been made aware of any case where the parties did not end up settling, in some cases at a cost of thousands of pounds to shareholders.
One resident, Marian Lewinski, withheld two £50 bills in 2010 due to a lack of heating and hot water for two years running, which she was entitled to do under the terms of her lease.
The managing agent then added around £1,000 in legal fees to her service charge.
She said: "In January 2011 I paid a large sum to make sure everything I legally owed was paid off, but then I didn't get a bill.
"I requested it and was told 'You aren't getting a bill, you're getting a solicitor's letter'."
She paid the next bill of £1,063 and solicitors attempted to send the money back to her. She said: "I refused to cash the cheques so they continued not to bill me and claim legal fees to which they were not entitled."
The managing agent went on to pursue her for thousands of pounds in legal costs. Ms Lewinski responded with a counter-claim in the civil courts.
The case was eventually settled in June 2016, with SQPE not receiving a penny of the £9,696 it was by then claiming to be owed in legal fees.
Ms Lewinski said: "There was never any case to begin with and they refused to mediate, even when the judge ordered them to.
"We need to stop the unnecessary legal actions. It feels like they are the lords of the manor, and we are serfs."
Another resident, Martin Preston-Davis, said he incurred service charge debts after a medical diagnosis in 2016 left him unable to work or drive.
On being signed off the Royal London Hospital in 2017 he said his bills were withheld, but then in 2018 he was "bombarded" with demands for immediate payment from solicitors.
Mr Preston-Davis cleared his debts that December but in January 2019 was hit with a court application to recover £3,277 in legal costs, which were also eventually settled out of court.
He said: "All the incurred costs have been absorbed by the company, i.e. the shareholders, totally unnecessarily. I am not an isolated case and there is no need for this heavy-handed tactic."
Other shareholders have also complained of heavy-handed tactics, with one person comparing the estate to a 'fiefdom'.
In recent years some have been asked to fork out £200 for retrospective 'encroachment licences' for changes made to the outsides of their properties. Some have also had their fences forcibly taken down.
Irene Wade, a 62-year-old council tenant who has lived on the estate for 25 years, was told by SQPE she would have to dismantle her porch until she produced written permission for the extension from Tower Hamlets Council from more than 20 years before.
She said: "I was so distressed. When the council ran the estate it was such a lovely place. Now it is being run like a caravan site."
What next for SQPE?
Shareholders are set to appoint a new board on June 24 and several individuals told the Advertiser that regardless of who took on the role, they would ask for a forensic audit of the accounts.
One person said: "It has been the most horrendous situation I have ever put myself through in my whole life. We have never been a group and tried to tackle things alone, but this time we had a collective."
In response the ex-board gave a statement through former chairman, Tony Winterbottom.
The board said that some of the allegations were "unsubstantiated", adding: "We have agreed that now is the time for us to provide facts and evidence."
They said when the data breach occurred they took legal advice and recorded it on SQPE's own register.
They also said they had planned to enter into consultation with leaseholders and shareholders about future repair work.
They added: "The probity of the former board was questioned. The facts are what matters. All statutory requirements have been met including a proper financial authority framework.
"Some directors have put in a good deal of personal time and effort to help the estate develop accurate databases, support the management agents, liaising with individual residents as well as holding meetings with external agencies such as crime prevention and anti-terrorism training. Not many people are aware or appreciate this work."
The national picture
Around seven million people - around 25 per cent of the population - are thought to be living in leasehold properties, while in Tower Hamlets the figure could be as high as 50 per cent.
Radical planned reforms to protect leaseholder rights were announced by the Law Commission in 2018.
An all-party parliamentary group (APPG) on leasehold reform was formed in 2016 to examine existing leasehold law and now has 117 MPs and Lords as members.
Jim Fitzpatrick, the MP for Poplar and Limehouse, co-chairs the APPG.
He wrote to Rendall & Rittner and SQPE in 2017 to ask why service charges had doubled, and received back a short email back from the managing agent, asking "which flat you are related to at this site, as it is not on your letter".
Mr Fitzpatrick said: "My constituency has the second highest proportion of leaseholders in the country outside of Westminster because of all the developments in and around Tower Hamlets and the docks. Everything is being built as leasehold, because these companies know it's a cash cow.
"The whole industry is now under the closest scrutiny. There are major reforms due, but this is going to take some time."