Managing agents and landlords are being accused by campaigners for the elderly of ripping off pensioners living in retirement blocks by imposing hefty charges and anti-competitive practices.

More than 100 residents from retirement homes around the country gathered at the House of Commons this week for a meeting of Carlex, the Campaign Against Retirement Lease-hold EXploitation.

There are 105,000 retirement flats designed for older homeowners in the UK, according to the Office of Fair Trading. These have features such as 24-hour telephone support and wardens on site.

Residents own the leasehold, but the landlord retains the freehold. The leaseholder has to pay annual service charges for the maintenance of the blocks, on top of ground rent and other fees. Residents also pay for the rent of the warden’s flat through the service charge.

Fairhold, one of the UK’s largest freehold owners of retirement properties, is under growing pressure to review the way the rent is calculated after accusations that it is overcharging thousands of vulnerable pensioners.

The rent is based on the sale value of the flat and then is raised on an inflation-linked basis. Campaigners point out that this does not take into account the market rate for rented flats in the area, which could be lower. Campaigners also say that the charges could fall foul of the Commonhold and Leasehold Reform Act, which stipulates that all charges should be “reasonable”.

Fairhold has reviewed and lowered the rent charged in 65 blocks, but campaigners argue that the company should recalculate the rents charged in all its blocks. It owns 1,550 retirement blocks in the UK. One in five blocks has a warden.

Fairhold is part of the Consensus Business Group, which also controls Peverel, the managing agent used by Fairhold to collect service charges.

Edward Davey, the Liberal Democrat MP for Kingston and Surbiton, says: “After meeting the Consensus Business Group it seems to me that it knows that it is overcharging residents but it will not reduce the charges unless it is challenged. I find that approach outrageous.”

Bill Proctor, of the Consensus Business Group, defended the way that Fairhold calculates the rent to Times Money. He says: “The level of the house manager flat’s rent is set by the developer before we buy the property. Residents are encouraged to write to us with issues and we have a considerable interaction with tenants as a consequence. The person who should decide whether a charge is reasonable or not is the person who is paying it. We think our rents are reasonable.”

Mr Davey is calling for the Consensus Business Group to be broken up. The group also includes Cirrus, a company paid to provide phone services. Mr Davey told the meeting that he was concerned by “monopolistic pressures in the market which feed into the way that residents are being treated”.

Mr Davey says: “The OFT is considering a wider investigation into the residential home market and I believe that it should consider breaking up this cartel to increase competition.”

Nigel Bannister, the chief executive of Peverel, rejected claims that the company awarded contracts to companies within the Consensus Business Group to boost profits. He says: “People are reading a conspiracy into a problem that isn’t there. We use Cirrus because it is an excellent service.”

The OFT is investigating whether residential home “exit fees” are unfair. These fees are taken when a property is sold, typically when a resident dies. The fee is usually 1 per cent of the sale price, but it can be higher.

If the OFT rules that the fees are unfair, Fairhold will be unable to enforce the lease clause requiring payment. The Consensus Business Group has confirmed that it is one of the retirement home companies in discussions with the OFT.

Mr Davey is calling for a wider investigation of the retirement leasehold sector.

Campaigners at the House of Commons acknowledge that the outcome of an OFT investigation or changes in regulation will take many years to come into effect. However, there are steps that residents can take immediately to address problems with their managing agent or the freehold owner.

Two-step action plan for residents

Setting up a Right to Manage company

Thousands of residents are joining together to take advantage of rules laid out in the Commonhold and Leasehold Reform Act 2002, which gives leaseholders the right to manage their own blocks. Residents can throw out their existing managing agent without the need to prove any wrongdoing if half the residents support it.

The process involves setting up a Right to Manage company, which becomes responsible for day-to-day management and maintenance.

Residents must serve a notice on a landlord, after which time the management transfers from the landlord to a Right to Manage company set up by the residents. Once the ability to manage the property has been transferred to the residents, it is possible to elect a new managing agent. The process typically takes five months, but the landlord can issue a “counter-notice”, potentially doubling the time it takes to complete.

A spokesman for Lease, the leasehold advisory service, says: “You need to know about company law if you are going to set up a Right to Manage company or to employ someone to run the company for you.”

It is possible to get outside help from a fee-charging company, such as the Right to Manage Federation, which will also complete annual returns and other functions for the Right to Manage company. You can get a list of companies who assist in the Right to Manage from Lease.

Buying the freehold

Leaseholders have the legal right to go one step beyond Right to Manage and buy the freehold to their block from the landlord.

It is possible to approach your landlord informally and to negotiate the purchase of the freehold. However, under the Leasehold Reform Housing and Urban Development Act 1993 it is also possible to force a landlord to sell to an individual or group who represents at least half the leaseholders in the block.

There must be more than two flats in the block to qualify and two thirds must have leases of 21 years or longer. The block must also have no more than 25 per cent non-residential use, such as offices. Usually leaseholders will need help from property experts to proceed. Valuers advise on the cost of purchasing the lease, while solicitors are required to help with the purchase of the freehold.

It is common for the purchase of the freehold to be carried out by a company owned by the residents, which will need to be set up and registered at Companies House.

Once residents have issued an Initial Notice, the landlord can respond with a Counter Notice querying the authority of residents to purchase the lease. A Leasehold Valuation Tribunal sets the cost of the purchase of the lease.

For more information on buying a lease or on Right to Manage, visit www.lease-advice.org or call Lease on 020-7374 5380.