CPM Asset Management – Uncovered!

Who are Erinaceous?

< — edit @ 17 May 2008 — >

As most will already know last month Erinaceous shares were suspended and the Administrators were called in. The appointment statement can be read by clicking here, and here is some analysis …

http://www.telegraph.co.uk/money/ … [1]
http://www.telegraph.co.uk/money/ … [2]

CPM are now a part of RMG (Residential Management Group) owned by the newly formed Caley Ltd. RMG are a name change of Dunlop Haywards Residential.

< — end edit — >

On their website Erinaceous advertise themselves as …

” Your One Stop Shop for Property Management “

So what do they mean by this?

Normally, a managing agent is employed by the Management Company to run the company and look after the development. This role can be simplified by splitting it into 3 parts. Managing expenditure (outgoings), collecting residents service charges (income) and administration. Service charge levels are calculated by creating a budget for expenditure. For this service a ‘managing agent’ charges a ‘management fee’ and this is included in the expenditure budget.

Some other common costs (expenditure) for a Residents Property Management Company might be – buildings Insurance, directors insurance, secretarial fees, accountancy/auditing fees, cleaning, gardening, maintenance/remedial repairs.

Now lets look at some of the companies in the Erinaceous stable;
CPM Asset Management (management fees), Vita Insurance (buildings insurance, Directors insurance), Hertford Company Secretaries (secretarial fees), R.N. Accountancy (accountancy fees), Francis Maintenance (cleaning, grounds maintenance [gardening], repairs) … Beginning to get the picture?

So what’s wrong with that?

You might well ask. Certainly at first glance it may even seem like a good idea, to have all your required services supplied by the same group.

However, ask yourself the question if you are unhappy and complain about, for example, the cleaning would CPM really take your side when tackling the cleaners? Would they shop around for the best, most cost effective insurance solutions for you? What do you think …?

Combine this with the likelihood that you will not have resident representation on the board of your Management Company and therefore no control over CPM or their fee level or the practical ability to sack/replace them and you will realise your development is wholly at the mercy of this group, who can now happily harvest the majority of your service charge – not just the management fee portion – all very incestuous!