McCarthy and Stone has replied on its website to the exposé carried out by Channel Four’s Dispatches on Monday evening. You can read the page here
It says: “Treating our customers with fairness and respect is at the cornerstone of what we do and over the course of the last 35 years, our staff have helped thousands of people live more enriched lives in retirement.”
Using an undercover pensioner ‘spy’, Dispatches revealed that the McCarthy and Stone’s sales team urged would-be buyers to sell their houses in a complex part-exchange scheme.
It cited the example of Marion Bowley, of Weston Super Mare, who was offered £140,000 for her family house in McCarthy and Stone’s part-exchange deal. She declined, and sold it privately instead for £50,000 more.
The undercover ‘spy’, supposedly living in a four-bedroom terraced house in Worthing, was attempting to buy a flat at Cherrett Court, in Bournemouth. But the part-exchange may have left her £65,000 worse off had she sold her house for the sums the most optimistic estate agents valued it at.
McCarthy and Stone use a third party, unrelated company to value and purchase the house, although how the proceeds are divided up is unclear.
Are 92 per cent of McCarthy and Stone residents ‘very happy or contented in their new home’?
McCarthy and Stone says “… it is important to note that the three estate agent valuations Dispatches obtained for the valuation of the property in Worthing varied by some £50,000. A property is only worth what someone is willing to pay for it, which is ultimately determined by the market. Once the valuations are received, the part exchange company will make an offer to purchase the property. In some circumstances, McCarthy & Stone may make available an additional sum to increase the overall part exchange offer but we [sic] this is not always the case.”
On the website McCarthy and Stone asks the question: what is the relationship between McCarthy & Stone and Peverel?
“Until 2010, management services in McCarthy & Stone-built developments were provided by Peverel, who are one of the largest property management companies in the UK. Peverel had originally been part of the McCarthy & Stone group before it was sold in 1993. Since this sale, McCarthy & Stone is not linked in any way at all to the Peverel Group of companies.”
It did not add that Peverel was sold off after McCarthy and Stone launched a disastrous £800,000 libel action against the Daily Telegraph in 1991.
John McCarthy, the legendary founder of the company – who sold McCarthy and Stone for £1 billion and now owns Churchill Retirement Living – writes about the court case in his memoirs, Building a Billion.
“One area of criticism was that there was a perceived conflict of interest between McCarthy and Stone and Peverel. In 1993 we sold Peverel for £30 million to its management through Electra Investments.”
After the disastrous Tchenguiz ownership of Peverel – he bought it for £300 million in 2007 and it was sold by administrators for £50 million earlier this year – the buyers turned out to be … Electra Investments (with another vulture fund Chamonix).
John McCarthy then adds: “Interestingly, in the formative days days of us moving into the provision of sheltered housing in the private sector, a number of institutions including Housing Associations were not interested in taking on the management. They seem to have missed out.”
McCarthy certainly knew there were riches to be had in managing retirement developments.
McCarthy and Stone reply to Dispatches: http://www.mccarthyandstone.co.uk/News-and-views/News/Answering-questions-about-matters-raised-by-Dispatches/
Related posts:
McCarthy without Stone: Churchill Retirement Living ‘to spend £500 million on new sites’
Goodbye, Peverel. But this is not a great debut for McCarthy and Stone Management Services …
McCarthy and Stone gives Peverel the push at 25 retirement sites
‘Our flat at McCarthy & Stone’s Buckingham Court has fallen in value £60,000 in 14 years’
Peverel sold for £30m but bought for £300m ?
Correct. Sold in 1993 for £30m; bought by US outfit Holiday Inc, sold in 2007 £300m; sold in 2012 £50m.
From “Susan”
I’m not surprised McCarthy & Stone quote a 92% satisfaction figure. They put their ‘happy questionnaires’ out very soon after purchase. During the honeymoon period when people are basking in the glow of having bought into the McCarthy Stone Dream. And well before the multitude of scams have become apparent. I’m afraid we will have contributed to that 92%.
But, for the record, we are NOT happy. It took some years before we found out about the house managers flat rental scam. And the Kingsborough insurance thievery. To say nothing of the ‘deals’ with electricity and telecoms companies (to name but two). The realisation that the price we had paid bore no relation to intrinsic value, but was directly related to the amount of money we had from the sale of the family home. Resulting in this purchase being the worst we’d ever made.
The icing on the cake? The discovery that we had been completely misled about the purpose of the exit fee. It was very interesting to see, in Dispatches, that McCarthy & Stone are STILL peddling this particular lie. Their statement that they are in the vanguard of companies not including exit fees in their leases is completely disingenuous. McCarthy & Stone were probably the originators of these fees, and only backed down on them in 2008 after challenged by the Office of Fair Trading. It beggars belief that the McCarthy Stone salesperson in the programme invented the reason for the fee being for ‘solicitors fees, and to check if the new purchasers have dementia’. She MUST have been instructed to say this.
So, NO, McCarthy & Stone. We are NOT happy. Your business plan is extraordinarily short-sighted. We are your next potential customers. Had you behaved decently, we would have been queuing up to buy. As it is, none of us will EVER buy one of your properties again.
OK, lots of adverse comment. The old chestnut about the exit fee features very high, but come on McCarthy and Stone why not relieve your negotiators of the imposition to lie about it’s purpose – Solicitors Fees? – evaluation of the applicant’s mental state [as the sales woman said on the programme]? What medical training did they get to assess this?
Why not be honest and just state that it is there to generate income for the landlord, if the punter does’t like that then he/she walks away immediately?
This has been happening in mobile home sites for years unchallenged.
Hey! Nobody mentioned ground rent, currently mine is £350 per year. What’s that for?
I enquired before buying and was told it was “so that the landlord maintained an interest in the property” I bet he did! Again, if I didn’t like it I could have declined further negotiations and walked away.
What about inflated rents for house managers’ flats? No mention of having to go to LVT with all its pitfalls.
What about the contingency fee? No mention on the programme. Another 1% of the transfer on letting or selling price that goes into the development’s contingency fund to boost this fund to the residents’ advantage.
Always an approved charge from the original Campaign against retirement leasehold exploitation ethos – in Melissa Briggs’ days – Please comment on this Sebastian O’Kelly, if this still stands.
A recently negotiated decision by the OFT and Fairhold Homes [a landlord] negated this charge thereby reducing the input to a development’s contingency fund. The obvious result of this will be to increase the service charge to balance any deficit lost by ‘contingency fee’ reduction imposition.
Have posed this question to my area manager about a fortnight ago. Still awaiting reply.
Paying one per cent on exit for the contingency fund is actually a good way of contributing to the major capital expenditure fund. We have come across self-managed developments that have increased the exit fee (a non-retirement listed property in Bury St Edmunds increased it to 10 per cent, for example – arguably far too high and possibly a deterrent to re-sale, in fact). Paying an additional one per cent exit fee, which at one point landlords argued was to ascertain the suitability of a purchaser for independent retirement living, comes on top of this. This is the exit fee Campaign against retirement leasehold exploitation has always campaigned against, and which OFT was investigating. There is now an agreement to waive these in some circumstances with the Tchenguiz Family Trust freehold-owning companies. But not on sale. The deal is feeble, and it is a subject we will be returning to. It is welcome that sub-letting fees are now reduced, rather than the absurd one per cent of capital value. This is a subject Campaign against retirement leasehold exploitation will revisit.
I thought that the OFT had agreed to allow the Tchenguiz Family Trust companies to continue charging exit fees on existing retirement complexes but not on new ones.
If the company is about to be sold off then this concession would have no effect on their profits.
If they maintain that the fee is charged to cover the cost of vetting future residents health condition then it is a fraud as it is not done and human rights acts would not allow it.
One of your contributors was prepared to challenge the exit charges in court on the basis that these checks are not made. It would be interesting to see how this would be would be defended , perhaps they will think up another reason for making it.
Susan Wood, a long-standing Campaign against retirement leasehold exploitation activist, is challenging this in court and will be reporting back on this subject very shortly. Search “Susan Wood” on this site for background.
The responses and info M & S are coming up with are not from the “real world”.
How do we tell that Susan Butler who has asked questions on the M & S site not to purchase anything that is managed by a Peverel company
I sent an e mail to the McCarthy and Stone site they have put up following the Channel Four Dispatches programme. Basically, I said if they were really caring and reputable they would have booted Peverel out years earlier than 2010, and also got rid of Peverel management from older sites thus showing they really cared about the elderly.
I also refered them to this site and TTAS to see what it is like in the “real world”.
As expected they have not published my e mail but I have had a direct e mail response as below.
She says my e mail was “sensitive nature” – I bet it is
Dear Mr B
Thank you for your comment via our website. I wanted to contact you directly given the sensitive nature of your enquiry. As you are aware McCarthy and Stone set up its own management services company in summer 2010 to provide an in-house and highly professional personal management service to all new apartment owners.
Before this period, you are correct to say that our previous management services were provided by Peverel. As a result of the new management company set up by McCarthy & Stone, Peverel no longer takes on the management of new McCarthy & Stone schemes. Regrettably the company at this present time is not in the position to acquire the management of sites built before this time.
McCarthy and Stone’s own management policy is for continuous, open and honest communication with residents on all matters affecting the running of our developments. This is a fundamental part of its service commitment. McCarthy and Stone is very proud of its record in providing high quality and responsive services to its residents. The management company has forty four developments under its new management arm.
As you are aware a small number of selling schemes which went on sale before summer 2010 remain managed by Peverel. Within these schemes and others that are managed by Peverel, the majority of residents are happy and supportive of both their House Managers and Peverel. We continue to meet Peverel representatives on a quarterly basis to discuss management-related matters.
I hope this email provides some more background and thank you again for your enquiry.
[Name withheld]
Marketing Team Assistant
There are still quite a lot of fairly new M &S complexes managed by Peverel where properties are still unsold.
It would be of great help to prospective purchasers if in their sales literature they stated who the management company actually is.
ie. is it Peverel or their own newly formed “highly professional ” company