A furious row has broken out over a company’s decision to charge its investors £150 each before closing its operations in Liverpool.
At the end of the month, Urbanbubble will end its involvement in Liverpool entirely, having been of various Elliot Group schemes in February.
But before Urbanbubble Liverpool ceases trading and gives up its role as a lettings agent, the residential property management specialist will charge investors in the firm's city projects £150 per unit in ‘termination fees’. The firm said it’s asking only for what is “contractually due”.
Urban Evolution, the business chosen by Elliot Group to take on management of the residential sites that include Norfolk House II in the Baltic Triangle, said it is acting “on behalf of the investors”.
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It called the charges “immoral”, demanded they be scrapped, and accused Urban Bubble of “walking off into the sunset” with thousands of pounds’ worth of investors’ money.
When Elliot Lawless’ firm made the decision to strip Urbanbubble of its status as block manager, it said the decision was primarily based on costs.
And a spokesman for Urban Evolution described the move as a “last cash grab by a company whose contract has been terminated due to high cost”.
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He said a “large number” of investors are “shocked, furious and disgusted” by the charges, accusing the firm of treating them like “cash cows”.
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Michael Howard, managing director and founder of Urbanbubble, said the fees are “contract termination charges applied to owners who notified that they wanted to move their lettings agreement”.
He said Urban Evolution’s terms and conditions have “these very charges” - and the firm is “doing nothing more but charging what is contractually due”.
Other residential projects affected by the row include student accommodation block Queensland Place and Parliament Place in the Baltic Triangle and various blocks at Wolstenholme Square. The total number of units is believed to total over 1,000.
BusinessLive has received a number of emails from investors saying they support Urban Evolution’s efforts, and that they were not aware of any ‘termination fees’ in their contracts.
Several chains of emails have also been sent to us, appearing to document a furious row between the firms, complete with insults, allegations and sentences written in capital letters.
Mr Howard said: “While it’s unfortunate that residents and leaseholders have been adversely impacted by the actions of Urban Evolution, the termination fees applied by us are standard across residential property management and entirely legal.
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“Urban Evolution’s canvassing of our leaseholder clients with information obtained by sales agents is a clear breach of data privacy laws and we have therefore lodged a complaint with the Information Commissioner’s Office (ICO).
“Having received numerous threatening emails from Urban Evolution over several months, our position has become untenable and we have therefore taken the reluctant decision to close our Liverpool operation, which primarily served the Elliot Group portfolio of residential schemes.”
A spokesman for Urban Evolution said it had followed guidelines from the Association of Residential Managing Agents before contacting leaseholders - and that it was “entitled” to their contact details.
He added: “We have been instructed by the Elliot Group to take over the management of their Liverpool portfolio and reduce overall running costs for investors, increasing each individual’s return on investment.
“We do not believe that it is ethical or in keeping with the guidance laid out by the Property Ombudsman, for Urban Bubble to cash in on investors, one last time, before closing their doors, by way of termination fees that are not mentioned in any terms of business or agreement with those investors.”
The spokesman added that any termination fees must be “actively flagged” to investors - “in a clearly laid-out terms of business or other such document”.
He added: “All of the investors we have spoken to have said that this was never the case.
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“We have had large numbers of investors contact us for support on this matter and we felt a responsibility to work in the interests of investors who may not realise they are being charged such fees, until after Urbanbubble Liverpool cease trading next month, after which time investors would have little option for recourse.
“We have assisted investors by providing them with detail as to the relevant industry guidelines that have not been adhered to and we have provided a standard text that each investor is able to send to Urban Bubble, to lodge a formal complaint and request the fees are refunded.
“We hope to see Urban Bubble refund these charges, to each investor, ahead of their imminent closure on April 30.”
In February, BusinessLive revealed how residents living at Norfolk House II had become after being caught up in a row between the two firms.
The situation - Urbanbubble being stripped of its status as block manager but retaining its status as letting agents - left some residents not knowing who to pay their rent to, accusing the firm of “fobbing them off”.