April 24, 2024

McCarthy and Stone reform sublet fees after discussions with Campaign against retirement leasehold exploitation

McCarthyandStonewebsiteFollowing discussions with Campaign against retirement leasehold exploitation, McCarthy and Stone is dropping the one per cent contingency fund contribution that has to be paid every time a flat is rented out.

It is replacing the sublet fees, which are a percentage of either the purchase price or market value of a flat, with a one-off payment of £80 plus VAT from September 1.

This will be for the first two years of a flat’s rental, thereafter the percentage charges will apply – which Campaign against retirement leasehold exploitation believes is reasonable, as it will be a contribution by institutional investors to the contingency fund.

(Aviva, Barings and Grainger all have retirement flat assets, most managed by Girlings.)

The decision by McCarthy and Stone – full statement is below – is strongly welcomed by Campaign against retirement leasehold exploitation, which has long argued that these contingency fund payments are excessive.

They make subletting a retirement flat as expensive as renting out a Knightsbridge property in central London, and they often come at a time when family finances are stretched when a relative requires further care.

As well as these costs, the family must continue to pay service charges on the empty apartment and letting agent fees to find a tenant.

To then also have to pay a one per cent contribution into the contingency fund – typically £1,000 – £1,500 – is excessive, Campaign against retirement leasehold exploitation has argued.

Following a meeting between Campaign against retirement leasehold exploitation and Clive Fenton, the McCarthy and Stone CEO, this point has been accepted.

The sublet fees will be replaced from September 1 it with a standard £80 plus VAT administration charge to process the tenancy.

This sum is in line with the Office of Fair Trading subletting fees (which do not go into the contingency fund) agreed with other freeholders.

The second largest private retirement builder Churchill last week told Campaign against retirement leasehold exploitation it would consider the McCarthy and Stone initiative.

This initiative by McCarthy and Stone is a very welcome and positive step.

The issue has been highlighted by a number of families in recent months.

In July Dawn Rundle, whose family own a retirement flat at Marina Court, in Newquay, was charged £625 to sublet, which was actually a reduction to one month rental of the flat.

This is a site where McCarthy and Stone is the freeholder.

But high payments into the contingency funds are still made at sites where the Tchenguiz Family Trust is the freeholder.

After the Office of Fair Trading, an agreement was made in September 2012 that “where the terms of an existing lease give it [the Tchenguiz Family Trust freehold companies] discretion to waive the contingency fund fee of one per cent of the open market value payable upon each sub-letting, it would instead charge a fee equivalent to one month’s rent (in accordance with the waiver) for each sub-let by way of an assured shorthold tenancy agreement”.

The full agreement with the OFT can be read here


Unfortunately, some leases did not allow the freeholder to reduce the contribution to the contingency fund.

This included the brand-new Gibson Court in Hinchley Wood, Surrey, an old McCarthy and Stone site that was rebuilt after a fire in September 2011 in which a resident died. More here

Last December, the Hay family were charged £2,500 to sublet their 97-year-old mother’s £250,000 flat.

Mrs Hay did not wish to return to the site after the fire, and required further care.

£2,500 was an extraordinarily high sum to pay for subletting, particularly for a new site that should not require any contingencies for some years.

It opened the very real possibility that the Hays could rent out the flat at significant financial loss.

But the Tchenguiz Family Trust said it could not waive the £2,500 fee, although as a “gesture of goodwill” it would accept four staged payments of £625.

Whether the Tchenguiz Family Trust had discretion to reduce or waive the fees, which were not to its profit, was not explored and the correspondence, copied to several MPs, demonstrates that there was no interest in engaging with this issue.

It may have been possible that the Hay family could have been spared this expense had the Gibson Court residents’ association given any indication that it agreed to accept a reduction to the contingency fund.

To avoid the threat of legal action, the Hays paid up.

The new policy of McCarthy and Stone on sublet fees to the contingency fund

What is our position on subletting?

We feel it is important that our customers do not face any unexpected financial burdens in their new home resulting from, for example, the need to undertake any major refurbishment or structural repairs on the development, which are issues that might have occurred in their previous property. Our customers purchase apartments from us because they want peace of mind and do not want to worry about maintenance.

In order to provide confidence that there is enough money available to help cover unexpected costs such as these, our service charge includes a regular charge that also covers the normal redecoration and replacement costs of items like furniture and carpets in the shared areas. This goes into a Contingency Fund, which is similar to a ‘sinking fund’. It is a specific fund kept in the development’s own bank account and is held in trust for the residents with its use restricted to the maintenance of that development. It is there for the benefit of all homeowners. Contingency Funds are essential for a sustainable development and the alternative is to have a higher service charge or leave homeowners liable to large and unexpected bills, as with their previous property.

In order to keep the weekly cost – and hence the service charge – to a minimum, the development’s specific Contingency Fund is topped up by a one-off charge of 1% of the resale price upon the sale of the apartment. Within our managed developments, there is also a 1% charge upon the rental of the apartment, although it has to-date been McCarthy & Stone’s policy to waive the payment of this 1% charge and substitute a month’s market rent in its place. We are aware of just 11 apartments that are being sublet in our managed portfolio in this way, so it is not a common occurrence. There may be others that we have not been told about, although it is a requirement of the lease to inform us, but the numbers are certainly not high.

Full details of the Contingency Fund are outlined in the lease and are repeated in the Property Information Pack (PIP) supplied to all homeowners and their solicitors before purchase. Further information about this charge can be provided by our Sales Consultant or House / Estate Manager if there are any queries during the sales process. These fees are communicated to potential customers in the leases and sales literature before completing a purchase, and the funds are held in trust for the benefit of the residents, not McCarthy & Stone. McCarthy & Stone is committed to a fully transparent communications process with all of our customers.

McCarthy & Stone has recently reviewed the requirement to pay the 1% fee upon the rental of a property as well as our policy of waiving the 1% fee and replacing it with a month’s rent. We have agreed that the 1% Contingency Fund charge on each rental in all new leases from 1 September 2014 will be removed for the first two years of the rental and replaced with a single administration fee of £80 plus VAT. The administration fee will be payable towards the cost of checking the proposed tenancy agreement and ascertaining that the incoming tenant meets the occupation criteria (age limit etc) for the development. This approach will also be adopted on historic developments where McCarthy & Stone is the landlord.


  1. This was redacted by Admin, now cleared as confirmed.

    Enter Norman Greed in the Search this website at the top of this page, and read his storey, very good reading, a true campaigner for over 10 years.

    Norman The Conqueror –

    Norman Greed received £5,000 into their contingency fund for Excessive Commissions, charged on Insurance Commission Scams.

    Norman Greed has received £5,000.00 from Peverel Property Management Ltd (A new Peverel name to me) on behalf of Fairhold Homes (No. 9) who purchased the development from McCarthy & Stone.

    The Freeholders through the Managing Agents have a responsibility to insure the development against all the perils to include all the necessary requirements to rebuild.

    The double whammy is since 2003/4 they added Terrorism Cover?

    Peverel Retirement/Peverel Managing Services Ltd hire their own Sister Company Kingsborough to bring in a Broker, to bring in an Insurance Company, to insure the Developments.

    Kingsborough (who only introduce the broker such as Oval Brokering Services Ltd) and Oval, together, were paid up to 40% commission, running into Thousands of Pounds a year.

    Oval would receive 3.5% for the same Insurance Cover and then receive up to 6% for Terrorism Cover?

    The good news is that McCarthy & Stone have replaced Peverel Retirement Division and are now using their own company as Managing Agents.

    McCarthy & Stone were the original Design and Build Contractors for Residential Homes.

    They only kept them for a few years, but were the instigator’s of the Leases’ that we have today.

    • If you enter McCarthy & Stone in the Search Campaign against retirement leasehold exploitation Website it will bring up a history of this company which will explain the campaign regarding M&S.

      This is a confirmation of the excessive commissions received by Peverel Management Services during the period 2007 to 2009

      2007/08 – 33.05% – £1,187.15
      2008/09 – 33.05% – £1,208.74

      2007/08 – 3.45% – £123.92
      2008/09 – 3.45% – £126.18

      2007/08 – 5% – £7.62
      2008/09 – 5% – £8.00

      The total commission paid in 2007/08 was – 41.50% – £1,318.69
      The total commission paid in 2008/09 was – 41.50% – £1,342.92

      Both Kingsborough and Oval received commission on the same, NET BUILDING PREMIUM

      From 2000 to 2014 commission of over £7,000.00 was collected by Kingsborough alone and then given to Peverel Management Services as informed by Chris Owens Head of Customer Relations for Peverel Services Ltd.

      I have print outs from 2000 to 2013/14 inclusive supplied by Kingsborough Insurance Services Ltd.

  2. I have to remind Campaign against retirement leasehold exploitation that its purpose is to eliminate leasehold abuse in retirement blocks. See what is Campaign against retirement leasehold exploitation posted in 2013 below

    “The Campaign Against Retirement Leasehold Exploitation (Campaign against retirement leasehold exploitation) aims to protect the old and vulnerable from being cheated by landlords and their agents”.

    Campaign against retirement leasehold exploitation should only discuss with M&S sale of new property tenure under Freehold , Commonhold or ” Leasehold with 999 years lease and Nil ground rent + RTM ( i.e no external landlord ). It should not agree to any charges for subletting for any landlord and give the appearance of approving the system. .

    M&S enjoy a 40% higher premium ( compared to private sector blocks). for sale of new leases by offering more communal facilities including HM flats . Any sale of communal facilities by the freeholder before the expiry of leases is looting of communal property and assets which have been paid by the leaseholders.

    • Campaign against retirement leasehold exploitation says

      Dear Ollie,

      You have that old Bolshevik quality of vigilance, but we also need to improve what exists already in leasehold while striving for commonhold or 999-year leases, nil ground rent and RTM.

      Of course, that is what we want and it is excellent that there are thoughtful figures in retirement housing, such as Bob Bessell of Retirement Security Limited, building flats that do fit these criteria to a considerable degree.

      Historically, McCarthy and Stone has pioneered much that is wrong in retirement leasehold, notably: exit fees (ended in Jan 2009); sublet fees; incremental ground rents; Peverel etc.

      But the current generation of executives want happy customers who buy their product and recommend their friends.

      Creaming off extra profit on the freeholds is a small matter by comparison, and the reputation of the company and the wider sector has suffered.

      McCarthy and Stone is striving to reassure customers and this initiative addresses one, relatively minor injustice. It is good that the company has done so.

      Sebastian O’Kelly
      Campaign against retirement leasehold exploitation

  3. Dear Sebastian,

    I never studied Russian History but I think the Bolsheviks or their rivals found a way to end their leasehold system in 1917.

    If M&S really want to make their customers happy, the generally accepted method taught by Business Schools should be collecting feedback from past customers and changing their ways of selling new property . I believe that M&S is striving to position itself as No. 1 builder to the Retirement Buyer market and that Campaign against retirement leasehold exploitation is the No. 1 Group is standing in their way by warning would-be buyers off , not to buy new build from M&S or enter part exchange to avoid risk of a high capital loss . If M&S are planning to put themselves up for sale , they would want to find some way to remove Campaign against retirement leasehold exploitation’s opposition as it affects their sale valuation ( my view only ).

    Campaign against retirement leasehold exploitation should recognise its growing power to expose the abuses and exploitation in the retirement homes sector and make demands on M&S for adopting the Commonhold tenure system . Campaign against retirement leasehold exploitation should be advising both M&S and Would-be Buyers to stop entering Leases ( with annual ground rent payment) which has been found open to abuse by companies controlled from the BVI ( offshore tax haven ) .

    I think that many leaseholders have made known the unfairness of the leasehold system , but successive Housing Ministers and Civil Servants have completely ignored the many complaints preferring to consult the ”professionals “ in the industry. Many MPs could help Sir Peter , but most seem unwilling to voice support for a change to Commonhold because the majority of the public are silent. There is no majority of the public calling for change- that’s whats wrong.

    So we all must brainstorm for more convincing reasons to pitch to MPs for compulsory change to from Leasehold to Commonhold tenure system .


  4. Ollie,

    I am also of the Bolshevik Persuasion and do not readily take bullying from anyone?

    I am not sure what Sebastian really meant?

    I agree with your comments and feel that we are going round in circles, and would benefit from some
    Direction, Guidance and Support?

    I have met my MP twice, last meeting he gave me back the emails I had sent, informing me that he received more emails from me, than any other resident?

    This was because he never did anything, other than send one letter to Peverel, typical behaviour from a politician.

  5. Michael Epstein says

    Any step in the right direction however small, is welcome.
    That said the Mcarthy and Stone business model is too close to Peverel’s methods for comfort.
    Their last accounts show they paid £39m in interest charges alone in the last financial year.
    At some point this money must come from leaseholders. In my opinion until true and meaningful safeguards that protect leaseholders become law Mcarthy and Stone retirement apartments are best avoided.

  6. Michael Epstein says

    Just a thought for those considering purchasing a Mcarthy and Stone retirement apartment.
    Rumours are circulating in the city that Mcarthy and Stone would not be adverse to another buyout.
    Imagine if you will that Vincent Tchenguiz bought Mcarthy and Stone.
    How long does anyone think it would be, before it was discovered that Mcarthy and Stone development communication systems were found to be obselete?

    • Michael,

      My relative at Denehurst is about to have Smoke Alarms replaced due to being past their sell by date?

      The development was built in 2005/6 which makes them 8 or 9 years old?

      The Technical Manager had notified all the resident that they only had a ten year life span?

      This is, as I believe for battery only smoke alarms?

      Not hard wired smoke alarms?,

      Why would battery only be fitted in a new build?

      The development was built by McCarthy & Stone and sold to Fairhold in 2005/06 my relative was not aware they were sold before they purchased in 2005/06 as the for Sale Board still stated McCarthy & Stone, well after the Fairhold purchas?

  7. Last time in 2007-2008 the M&S ( sellers of retirement Homes ) and Peverel Group ( Management and Freehold investor, previously controlled by US Holiday Homes ) were bought out by Consensus Business Group let by Vincent Tchenguiz.. Consensus Business Group 2006 website claimed about itself in March 2009 :

    Consensus is a multifaceted principal advisor to the trustees of a Family Trust , its ultimate beneficial owner. The core business includes structured finance , the acquisition and amangement of commercial and residential real estate; and a sustsntial portfolio focussed on the environment, new tchnologies and technical start-ups.

    The Group is also owner/manager of over 420,000 residential freeholds through out UK making it one of the largest owners of residential properties in the UK.

    Consensus’s innovative Financial Enginering team provides a structured finance capability focused on debt soluctions with an efficient risk/return profile.

    What does the result of CGB ” Financial Engineering” and “Debt Solutions” mean to You” ?

    Answer :

    1. Financial Engineering = CGB borrowed heavily to finance their investment in residential Management Companies such as Solitaire Group, M&S Group and Peverel Group using loans from Kaupthing ( Icelandic Bank ) and BOS ( Part of Halifax Group) by subverting bank lending criteria and contributed to bank collapse.
    The near collapse of the banking system has caused Bank of England to hold down bank interest rates for past 5 years and those frugal pensioners who saved for the retirement are now suffering real loss of income. Indirectly every person with savings in a UK bank or Building Society is a victim of Financial Engineering.

    2. Debt Solutions = stripping the assets inside the acquired companies such as leasing the HM Flats and mortgaging the properties and moving out the cash to other parts of the group.

    3. Debts taken on by CBG companies have to be serviced and more money to pay loan interest has to be extracted by leasehold abuse ( excessive insurance commissions, price fixing for works in retirement homes , charging exit fees and consents to subletting etc ).

    Don’t buy new build property under leasehold title with ground rent .

    Insist on Nil ground rent and service charge controlled by RTM company.