Wendover Court Management Limited –
How it all Began
At Wendover Court there is an elected Board of Directors, chosen exclusively from amongst the flat owners, that is responsible for every aspect of the management of the block. Wendover Court Management is assisted by Rendall & Rittner, a residential block management company.
Prudent financial management is the key priority and so the first task of the Board each year is to set a realistic budget which establishes the minimum service charge income required to fund the necessary outgoings of maintenance, improvements and any other reasonable costs. (The result, incidentally, is one of the lowest and most stable service charges in Marylebone). The Board then monitors expenditure against budget on a regular basis and the Board itself is subject to an election once a year at an AGM. In other words, the owners of the flats, as represented by the Board, are in a position to run the block themselves in a sensible and business-like manner, subject only to their responsibilities to the freeholder, the Portman Estate.
It was, however, not always thus and what follows is a brief summary of how our present freedoms as leaseholders were achieved.
Pre-1982
Prior to 1982 the head lease of Wendover Court was held by the company that had originally built the block – the Artizans Company. In the early 1960s, this company carried out a complete refurbishment of the building, and most of the blocks were converted into self-contained unfurnished flats to let.
The Rent Act
Not long afterwards, in 1965 and 1968, new Rent Acts gave protected status to all the tenants of the newly refurbished flats. The purpose of the new Rent Acts was to reduce the provision of affordable, or social, housing by the private sector and to bring as much of it as possible under the control of local authorities. The impact on Artizans and companies like them all over the country was devastating, severely reducing the value of their residential property investments which in some cases had been built up over a century or more.
Artizans, as one of the victims of this sea change in public policy, had to completely re-focus the activities of the company, disposing of their residential investments and transferring their capital into commercial property instead. Many philanthropic organisations such as Artizans sold out to local authorities who then embarked on a huge expansion of their housing departments.
Sale of Wendover Court to George Barker & Co.
In due course Wendover Court and Wendover Buildings were put up for sale, including all the shops, for around £1,000,000, a sum of money which even at the time did not seem particularly large.
The property was quickly sold, not to the local authority but to a private company called George Barker & Co., who became our new landlord. George Barker was typical of a new breed of property company that arose to exploit the opportunities presented y the new Rent Acts. Later known by the derogatory term “break-up merchants”, such companies specialised in finding “unbroken” blocks of tenanted flats with short, newly protected, tenancies. The tenants would be offered new long leases in return for a premium, thus producing a profit for the company. It has to be said that there were considerable attractions to the tenants of such blocks who were presented with the opportunity to purchase their flats at a substantial discount, exchanging their worthless short leases for something of real value.
Sale of flats to sitting tenants
George Barker did not waste any time in making their intentions known and nor did the residents need much persuading to look seriously at whatever offer George Barker was going to make. It made sense to negotiate as a group and so the residents formed Wendover Court Residents Association to exchange information and most importantly raise money for legal advice.
The Association instructed a firm of solicitors, Joynson Hicks, to negotiate on the residents’ behalf and an agreement between George Barker & Co. and the residents to purchase new long leases was quite rapidly put in place.
The negotiating process established agreement in two vital areas. Firstly, agreement was reached on a standard price for both the 3-bedroom and 2-bedroom flats but most importantly George Barker & Co. agreed to carry out a list of “major works” (costing approximately £500,000) that was required to put the buildings into a satisfactory condition.
This was a very attractive proposition to the tenants and in 1983 most of them bought new long leases for around £25,000 each. Attached to each underlease was an agreement from George Barker & Co., guaranteed through the head lease by their parent company, Bardsey PLC, whereby George Barker & Co. agreed to complete the major works at their own expense. They also undertook not to charge the lessees for the cost of these works through the service charge or by means of an additional levy.
The ‘break-up’ process
By its very nature a break up company has only a short term interest in a block. In order to repay their investment and obtain a quick financial return, George Barker succeeded in selling off the shops to the Mars pension fund, long leases were sold to the residents of Wendover Court and finally the Wendover Buildings block was refurbished, renamed Wendover House and the flats sold off. By this stage, there was no further scope for selling anything else. An attempt was made to put penthouses on the flat roofs but this, as it turned out, was prohibited by the terms of at least one of the leases that they themselves had granted. The only other source of cash to be exploited was the service charge income.
The management style of George Barker & Co.
When George Barker came on the scene initially as the prospective purchaser of Wendover Court the Portman Estate had serious reservations about granting them a long head lease because they were a new company and clearly not an investment company interested in the long term. To reassure Portman, George Barker & Co. brought in a management company, Holding & Management, as party to the head lease. Their supposed duties ran into many pages, but their only active role, as it turned out, was to charge a 17% levy on top of all service charge demands.
Broken promises on ‘major works’
Despite the undertakings given in our new leases, Holding & Management issued service charge demands to the new leaseholders for “major works”, the very works which, according to our leases, should have been paid for by George Barker & Co. It was nevertheless, clearly their intention to make the residents pay.
The early optimism of the residents began to fade, to be replaced with outrage. Most leaseholders refused to pay the ‘major works’ demands and there then began a long legal battle between the leaseholders of Wendover Court and George Barker/ Holding & Management.
Legal dispute
Once George Barker & Co. had reneged on their agreement to refurbish the block at their own expense it was only a matter of time before the freeholder, the Portman Family Estate, became concerned. The block fell into disrepair and Portman served a “Section 146” notice. The purpose of such a notice is to enforce the repairing covenants in the head lease under threat of forfeiture. The serving of such a notice thus rendered the underleases potentially worthless and the flats could not be bought or sold.
Armed with new litigation solicitors, Phillipsohns, the Residents Association first of all attacked Holding & Management. This company was headed by a man called Hodges, a city property developer best known for leading the Brighton Marina Company into bankruptcy. At a final fiery meeting, with lawyers present, amidst accusations of fraud, Holding & Management resigned. One down, one to go.
George Barker’s problem was that they could not walk away and surrender their lease because the Portman Estate could take enforcement action against their parent, Bardsey PLC, for around £1,000,000. At the same time, Portman were reluctant to embark on litigation, so a stalemate ensued.
Residents offer to take over head lease
During that time, the residents had made a proposal to Portman to take over the head lease should George Barker & Co. relinquish it at some time in the future on the basis that we would raise the necessary finance and renovate the blocks ourselves. This was accepted in principle by Portman who by this stage had become extremely wary of the ‘hands off’ management style of the likes of Holding & Management which they had now experienced in some of their other properties as well.
The residents therefore engaged a conveyancing solicitor, Michael Daniels, who not only drew up all the documentation in readiness for a potential takeover but agreed to defer sending us a bill until the deal was concluded! As part of the preparation a company was formed, Wendover Court Management Limited, who would, it was hoped, eventually acquire the head lease. The shares would only be distributed to leaseholders, one share per leaseholder, to ensure that in the future Wendover Court could always be controlled by the owners of the flats and not be any outside party.
The breakthrough
Matters finally came to a head in a totally unexpected way. Bardsey PLC was taken over by another city property company and amalgamated into a new publicly quoted vehicle, the Beckenham Group PLC. There was considerable press coverage and so we wrote to the city press, the company’s brokers and also their bankers to tell them about Bardsey’s undisclosed liabilities in respect of Wendover Court. We were immediately summoned to meet the deputy chief executive of the new company, Mr Macario, who there and then offered to surrender the head lease back to Portman and give a substantial cash payment of around £140,000 to go away. It was an offer we could not refuse.
Finally, in 1992, under the chairmanship of Philip Lancashire RIBA, and after seven long years of frustration and legal wrangling, agreement was reached between George Barker & Co. and the Portman Estate whereby George Barker & Co. surrendered the existing head lease and Portman granted a new head lease to our newly formed company, Wendover Court Management Ltd.
As a postscript to this episode, Bardsey and its newly combined property vehicle, the Beckenham Group, became a victim of the then gathering recession and went bankrupt in 1992/3.
Lifting the Section 146 Notice
Having been granted the new head lease we also inherited the schedule of works contained in the Section 146 notice. Wendover Court Management Limited therefore elected a board of directors from amongst the leaseholders, appointed a quantity surveyor, obtained estimates, raised contributions from all the flats, completed the refurbishment and after inspection by the Portman’s surveyor, got the Section 146 notice lifted. Our flats once again had real value!
Owner management
One of the Board’s policies at that time was on no account to pay an agent to run things on our behalf, we wanted to see what was involved and what it would cost. A board member, June Blair, not only became Secretary of the new company, but also took on many of the tasks normally performed by a management agent, such as dealing with cleaners, plumbers and locksmiths, and for many years ran the maintenance side efficiently and economically. The result, one of the lowest service charges in Marylebone.
The Board has always operated under very few permanent guiding policies, but first and foremost has been the desire to ensure sound financial management and generally to look at all issues strictly from the standpoint of how best to maximise the value of our flats.
That, in a nutshell, is how Wendover Court Management Limited came into existence and why Wendover Court is now run by the leaseholders, for the leaseholders.