Annette Brooke (Mid Dorset and North Poole) (LD)
I beg to move,
That this House calls on the Government to set up a review of the current fee of up to 10 per cent of the sale price of a park home payable to the park home site owner.
I start by thanking the Backbench Business Committee for selecting this debate. I am reminded of a previous Back-Bench debate on park homes that I led in 2010. That debate was attended by a very large number of Members, and it was an important step in achieving the passage of the Mobile Homes Act 2013, ably piloted through the House by my hon. Friend the Member for Waveney (Peter Aldous). Although our numbers are smaller today, I have received messages of support from several MPs who are unable to attend and speak for various very good reasons.
On many occasions over the years, the House has heard about how mobile park home owners have been exploited and badly treated by some site owners. It is a matter for some celebration that appalling practices can now be prevented through the implementation of the 2013 Act, and there is also the ability to make use of the residential property tribunals. However, there is still work to do to protect and ensure fairness for a fairly vulnerable population.
Today we are focusing on the 10% commission charge that is payable to the site owner on the sale of a park home site. Well over 30,000 park home residents from 975 parks have signed a petition against the up-to-10% commission on the sale price of their homes that is payable to the site owner.
Dr Sarah Wollaston (Totnes) (Con)
Does the right hon. Lady know of any other circumstances in which residents would have to pay this iniquitous charge of 10%, particularly when it often applies to an older and vulnerable group of people?
Annette Brooke
My hon. Friend makes a valid point. It is difficult to think of anybody in a leasehold property who would have to pay such an additional charge. We need to look at what the money is used for, and I shall expand on that later.
Alok Sharma (Reading West) (Con)
I have had representations from residents of Garston Park caravan park about their concern that 10% is indeed a very high figure. The Mobile Homes Act says that the charge on the sale of a home can be up to 10%. Does the right hon. Lady have any statistics—or perhaps the Minister can give them when he responds—on how many park home owners are charging 10% as opposed to a lower figure?
Annette Brooke
I think we will have to rely on the Minister being informed of that number. It has not been drawn to my attention that anybody charges less than the maximum, as is usually the case when a maximum is set.
In July, over 200 park home owners travelled to London to lobby their MPs. That is an amazing number given the distance and the age of many park home owners. It is important to note that their campaign has no funding whatsoever.
There are at least three elements to a site owner’s income, including the initial siting of the mobile home, the pitch fees, and the commission payment. On the siting of a new home, a site owner may purchase a new unit at a wholesale price and will incur further costs such as transportation and connection to services. However, it is reasonable to assume that the final selling price will exceed all costs incurred, and perhaps produce a significant return. As soon as the home is re-sold, the commission clicks in. In another scenario, a park home owner could replace their home, meaning that they will be charged for connections to services and landscaping, leading to more potential profit through re-charging—and again, when the unit is sold, the commission will click in.
On pitch fees, research by the National Association of Park Home Residents in November 2013 revealed that monthly pitch fees in 1,075 parks varied from £40 to £382, with an average of about £150 per month—quite a lot for people on fixed incomes. The 2013 Act will introduce some accountability, with an annual review of pitch fees, an opportunity for park home owners to challenge pitch fees on the basis of lack of maintenance or deterioration of the site, and a requirement for site owners to justify increases above the retail prices index. I hope that there will also be fully published audited accounts for these transactions.
On the commission itself, it is sometimes argued that this payment provides an important income stream to the site owner, and it is equally argued that the payment is essential for site improvements. A case is also put forward that it is not in the interests of park home owners, who are often on low incomes, to pay higher pitch fees out of current income, as would be required without this sales commission. In that sense, it might be seen as a deferred payment. I do not want to create unintended consequences, and hence I am not following the wording of the petition in asking that the commission be scrapped or reduced, but calling for a review. I think we need some facts.
Steve Brine (Winchester) (Con)
I was at the rally in the summer and saw the strength of feeling about this issue, which we are right to bring to the Floor of the House. I completely concur with the right hon. Lady’s view that we must not legislate in haste and repent at leisure. She will be aware of the report from the Deputy Prime Minister’s Office back in 2002, which sounded a note of caution about abolishing the 10% charge, saying that pitch fees could rise to between 20% and 32% if we did that. Having a review is absolutely the right way to go, and I back her on that as a fellow officer of the all-party group on mobile homes. I also congratulate her on securing this debate.
Mr Mike Hancock (Portsmouth South) (Ind)
Another issue is whether site owners that are local authorities use the same policies. Any review should encompass local authorities that own parks and also have the 10% rule, because they certainly do not justify the fee they take for the pitch in terms of work carried out on sites.
Annette Brooke
I was not aware of that. We could demand transparency in that regard and find out how much of the commission fee was ploughed back into improvements on the site.
Alok Sharma
The right hon. Lady makes an interesting point about transparency. A lot of these park homes are owned by individuals and private companies, so there is not the level of transparency in the accounts that one would expect. Does she agree that as part of a review, we should ask park owners to be a little more open to demonstrate whether a reduction in the 10% charge would really hit their bottom line as much as they say?
Annette Brooke
I absolutely agree. Transparency is the key to finding the right answer for everybody in this scenario.
Obviously, a site owner must get a reasonable return on capital, and we want to encourage good site owners to remain in the industry. Park homes are an important part of the housing supply and should be encouraged. The Government acknowledge that the park homes sector plays an important role in the provision of low-cost housing for the elderly, and that it frees up under-occupied homes that are much needed as we face a housing crisis. However, with pitch fees, other overheads and the 10% commission, many residents worry that the costs of owning a park home are becoming unviable. The 10% commission charge is undoubtedly a matter of concern. Although it is now paid by the purchaser, it does reduce the sum of money paid to the seller.
Park operators have argued that they cannot remain in business without the 10% commission charge, yet our petitioners have pointed out that it would be foolish for a business to rely on an income that is unpredictable. It is difficult to predict how many new homes will be purchased, or used homes re-sold, in a year. Many residents reported feeling trapped in their homes and unable to sell. Owing to park rules, many sites are only for people of retirement age, and so the need to move into a nursing home or some other form of residential care is a real possibility. Having to give the park operator such a high percentage from the sale of their home reduces the amount the seller has to put towards their care.
Park home owners feel discriminated against and ask, “In what other leasehold property arrangement would a payment be made to the leaseholder on the sale of the property?” They cite examples of poorly maintained sites and no real improvements over time, and a perception of a luxury lifestyle for some site owners. Clearly, there are counter-examples of exemplary site owners, which I welcome, and I would like them to showcase their best practice. Transparency and published accounts would be helpful, to encourage all site owners to follow best practice.
Park home owners also point out that the value of the property is influenced by their contribution to the home’s value via its upkeep and maintenance, and argue, “Why should the site owner benefit from this contribution?” That is a good point.
Steve Brine
The Department put together an excellent document, “Park homes: know your rights”, following the legislation promoted by my hon. Friend the Member for Waveney (Peter Aldous). In the past, site owners were part of the sale, because they had to approve it, but the 2013 Act has taken them out of that equation. Did the right hon. Lady take that into consideration when preparing her speech?
Annette Brooke
The park home owners say that that gives even less justification for the 10% commission, because the site owners are not involved any more.
I received an interesting representation from a park home owner, who wrote:
“I am not personally in favour of abolition of the sales commission. This would remove an opportunity to improve the sector. Linking a reduced sales commission to site owner performance will improve site maintenance, sustain home values and assist mobility.”
That is an interesting idea and perhaps we could work it through.
Gavin Shuker (Luton South) (Lab/Co-op)
The residents of Brickhill Farm and Downlands park homes in my constituency would welcome the right hon. Lady’s general approach to the debate. Clearly, the 10% commission is having a behavioural effect on whether people are able to move and how they do so. Surely that should be the major point to consider when it comes to reviewing the effectiveness of any legislation or legislative change.
Annette Brooke
The 10% commission has wide-ranging impacts and they need to be considered. It is only now we are hearing about some of those impacts, as the voices of park home owners grow louder. If we had a review, their input would be vital.
Given that the commission is an unpredictable income stream depending on how many units are resold over a period of time, the question remains of whether it is a windfall gain or an essential source of money for site improvements. It is very difficult to answer that question without a review.
The Mobile Homes Act 1975 limited the commission to 15% and the Mobile Homes Act 1983 limited it to 10%. Is it not time to have a proper independent review to establish whether the current situation is justified or whether there is a case for a change? I am absolutely sure there is a case for more transparency.
Conor Burns (Bournemouth West) (Con)
I was delighted to support my right hon. Friend’s application for this debate. She knows that there are a number of park homes in the north of my constituency. I thoroughly endorse all the points she is making. Put simply, she is sensibly and correctly asking for a review—a very modest request—and I have noticed the shadow Secretary of State, the right hon. Member for Leeds Central (Hilary Benn), nodding in agreement with some of her remarks. She is approaching the issue in a sensible way and I hope the Minister, when he responds, will grant that review, which would be welcomed by all.
Annette Brooke
I thank my hon. Friend and constituency neighbour for that intervention. Obviously, we are mutually aware of the issues that occur on the park home sites in Poole, Bournemouth and Dorset.
In 2012, the Communities and Local Government Committee concluded in favour of retaining the 10%, but did we have the review I am asking for? I do not think we did, because the sequence of events shows that the Committee relied heavily on the conclusions of a 2006 Government consultation published in 2007, which in turn relied on a report published in 2002. National associations for park home owners feel that the 2007 conclusions were heavily biased towards site owners and their trade bodies. I believe that, in total, there were only 1,250 responses to the consultation. I would be interested if the Minister could confirm that. If we had a consultation today, I think the response would be very different. I believe the responses came from only 230 parks, which is a limited number.
The park home associations did not accept the conclusion that the majority of park home owners wanted the commission to remain. Questions have also been raised with me about the independence of the 2002 report. It is only in recent years that individual park home owners have made their voices heard in very large numbers and accessed democratic processes via petitions and lobbying, led by my amazing constituent Sonia McColl and others, complementing the work of their excellent national associations, including the National Association of Park Home Residents and the Independent Park Home Advisory Service. The situation is different from 2006. Our park home constituents are aware of their rights and know how to make their voices heard, but we as MPs need to respond.
We need a review that looks at the viability of the industry and that listens both to site owners and to park home owners. I do not prejudge the outcome of any review. It might conclude that the situation is best left as it is, but with openness, fairness and transparency to ensure no bias either way, all parties will understand the conclusions.
Interestingly, I have looked at what has happened in the Welsh Assembly. Following a short debate in July 2014, it agreed to review the data and evidence contained in the 2002 publication “Economics of the Park Homes Industry” and the 2006-07 consultation. A review has been undertaken and the Assembly awaits the report. This month, the Minister for Communities and Tackling Poverty wrote in a letter:
“I feel a further review of the economics of the mobile homes business is necessary before a decision on amending the 10% commission rate can be considered. I do though feel the Mobile Homes (Wales) Act 2013 needs time to be embedded before a further review is conducted. It is, therefore, my intention to commission further research into the economics of the park home industry and the implication of amending the commission rate, in late spring 2015.”
I do not think we should be embarrassed about following the lead of one of the devolved nations.
I would like to see the review process started shortly in England, with the setting of the terms of reference, the processes for looking at the economics of the industry and the commissioning of a study. Detailed consideration of the retention or alteration of the 10% could be dovetailed a few months later into a review of relevant aspects of the Mobile Homes Act 2013.
I emphasise that I do not want unintended consequences that would increase burdens on vulnerable people on low incomes with increased pitch fees. I want a viable park home industry, but I also want to be sure the system is fair to park home owners. The review process should start sooner rather than later.
Graham Jones (Hyndburn) (Lab)
I congratulate the right hon. Member for Mid Dorset and North Poole (Annette Brooke) on bringing this issue to the House’s attention once again. She has been a sterling campaigner on it for many years, and we should congratulate her on some of the successes and advances that have been made for our constituents in mobile homes, for whom the legislation has changed for the better. I want to place on the record my thanks to her.
This issue affects many Members, and I know that quite a few of them cannot be in the Chamber today. They include my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who would have liked to speak but is in a Public Bill Committee upstairs.
Today, I am here to represent the residents of Carter Hall park in Haslingden and Harwood Bar park in Great Harwood in my constituency. Like residents in park homes across the country, those in my constituency are up in arms about the 10% point-of-sale fee that is still levied on static and mobile park homes sales. Much action has been taken in Parliament in the past few years that park home residents can be pleased about—the right hon. Lady highlighted the gains that have been made—but the 10% levy, which is a source of much anger and frustration, still has not been addressed.
The reason park home residents are frustrated, if not angered, is that no other form of property ownership is subject to this form of exit charge—set at an arbitrary level—at the point of sale. If a similar charge affected bungalow owners or those in terraced properties, I am sure that the House would seek measures to redress such a matter. That point was raised by the hon. Member for Totnes (Dr Wollaston), who is not now in her place.
Legally, park homes are mobile homes, but in reality they are permanent and stationary. Moreover, such park homes are my constituents’ primary residencies, and regulations need to take account of the fact that they cannot choose simply to up sticks and move to a park home with a better contractual offer. My hon. Friend the Member for Luton South (Gavin Shuker) made that point when he mentioned behavioural effects.
Bill Wiggin (North Herefordshire) (Con)
My constituents’ feelings on this matter are very similar to those of the hon. Gentleman’s constituents. What makes it worse is when a park home owner has not helped their investment in the park home to grow, because they then feel that they are being hit twice as hard.
Graham Jones
The hon. Gentleman makes a very good point. I will move on to transparency, which is crucial, as is the contractual relationship between the park home owner and the residents, tenants or owners. It is important to have transparency so that people can see how their money has been allocated and how it has been spent, because part of what they pay, via the park home owner, is for maintenance. That is one of the missing elements in this debate.
Many of my constituents who live in park homes are elderly, and to lose 10% of the capital in their property is a huge financial blow at a point in their life where they may be looking to fund their retirement or even their care. Frankly, even if they do not intend to use the money for any particular purpose, it is their property, and in my view an exceptional 10% charge requires an exceptional justification.
Mobile home owners are clearly not people of significant means. Is there not a disconnect here? Is it not obvious, as the hon. Gentleman has said, that there is a gap between the interests of the owner of a site and those of the residents on it? The key point in the argument about the 10% levy is to ask why and for what purpose the money is raised, and how it is allocated. There is such a lack of transparency.
Everyone accepts that park home owners need a revenue stream to manage and service the park, which is the source of their livelihood. I accept the point made earlier that that may lead to a rise in site fees, but it is done as part of a transparent process. Such transparency otherwise seems to be lacking at the moment, which is one of the key issues.
There are key concerns about the transparency of the legally defined and arbitrarily set 10% fee. The residents in my constituency can see no evidence of how the money that is taken is used to improve the park in which they live. I suggest that the Government look again at the fee, and explore ways in which to inject transparency and confidence into the system.
If the Government regard the fee simply as an income stream that is guaranteed to the park owner regardless of any service provided, that will come as a great disappointment and even a source of anger to my constituents. In their view and mine, the revenue for park owners can be taken only in exchange for services provided. Residents need to be able to audit the fees, and have confidence that they are properly used.
I reiterate that I completely understand that park home owners need to have an income. However, sales are not constant and cannot be predicted year on year, so the argument that fees are vital is shaky at best. I know that my constituents simply regard the fees as greed. Indeed, they provide an incentive for park home owners to encourage a churn of residents, because they gain the 10% fee each and every time there is a transfer, and therefore become better off. The incentives in the process are a cause of deep concern. It is worrying that the single 10% fee is payable on each transfer of property, because an accumulation of transfers leads to greater wealth for the park home owner. It may also provide a disincentive for them to maintain the site, to look after owners on the site and to have longer tenancies or permanent residents.
As I mentioned in relation to the right hon. Member for Mid Dorset and North Poole, we have had huge success during this Parliament—I must say that that has been on a cross-party basis—in undoing some of the historical unfairness for park home residents, and it is vital that we continue in such a vein. Park home residents are well organised and have legitimate grievances. The issue of this 10% fee will not go away with well-meaning words and expressions of understanding from the Dispatch Box. They need to have confidence in the fact that steps are being taken to address the lack of transparency with regard to the fees.
My constituents simply want some confirmation that the issue will not be allowed to go away, but that the Government will continue to address and consider it, and that there will at some point be some redress or a change in legislation so that there is more transparency on the 10% anomaly and so that there are far clearer transactions between owners and residents, with people understanding what they are getting into and able to move from one site to another should they so choose, rather than being stuck in a particular site because they are bound by the 10% fee.
Peter Aldous (Waveney) (Con)
I am grateful to my right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) for securing this debate. I am very much aware of the significant amount of work that she does for park home owners, for whom she is very much a champion. It is right for the House regularly to consider issues that the park home sector faces, and this debate provides us with such an opportunity.
The background to this debate is that my right hon. Friend’s constituent Sonia McColl—she runs the Park Home Owners Justice Campaign and is likewise a stalwart champion for park home owners—has delivered a petition of more than 31,000 signatures that calls for a debate on reviewing the 10% commission. I have considered the motion carefully. Although I welcome this debate and understand the reasons and sentiments behind the motion, I am not able to support it. I shall explain why briefly.
As has been said, I had the good fortune to pilot the Mobile Homes Act 2013 through the House. It was a privilege to do so and I pay tribute to the other Members who had campaigned for many years beforehand, including my right hon. Friend the Member for Mid Dorset and North Poole, my hon. Friend the Member for Christchurch (Mr Chope), the hon. Member for North East Derbyshire (Natascha Engel), my hon. Friend the Member for Winchester (Steve Brine), my hon. and learned Friend the Member for South Swindon (Mr Buckland) and the hon. Member for Epping Forest (Mrs Laing), as well as Lord Graham of Edmonton and Lord Best.
The 2013 Act addresses the appalling practices that have emerged in the sector in recent years, such as park home owners being bullied, intimidated and driven out of their homes by a minority of owners who are, in effect, gangsters. It also puts in place a framework under which park home sites can be better managed in a more transparent way.
In presenting the Bill, I was fortunate that a great deal of research had been done on the way the sector worked, identifying the problems that needed to be addressed and coming up with solutions. In many respects, the cornerstone on which the 2013 Act was built was the report on park homes by the Communities and Local Government Committee that was published in June 2012. The Committee considered the 10% commission on sales and heard evidence on the matter. It concluded that the right of site owners to receive up to 10% commission from the sale of park homes should remain. The same conclusion had been reached by the previous Government as a result of their 2006 consultation on park home commission rates.
I am mindful of the findings of the research carried out by Consumer Focus, which was published in its report, “Living the dream? An investigation into life on park home sites in England”, in October 2012. It concluded that the issues that needed to be addressed as a priority were improving local authority licensing, addressing the poor maintenance arrangements that prevail on some parks, introducing greater transparency in the process of paying utility bills and, above all else, tackling the problems of sale blocking and intimidation. Its research did not identify the 10% commission rate as a major problem that needed to be addressed as a matter of priority.
Annette Brooke
I congratulate my hon. Friend again on the Mobile Homes Act 2013, which addresses the very worst problems, but there is still a lot to be done. Does he not agree that we should look at the issues that concern park home owners in a balanced and unbiased way?
Peter Aldous
I agree with my right hon. Friend that there is an awful lot of work to be done in the sector. As I complete my remarks, she will see that I do not think that now is the right time to look at this one issue in isolation. The 2013 Act was one of the biggest changes in the sector in 30 years. I think that it needs to bed down and that we should then carry out a full review.
I have learned a great deal about the sector in the past two and a half years. One message that I have very much taken on board is the importance of achieving an equilibrium—a balance whereby park home owners can enjoy a high standard of living, a peaceful environment and quiet enjoyment, while responsible site owners can manage their parks efficiently and properly, and make a reasonable living and a return on their investment. In the feedback that I have received from responsible and good park home owners in my constituency, the concern has been expressed that if the 10% commission were removed, that equilibrium would be lost.
Given that there are fewer opportunities for new developments on sites and that the lifespan of homes is increasing, site owners are very reliant on pitch fees and sale commissions for their income. The majority of their income is derived from pitch fees—the figure of 70% has been mentioned to me—with sales commission providing much of the remainder. In many cases, the income from sales is the difference between profit and loss. I have seen figures to confirm that. Changing the 10% commission rate might therefore lead to some businesses becoming financially non-viable. That could result in cuts being made in the management of parks, with less money being spent on investment in infrastructure such as roadways, footpaths and communal areas. The result could be that parks take on a more run-down, down-at-heel appearance, which would have a negative knock-on effect on the value of the homes.
Stephen Barclay (North East Cambridgeshire) (Con)
My hon. Friend speaks with authority, given his long-term commitment to this matter. However, I take issue with his point on the deterioration of standards. Is not the issue the bundling of costs? As a fellow Conservative, I would have thought that he would be concerned at the bundling of costs into an overall price, which means that the sale price and the 10% commission do not reflect the services that are being offered. The review will deliver greater transparency on what services are being offered, what the price of those services is and what competition might be introduced in respect of those services, so that there is not just an overall 10% figure that may or may not have a bearing on what the park owner is delivering.
Peter Aldous
In the fullness of time we need to consider the whole way the industry operates, but if we rush to take away this income stream, there is a danger that we may affect viability and cause problems on good parks.
Research undertaken under the previous Government in 2002 by Berkeley Hanover Consulting was considered by the Communities and Local Government Committee in 2012, and viewed as still being valid. It suggested that if the 10% commission was abolished, pitch fees would rise by 20% to 32%, which could impact on the attractiveness of the sector. In summary, there is a legitimate worry that changing the rate of commission could have unintended consequences. It could lead to higher pitch fees, which would in effect be robbing Peter to pay Paul. At worst, it could lead to a significant decline in the standard of parks, and their maintenance, state of repair and appearance.
Bob Stewart (Beckenham) (Con)
Would an increase in fees be fairer than a 10% cut when someone is trying to sell? It seems to me a fairer proposition.
Peter Aldous
I certainly take that on board.
The Mobile Homes Act was the biggest shake-up in the park homes sector for 30 years, and it will take a few years to settle down and be implemented fully, properly and effectively. The feedback I have received is that the legislation is providing local authorities with the means of working with park home owners to bring rogue site owners to account, ensure that parks are properly managed and run, and ultimately to drive those bad apples out of the sector.
There remains much work to be done to make the new sale process work better. On good, well-run sites, in the past home owners have relied on responsible site owners—the good apples—to do much of the work for them when it came to selling their homes. Now that site owners have been removed from the sale process there is a vacuum to fill, and I am afraid that the legal, conveyancing and estate agency professions are not coming forward quickly enough to fill that void. That problem needs to be addressed now.
Natascha Engel (North East Derbyshire) (Lab)
The hon. Gentleman mentions estate agents. A 10% charge is taken by the site owner, but residents also pay estate agent fees, so that is one injustice. This measure is not being done in haste; as he said, this has been 30 years in the making. His Bill was important because it dealt with the most serious injustices, but it left out the 10% commission because it was so complicated and contentious. Why is the hon. Gentleman fighting against a review? We are asking to look at all aspects of the 10% commission, specifically in a review. Why is he so hesitant to have such a review and consider those aspects?
Peter Aldous
I am not opposed to a review, as I will say when summing up my remarks, but it is about the timing of that review and the way it takes place. I understand —I would be grateful if the Minister confirmed this when he sums up the debate—that the Department intends to carry out a comprehensive review of the sector in 2016, three years after the Mobile Homes Act received Royal Assent. One of the main tasks in that review will be to assess whether the fit and proper persons test should be applied to those seeking to manage parks, and I suggest that at the same time the whole sector should be reviewed, including the commission rate. I believe that is the right way to consider this matter, not on its own ahead of that comprehensive review.
Those are my findings on this situation, and as I said, we must seek to maintain an equilibrium and ensure that responsible site owners get a fair return. When introducing the Bill it was important to maintain understanding and consensus on all sides, but I fear that we are perhaps in danger of losing that consensus. That is the basis on which I hope we can proceed.
Natascha Engel (North East Derbyshire) (Lab)
I add my thanks to those of other hon. Members to the many campaigners who have gone before us in the previous three decades—at least—who have sought justice for people who live on park home sites. I thank Lord Graham of Edmonton, who has done so much work on park homes over many years. The right hon. Member for Mid Dorset and North Poole (Annette Brooke) has led the charge for many years and I thank her for her work. We have got to know her heroic constituent Sonia McColl extremely well. She has become the park home owners’ agony aunt, answering e-mails and phone calls into the night, dealing with some very distressed individuals. She also set up the Park Home Owners Justice Campaign. She has done magnificent work.
I thank my predecessor, Harry Barnes, who led the campaign in the 18 years he was in the House before me. Many of the people who live in North East Derbyshire’s park home sites would like to thank him. Most of all, I thank all the tireless campaigners in the eight park home sites in North East Derbyshire. Hundreds of people live in the park home sites in Riverdale, Millfield, Brookfield, Ponderosa, Sunningdale, Poplar Drive, Grasscroft and Bramley.
The 2011 census showed that something like 160,000 people lived in 84,000 park homes in about 2,000 UK sites. Those figures might be out of date, but more people and not fewer live in park homes. Most park home sites have a rule that people must be 50 or over to live there. Therefore, by their nature, they are places where people go when they have sold up in order to live off the money they have released from their homes. They are on low incomes, and they tend to be elderly and vulnerable. They live in isolated areas, because the sites are on the edges of communities. As the right hon. Member for Mid Dorset and North Poole said, many of them are very frightened.
Stephen Barclay
I concur with that. Is not a further problem that those people cannot possibly have an idea what the charge will be, because, by its very nature, it will be decided in future? They will not know what the sale price is, and therefore even an informed consumer cannot consent to it.
Natascha Engel
That is a key element, and the Park Home Owners Justice Campaign group has made exactly that point. How can the charge be such a fundamental part of the necessary profits of site owners—it is necessary according to the site owners—if they cannot say when the profits will come? I will go into more detail on that.
Hon. Members are enormously grateful to the hon. Member for Waveney (Peter Aldous) for promoting as a private Member’s Bill what became the Mobile Homes Act 2013. It has and will make a huge difference. The Act is bedding down. He is very lucky to have so many good apples as site owners in his constituency. All the bad ones have come to mine. As a result of the Act and other legislation, the intimidation has stepped up a level. As campaigning MPs, we need to ensure the involvement of the local authorities.
I do not recognise the picture the hon. Gentleman paints. I understand the importance of consensus, and as hon. Members have said, we do not want to deny park home site owners a good living. They have a very good living at the moment. All we are fighting for is justice. The 10% commission is a fundamental injustice in the sector and I will go into detail to explain why.
The 10% commission is a flat fee. It was initially intended as a maximum commission, but it is a flat fee of 10% no matter the value of the home, how long somebody has lived there, and what improvements people have made to their homes. The homes in my constituency are absolutely beautiful. There is a reason why the report mentioned by the hon. Member for Waveney is called “Living the Dream”. It is absolutely idyllic living on a park home site with like-minded people. It is quiet and beautiful and on the edge of beautiful countryside. It should be absolute heaven in retirement, but improvements are paid for and done at great cost to the people who live there, not to the site owners themselves.
The biggest reason the site owners give, as the hon. Member for Waveney said, is profit margin. With the profit margin, 70% comes from pitch fees and 30%, as the right hon. Member for Mid Dorset and North Poole mentioned, is from income that is not secured—residents do not know when it is coming. They are told that it is an essential revenue stream for the maintenance of park home sites. I can hear almost every single one of the 600 residents in North East Derbyshire sighing and saying, “If only”. On the sites we go around, there are loose cables and tree roots growing into water pipes that are not being repaired. Massive costs are incurred where there are leakages. As we all know, utility bills are collected on the whole of the site—there is one bundled-up price. Therefore, if the site owner does nothing about the burst pipes, it is the residents who pay.
Stephen Lloyd (Eastbourne) (LD)
Does the hon. Lady agree that there are numerous examples—certainly on pitches in my constituency and probably on those in the constituencies of other hon. Members—of site landlords simply refusing to act? They are challenged; something is pointed out to them but they simply do nothing.
Natascha Engel
Yes, and I go back to the point about the type of residents. There are some brilliant campaigners, but all of them are very elderly. What can they do if a site owner is never to be seen, especially when there is work to be done and something has to happen? They are either left to do it themselves—a lot of people are just not able to do it themselves—or they have to live with the fact that there are lots of dangerous things lying around and things are just not sorted out.
We hope that enforcement on the part of the local authority can now happen, but it is very difficult to do in practice if a park home site owner is reluctant to do anything because it costs them money and bites into their profits.
Peter Aldous
The image that the hon. Lady is portraying is the view I have of the one bad park home site in my constituency. Does she not agree that the Mobile Homes Act 2013 provides the means to address the problem?
Natascha Engel
We hope it will address the problem. One of the really big issues previously was that there was nobody to enforce the licence unless it was a matter for the police, in which case it was a criminal matter and out of everybody’s hands anyway. We hope it will be a very important change, but certainly in North East Derbyshire the legislation needs to settle down. The 10% flat rate seems enormously unfair when site owners are saying it is absolutely essential for the maintenance of the park and no work is ever done. On the contrary, residents are doing all the work and having to pay out for everything.
Bob Stewart
This is the first I have learned of the problem. I have listened to the debate and I am absolutely appalled. The 10% fee sounds like daylight robbery. It is fair to charge a rent for a pitch; it is grossly unfair to charge 10% for nothing. It is robbery.
Natascha Engel
Absolutely; in fact Rick and Bill, from one of the park home sites in North East Derbyshire, made a T-shirt with “Daylight Robbery” on it, which is selling like hot cakes. It is a funny point, but about something serious. This is daylight robbery from people who cannot afford it. That is the really awful aspect. It is exactly as the hon. Gentleman describes: it feels such a terrible injustice that people pay out and get absolutely nothing in return.
I have mentioned this before in a debate, but it is also interesting to remember that when park home sites first started, the type of people who owned them had a social conscience. Part of the reason why utilities are bought in bulk now is that the site owners used to do that and then pass on the savings to the residents. Now the absolute reverse is true, certainly in many of the sites in my constituency, where although utilities are bought in bulk, everything is completely un-transparent. No one can see what they have used or how much money is being charged, and the site owners tend to add a little administration fee, on top of the pitch fees, on which a lot of them are making a disgusting amount of profit. That really should not be allowed, and it is also something that should be taken into the calculations.
As we have said before, what we are asking for is very reasonable: a review of just one thing that was not included in the private Member’s Bill of the hon. Member for Waveney. That would also be an opportunity for those who disagree with us to make their case. The most interesting thing in the speech by the right hon. Member for Mid Dorset and North Poole was the fact that the evidence relied on, certainly in the consultation for the private Member’s Bill and under the Labour Government, is from previous research that has never really been updated. As the sector is now much more organised, the people taking part in consultations are ever increasing in number and, thanks to Sonia McColl, have a proper focal point. I therefore urge the Minister and the shadow Minister—the Minister in what I hope will be an incoming Labour Government—to commit to having a review, simply in recognition of the fact that there is a problem. It is not a problem for the site owners, but it is for those who live on the sites.
Transparency and clarity are enormously important. Under the last Labour Government, a regulation was proposed to make any changes clearer and to require site owners to make it clear to those buying park homes that they would face not only pitch fees and utilities bills but the 10% charge at the end their time. That should have been a requirement, but unfortunately it was never implemented. It is all there in the Department; perhaps that regulation needs to be brushed down, so that we can have a look at it before the general election.
As I have said, we do not want to deny site owners a living; it is just that, certainly from anecdotal evidence and the kinds of cars they drive, we can make quite a safe assumption that the profits they are making, on the backs of vulnerable people, are extremely high. Therefore, it is reasonable for us to have another look at this extortionate commission of 10%. The right hon. Member for Mid Dorset and North Poole mentioned this, but it would also be a good idea for the review to look at minimum maintenance standards on site, so that if people are paying 10%, the site owner has to commit in return to maintenance up to a certain standard and within a certain timeframe. That would go some way to addressing the injustice that people feel. We could look at that in the review, and there would then at least be a proper justification for the site owners to take that 10%. At the moment, it is daylight robbery; people are getting nothing in return for it.
It was interesting to hear about park home sites that were council-owned. Bramley Park site in my constituency used to be council-owned and is now in private ownership. It does not charge the minimum 10%. The same owner charges the 10% at another park site in the constituency, but he seems to manage perfectly well without charging it on the former council-owned site. Perhaps we could look further into that in the review and assess the profit consequences to a park home site owner if the 10% commission were to be abolished.
Some people think of these mobile homes as caravans, but they are not mobile; they are entirely static. As mentioned earlier, there is one set of rules for people who live in bricks-and-mortar homes, and a different set of rules for these static caravans. Yet these are people’s homes; it is where they live. It is where many of them will live for the rest of their lives. Some have quite a high value. Some of these homes go for between £150,000 and £200,000—often reflecting how beautiful they are. We are not talking about peanuts.
Annette Brooke
When the commission first began to be charged, we were talking about home prices of between £10,000 and £20,000, yet now we are up into the realms of £250,000 for a new park home, and even trading prices can be at least £150,000. These are very large sums of money, yet we do not know exactly what the commission is used for.
Natascha Engel
That is an important intervention. One of my constituents has written:
“Under the new rules a Site owner has no dealings with the sale of properties, not even to notify the provider of essential services…Water, electricity etc. We do that. All he has to do is get his secretary to delete one name and enter another. A huge commission for a two minute job.”
I think that rather makes the hon. Lady’s point.
The review should look at another problem about which residents have written to me. On one park, an elderly resident had gone into a care home before she sold her home. We need to note that none of my constituents were happy for me to use their names. They wanted to remain anonymous because they are absolutely terrified of the consequences that might follow from their site owners. I would like the Minister to listen to this letter, as it reveals a really serious problem. It states:
“In respect of the new Mobile Homes Act 2013 particularly on the sale of homes, it appears that problems are occurring on properties that are for sale and empty due to either the home owners moving to another property or into a nursing home. Although the ground rent is continuing to be paid, our site owner is claiming that if the property is empty then the home owner is breaking the law within the implied term which states that the home must be kept in a sound state of repair and must be the sole residence of the occupier. It appears that our site owner then sends a solicitors letter to that effect to the seller and also sends out surveyors to check the exterior of the property who obviously find many major defaults and state the property is not worth anything! This then means that any prospective purchaser cannot purchase the property because it is in the hands of the site owners solicitors pending court action!”
That was not the first time I had heard about that problem, which relates to the wider context of the 10% commission issue. We really must have a proper and careful look at this. One positive consequence of setting up an independent review is that many such examples, which I have become aware of only recently, would be brought to our attention. Many of these real injustices, which simply would not be tolerated for homes of bricks and mortar, could be highlighted. That would be most useful.
I hope that when the Minister and the shadow Minister wind up the debate, they will commit to setting up a review and will ensure that the review is independent. We would very much like to help out with the review, but what is most important is for it to be independent of not just site owners, but any other pressure groups. We must ensure that its findings are regarded by everyone as fair and justified. It is high time that we updated what is, by now, quite ancient research.
Notwithstanding what was said by the hon. Member for Waveney, I think that time is of the essence. One of the tragic aspects of this issue is that many people have died since I started the campaign: they have died waiting. Many of those who are alive are elderly, and time is clearly of the essence for them. This is an injustice that needs to be dealt with sooner rather than later.
It is unfortunate that many of the changes for which we have been lobbying have got lost between general elections. I should dearly love to see a review set up now, with a definite timeline and involving cross-Bench consensus, so that we can ensure that something happens, and happens very quickly. I should be very grateful if the Front Benchers would be specific about whether there will be a review, how independent such a review will be, and, above all, what the timeline will be.
Jeremy Lefroy (Stafford) (Con)
It is a pleasure to follow the hon. Member for North East Derbyshire (Natascha Engel), and, indeed, all who have spoken so far. I congratulate my right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on instigating the debate, and on making such a powerful case. I also congratulate my hon. Friend the Member for Waveney (Peter Aldous) on all the tremendous work that he has done in piloting his Bill through the House.
I will not repeat the arguments that have been advanced so powerfully this afternoon. I will, however, quote briefly from an e-mail that I received from a constituent who lives in Lodgefield park in my constituency. He writes:
“Home owners are having great difficulty in selling partly because of the 10% which in effect makes their homes over-priced on the market. This means that owners are trapped in their homes and unable to move unless they drop the price to a level where they are unable to purchase anywhere else.”
He also makes the interesting point that if home owners are selling to fund care, the state, if they come to rely on it, will lose quite a large sum through the 10% commission. That point may be tangential, but I think that the Government should bear it in mind none the less, given that in such cases there will ultimately be a cost to the Treasury.
The only other point that I want to make concerns transparency, to which many Members have referred. There are three elements of the income that comes to park home site owners. First, there is the income to cover their current costs, the year-by-year costs of maintaining the park. Secondly, there is the income to cover capital improvements to the site. That is very important, not least to those who live in park homes, because they want to see improvements to their properties which will increase their value. Finally, quite rightly, there is a surplus or profit element.
Every Member who has spoken has acknowledged that site owners have a right to see a return on their investment, but I, like others, would like to see more transparency. We are told that the commission is needed because, without it, pitch fees would rise substantially—by 20% to 30%, or even more. I am not sure that I entirely understand that. The corollary is that, in a year in which a number of homes have been sold in a park, the site owner would be expected to say “We can reduce pitch fees this year”, or “We will not apply for an increase, because we have received so much income from the 10% commission.” I have yet to hear of such instances. There may have been some, but they have not been brought to my attention.
I agree with what was said earlier by my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay). We need to see an unbundling—a transparency —in regard to both revenue and capital costs. Those who live in park homes would then be able to see clearly what had been spent on maintenance and on capital improvements, and what remained as a surplus. I am sure they would welcome that information being made clearly visible, because these matters have an impact on their quality of life and on the capital value of their home.
Such transparency would take a lot of the heat out of the debate. For example, people would be able to see that there might be cases in which a fee of 10% was reasonable in a particular year, just as a fee of 0% might be appropriate at other times. There could also be a strong case for transferring most of the cost to annual fees, or for introducing a mixture of a capital fee and a revenue fee. This is the opportune time for the review that my right hon. Friend the Member for Mid Dorset and North Poole has proposed, and I hope that those on the Government and Opposition Front Benches will concur with that view, as the hon. Member for North East Derbyshire (Natascha Engel) requested, because many people living in those homes are coming to the end of their lives and a solution needs to be found. Transparency is what we need.
Stephen Lloyd (Eastbourne) (LD)
I apologise for coming late to the debate, Madam Deputy Speaker. I had to deal with an urgent constituency matter, and I want to put on record my apologies to you and to the previous Deputy Speaker.
My right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) has been a doughty campaigner on this issue for many years and I congratulate her on securing this debate. I am also grateful to my hon. Friend the Member for Waveney (Peter Aldous) for introducing his private Member’s Bill. It took 30 years to enact legislation on this matter, and I should like to express my tremendous appreciation to him for enabling that to happen during his first term in the House. It is also a pleasure to follow my hon. Friend the Member for Stafford (Jeremy Lefroy) as I agree with all he said about transparency. The hon. Member for North East Derbyshire (Natascha Engel) passionately evoked the issues.
I have mobile home owners in my constituency. I supported them as best I could as a candidate before I was elected, and it was then that I came across their astonishing lack of power over their own homes. It was absolutely incredible. As the hon. Member for North East Derbyshire said, these homes are not caravans; some of them are absolutely amazing. They are meticulously kept, with beautiful carpets, for example. They are beautiful homes.
Significantly, the vast majority of the mobile home owners are elderly. Having discovered the lack of power that they had, I then discovered the astonishing influence and sheer maliciousness of some park home landlords. I simply could not believe it. As a naive young—or perhaps middle-aged—candidate, I went to the council, but I was told, “Stephen, what can we do? We don’t have the power to do much about this.” That is how I first learned about the process. I have been a close colleague of my right hon. Friend the Member for Mid Dorset and North Poole for many years, and under her guidance I have since learned a lot more about the iniquities of the system.
On behalf of my constituents, I am particularly grateful to my hon. Friend the Member for Waveney for his private Member’s Bill. I hear his suggestion that we allow it to bed down for a few years, and that we should perhaps step back and take a little heat out of the process so that we can see how it is working—I have tremendous respect for my hon. Friend, with whom I have worked in a number of cross-party contexts—but I disagree with him on that point. I will tell him why.
If I were to sell my house tomorrow, I would be charged between 1% and 2%. Estate agents’ rates are very competitive at the moment. The last time I sold a house, it was valued at about £230,000, so a fee of 2% would have been a couple of thousand pounds. If I had been selling a mobile home, however, it would have cost me £25,000—£2,300 in estate agent fees, plus an extra £23,000. I would have been paying that to the landlord or leasholder, and that is mind-blowing. That would not be so bad if I had tarmac that was always swept and looked after, lights that were kept on and repaired whenever they were broken, bushes and shrubbery that were cut and a landlord who treated me and all the other park home owners with respect. I would still resent it, but I would probably manage my resentment. However, if I was treated with the absolute contempt with which, as I have discovered over the years, some, but not all, park home leaseholder owners treat their tenants or mobile home owners, it would go beyond what my hon. Friend the Member for Beckenham (Bob Stewart) described as “daylight robbery”; it is theft. If the wider world knew that this was common practice and estate agents, who are not popular at the best of times for charging 2%, were getting 10% on top of that, it would just be unacceptable. Why has it gone on for 30 years? It is because this is a small sector; it is a niche. Sadly, before the involvement of the doughty Sonia from the constituency of my right hon. Friend the Member for Mid Dorset and North Poole and the other amazing people who brought this practice to our attention and to that of the public, it went on for many years. Not only were people treated very badly, but they were losing a fortune. It is disgraceful.
So where are we at? The Welsh recognise that the review needs to happen sooner rather than later, so they are going through the process right now. What I say to both Front Benchers is that this is a cross-party issue; there is no problem here. I pay tribute to some of my colleagues who have been pushing this issue for years. We all now understand that the current situation is wrong and it is time that we did something about it. The review should be independent, involving actuarial specialists and estate agents and so on. People who really understand this sector should, independently, have an input to the review and come up with a number of recommendations. They may well say, “Actually, we should keep a commission because of the uniqueness of park homes. Let’s make it 5%, but for that you get X,Y and Z. You get the lawns cut and you are looked after. It is a service rate, like the one that people pay in an apartment block. If you don’t meet that service rate, there are penalties.” This is not difficult, it can be done and there is a cross-party consensus. The first step is to have the review, with robust independent lay people on it, plus specialists and representatives from each of the areas. It will then come up with recommendations, and I am as certain as I can ever be that once the recommendations are made, be it under the coalition Government or whoever the Government are after the general election, there will be a consensus in the House and they will be passed quickly. I hope to receive that commitment from both Front Benchers at the end of this debate.
Mr Iain Wright (Hartlepool) (Lab)
May I begin, Madam Deputy Speaker, by apologising to you, to the right hon. Member for Mid Dorset and North Poole (Annette Brooke) and to the House for not being present for most of the debate? I have been in Committee considering the Small Business, Enterprise and Employment Bill and have just hot-footed it from Committee Room 10. I want to pay tribute to the Minister there, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), who has allowed me to come here, and to the Labour Whip, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who is holding the fort at the moment. However, my constituents come first when I am dealing with matters in this place, which is why I wanted to contribute in this debate.
I am pleased that the Backbench Business Committee considered this matter to be worthy of debate. I pay tribute to my hon. Friend the Member for North East Derbyshire (Natascha Engel) for her work and her strong interest in this matter and to the right hon. Member for Mid Dorset and North Poole for pursuing her case so professionally and with such tenacity.
I wish to make representations on behalf of my constituents who live in Elmtree Park, which is close to the coast at Seaton Carew in my constituency. Comprising 100 park homes, the site caters for people without children who are over the age of 50, and it has a vibrant community life. Indeed, it is a great community, and the people who live on that park are its greatest assets. It is always a pleasure for me to visit the residents, eat their scones, drink their coffee and discuss matters relating to the ownership of their homes.
It is clear, from speaking to the residents of Elmtree Park over many years and from my time as a Department for Communities and Local Government Minister with responsibility for park homes, that the current business model is broken, as it provides far too much power to site owners at the expense of park home owners. Although there are many good site owners who invest for the long term and who want a good and mutually beneficial relationship with residents, far too often the sector sees malpractice, a lack of investment, poor if any maintenance and unscrupulous and often criminal site owners who are content to make a fast buck and fleece residents. Time and again I hear of unfair fees that are opaque and subject to no challenge, poor maintenance of the land, and site owners either making it difficult for home owners to sell their homes or hounding people out so that they can consolidate pitches. Either way, the owners often take a whopping profit when park homes are sold.
During my time as Minister, I was particularly keen to reform the licensing regime to ensure that we incentivised the good park home site owners and punished the bad, to the point of driving them from the industry. I wanted to push the concept of fit and proper persons for site owners so that the sector encouraged responsible owners, good behaviour and good conduct, and to ensure that this responsibility was reinforced through effective regulation. I also wanted to make the fee regime transparent, so that park home owners knew precisely what they were paying for. I also wanted them to have the opportunity to negotiate and discuss the fee with the site owner before it was finalised.
It is the fee regime that most concerns my constituents on Elmtree Park. A balance needs to be struck between allowing site owners to raise enough revenue to maintain the site, provide amenities and produce a reasonable return while, at the same time, protecting residents from unfair costs. As a Minister and a constituency MP, I have always been struck by the lack of consensus on whether the 10% commission on sales should be reduced. Some people see their park homes as homes for life and so would rather see a reduced annual pitch fee than a reduction in the commission on sales; conversely, others would like to ensure that the commission was reduced or even eliminated, maximising their income on any sale.
Despite the lack of consensus, it is clear that too much power lies in the hands of the site owner, at the expense of the park home resident. The current regime allows for site owners to benefit twice from any sale, which is very wrong. It allows them to coerce a park home owner, through fear and intimidation, to sell their home to them for a reduced price—the so-called site blocking. The site owner collects 10% on that sale. He or she can then bundle up sites or sell the home, often at a huge profit. All the upside and none of the risk is with the site owner and that cannot be fair.
Peter Aldous
The hon. Gentleman is making a passionate speech with which I wholeheartedly agree. However, does the Mobile Home Act 2013 not provide local authorities and park home owners with the ability to stop those problems?
Mr Wright
I understand where the hon. Gentleman is coming from, but my main point is to do with that 10% commission on sales as part of the overall fee regime. With his permission, I will elaborate on that, as it is an incredibly important matter. Forgive me, Madam Deputy Speaker, for not being here at the start of the debate when this issue must have been touched on time and again. I am keen to push the idea that the fee regime should be as transparent as possible.
I want to preserve the unique character of park homes that attracts older owners to want to live there. In many respects, therefore, there is possibly an argument that the site owner should be able to vet potential buyers. However, it cannot be right that the home owner is unable to sell his or her asset, in most cases the biggest asset they have, without first seeking approval from the site owner and then paying 10% for the privilege of doing so. I cannot see how that is fair at all.
Stephen Lloyd
Does the hon. Gentleman agree that it is almost feudal to expect park home owners to go through that process?
Mr Wright
I came into the debate during the hon. Gentleman’s excellent contribution, and I agree with him. I was going to touch on that. He used the word “feudal”; I have the word “archaic”. It is so old-fashioned in the 21st century, and not appropriate these days. We need to ensure that the balance of risk and reward is pushed more firmly towards home owners than site owners. That is why the Government should look again at the 10% commission on sales, as part of the wider review of all costs and fees relating to park homes. I really liked what the hon. Gentleman was saying as I came into the Chamber, which was about ensuring that any commission was linked to proper clarity on maintenance and improvement of homes. At the moment, we do not have that relationship, so the costs of maintaining and improving sites and how that will be paid for are not clearly stated and understood. The hon. Gentleman was absolutely right, and I would like to see that.
There are long-standing problems within the sector, and, as I have said, far too often the balance of power tilts away from the home owner. When I was in office, I was keen, on behalf of the residents of Elmtree and others throughout the country, to ensure that they received fairness as part of a well-functioning park homes sector. That 10% commission now needs to be driven down as much as possible, if not eliminated. Greater transparency on fees needs to be considered as part of that wider regime. I hope that the Minister will reflect on that and wish to advance those aims on behalf of park home owners everywhere.
Hilary Benn (Leeds Central) (Lab)
I congratulate the right hon. Member for Mid Dorset and North Poole (Annette Brooke) and other Members who have secured today’s debate. The right hon. Lady deserves particular recognition for her long-standing and determined campaign on behalf of 165,000 park home owners and residents to secure better protection for them. It is a cause that has attracted a number of contributions from Members who have park homes in their constituencies.
The basic principle is that park home owners deserve just as much protection as other home owners. That is why the progress that has been made during the past decade or so, including, I freely acknowledge, under this Government, to provide greater protection for park home owners has been so important. The last Labour Government established a park homes working group in 1998, and its recommendations led to not all but many of the shortcomings being tackled in the Housing Act 2004. Further proposals to amend the law were set out in 2005 and implemented later that year, and in May 2009 further consultation was published on options for improving the management of park home sites.
Significant progress has been made in this Parliament, and I pay tribute, as have many other hon. Members, to the hon. Member for Waveney (Peter Aldous) for his Mobile Homes Act, which was put on the statute book in 2013. As he would acknowledge, it drew on the work of the Communities and Local Government Committee and it had cross-party support. It is worth reminding ourselves that the reason for that was the injustices that were so clearly rife in the sector, as we have heard today, and that still continue in some places to this day. It reformed the licensing regime that applied to park home sites, it removed the ability of unscrupulous operators to try to block lawful sales by residents of their homes, and it ensured that pitch fee increases were transparent. It also included provision for the Government, should they so wish, to introduce a fit and proper person test through legislation. As I think we have heard, the reputable park home site owners, apart from anybody else, deserve not to have their reputation undermined or damaged by the rogues—the word “gangsters” was used—who sometimes act shamefully towards their residents. We have made real progress.
Today we have focused on the question of the 10% commission payable to the site owner on sale of a park home. I want to explore the arguments that have been made today, and in the previous studies, on that question. On the one hand, it is forcefully argued by mobile home owners that the site owner does nothing, in effect, to earn the commission, so they do not see why they should be paid it. As we have heard—this point was made most forcefully by my hon. Friend the Member for North East Derbyshire (Natascha Engel)—when residents have spent their own money on improving their home, and therefore its value, it is particularly galling to see 10% of the increased value paid to someone else for work that they have not funded.
On the other hand, the argument has been made—we have to acknowledge it—that the income from commission is part of the income that site owners depend on, along with pitch fees and the sale of new mobile homes to new owners coming to the site, and that it is therefore important for making their business viable. Were the rate of commission to drop or disappear—the right hon. Member for Mid Dorset and North Poole was perfectly frank in acknowledging this argument—would there need to be an increase in pitch fees to compensate?
There have been other changes that I strongly welcome. For example, commission can no longer be applied to the gift of a mobile home to someone else. The previous Labour Government looked at this matter, as we have heard. Reference has been made to the research carried out by Berkeley Hanover Consulting, which concluded at the time—I acknowledge that it was 12 year ago, as the right hon. Lady argued clearly and forcefully—that pitch fees would rise significantly if the commission paid to site owners was reduced. It argued that pitch fees could increase by about a third as a result.
Indeed, when the Communities and Local Government Committee looked at that recently, it pointed to the case of a residents association that was offered a reduction in commission in return for an increase in pitch fees. It was reported to the Committee that one in 100 of the residents so approached agreed to such a move. The Committee’s report also pointed to the previous Government’s consultation in 2006. We have to acknowledge that it would be in the interests of some residents to move in the direction of the commission disappearing, but others would prefer the status quo.
The difference is this: those who favoured a reduction in, or abolition of, the commission rate accepted that it might well result in a higher pitch fee. The residents who intended to sell their home at some point in the future thought, “Well, that’s okay.” However, the residents for whom that will be their home for the rest of their lives were, understandably, much more anxious about an increase in their pitch fee, because they could be paying it for a long time.
With people’s budgets already stretched, and as many of the people who live in park homes are on low incomes, as we have heard, I think that that is a reasonable consideration to take into account. In that sense, would we want to take a step that might result in people facing fees that they would find difficult to pay? There is genuinely a balance to be struck, and we have to consider that.
One of the ways we could help to answer that question—there has been strong consensus on this point—is by having greater transparency. It is self-evident. The right hon. Lady made that point at the start of the debate, and it has also been made by my hon. Friend the Member for Hyndburn (Graham Jones) and the hon. Member for Stafford (Jeremy Lefroy).
Let us look at the example of leaseholders. Where service charges are levied for works that the freeholder of the building undertakes, whether cutting the grass, cleaning or external painting, they have a right under legislation—the Landlord and Tenant Act 1985, I think—to see a cost summary and then the underlying documents. However, park homes were not included in that legislation, which was introduced some years ago, and I simply do not think that can be right. Why should park home owners not be able to see where the money they have paid goes and what it is being spent on? That is a matter of principle if a fee is being paid to someone else, who may or may not be providing the services in return. It would also help us answer the question raised in the argument made by site owners—that if they do not have commission income, they will not be able to continue operating sites as viable entities.
My hon. Friend the Member for Hartlepool (Mr Wright) made a point about the business model, and that is important. If someone is not entirely sure how many homes are going to be sold, how can they hope to run their business, which is dependent on something they do not control? With pitch fees, of course, there is control. We recognise that there is a balance to be struck. The hon. Member for Eastbourne (Stephen Lloyd) described one possible option: that of lowering fees. Others have argued for their removal.
There seems to be a consensus across the House in favour of a review. As the right hon. Member for Mid Dorset and North Poole made clear, a review would not say, “We’ve reached a decision about the sensible thing to do.” There is a very strong feeling on the part of home owners that the 10% commission is unfair. We could ask them whether they would be able to cope with higher pitch fees if the commission disappeared; people will have to express a view. I think it would be sensible to have a review. As I understand it, the only issue across the House is its timing. I hope that the Minister will be able to enlighten us on that.
I conclude by congratulating the right hon. Lady on bringing this debate to the House. I hope that the Government will respond sympathetically to her points and those of other Members.
The Minister of State, Department for Communities and Local Government (Brandon Lewis)
I congratulate my right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on securing this debate on an important issue. As others have said, she has worked hard for many years for residents in park homes across the country. I represent Great Yarmouth, where there are a large number of park home owners, so I appreciate the importance of the issue. I was delighted that one of my first appearances at the Dispatch Box as a Minister back in October 2012 was to respond to my constituency neighbour, my hon. Friend the Member for Waveney (Peter Aldous), during the debate on his Mobile Homes Bill. Both Members have campaigned tirelessly for better protection for park home owners. My right hon. Friend was instrumental in securing the passage of my hon. Friend’s Bill, which is now the Mobile Homes Act 2013.
Members feel strongly about this issue. The hon. Member for Hartlepool (Mr Wright) has whizzed his way here from his Bill Committee, where other Committee members will be missing him as we speak. I do not intend to keep him for too long. He joins a number of Members who have campaigned hard for years—not just me and the others here today, but my hon. Friend the Member for Burton (Andrew Griffiths), who has also been in a Bill Committee; I have spoken to him about the issue a number of times. My hon. Friend the Member for York Outer (Julian Sturdy) has lobbied me regularly, although he is unable to speak today from his position just behind me in the Chamber. You, Madam Deputy Speaker, have campaigned on behalf of residents in Epping Forest. This has also been a strong issue for other Members across the House who want to make sure that residents are protected and can feel confident about their rights and ability to look after their homes, for themselves and their families.
The hon. Member for Hyndburn (Graham Jones) also contributed to the debate, as did my hon. Friends the Members for Waveney, for Stafford (Jeremy Lefroy) and for Eastbourne (Stephen Lloyd) and the hon. Members for North East Derbyshire (Natascha Engel) and for Hartlepool. They have shown the strength of feeling in favour of making sure that our residents are well protected and can have confidence about their rights in respect of their homes.
The hon. Member for North East Derbyshire raised a particular resident’s issue about a site owner’s claim that having a property empty is breaking the rules and that the property could be put in the hands of the site owner’s solicitor and sold. If that is what the resident is being told, it is simply not correct—the law does allow for a property to be empty. If the hon. Lady wants to write to me or contact me outside, I will happily take the matter forward and give her a formal response.
The 2013 Act was the biggest shake-up in park home legislation in 30 years. The Government were pleased to support it during its passage through both Houses. It marks our commitment to ensuring that park home owners are protected and that their rights are fully respected. One of those is the right to sell a park home without undue interference from the site operator. As the right hon. Member for Leeds Central (Hilary Benn) said, there was significant evidence that the role of the site operator in approving the purchaser was being abused by the unscrupulous to block the sale. This is as much about protecting the integrity and reputation of good site owners as about weeding out the scourge of the bad, rogue landlords whom none of us want to be viable. Park owners in my constituency, such as Blue Sky, work hard to provide a good environment for people to live in. The Act has removed the opportunity for abuse by abolishing the right of a site operator to approve the person to whom a home could be sold.
The new system for buying and selling has been in place since last May. As Members have outlined, it is much fairer than the old system in which the site operator could demand to interview, or otherwise vet, a prospective purchaser—often with a view to putting off a purchase so that the site operator could acquire the home from the seller at a fraction of its true market value. That was simply not acceptable. While the practice of sale blocking was not endemic, it was acknowledged to be widespread. The new procedure reduces the opportunity for abuse. As we have heard, there are still, sadly, some unscrupulous operators who continue to do what they can to interfere with people’s homes and their rights over them.
It is fair to say that, as has been reported to me, some site operators have experience of sellers not complying with the new system and not following the correct procedures when selling their homes. This may not be in any way deliberate—I would imagine that in most cases it is not—but if a sale goes through that does not comply with the law, there could be grave consequences for the seller and the purchaser. This is why we have constantly urged, and continue to urge, that parties to the sale of a park home obtain professional advice, as almost everyone buying or selling any home would do, and as we would encourage them to do.
On the payment of commission, although the 2013 Act did not, for reasons I shall explain, change the maximum amount payable, it did make significant changes to how it is paid to the site operator. Members will be aware of that from the debates that took place at the time. The maximum amount of commission did not change, and it remains at 10%. I can understand why owners object to commission on the sale of a home. They feel aggrieved that they have to give up 10% of the sale price, which is paid to the site owner, who they feel does nothing in exchange. Sometimes they see this charge as a kind of estate agency fee at a point when the site owner is no longer involved in the sales process. However unfair home owners feel the payment of commission is, the fact that it is payable should not come as a surprise. It is an implied term of the pitch agreement, and they should have been aware that it was payable on a sale when they purchased the home.
The maximum rate of commission is 10%, as it has been since the Conservative Government reduced it from 15% in 1983. As we have heard, site operators do not have to charge the maximum rate. The right hon. Member for Mid Dorset and North Poole made the fair point that it would be interesting to find out more about whether anybody is charging less than the maximum amount. If Members will bear with me, I will return to that in relation to their comments about a review.
Commission is a legitimate income stream for park home businesses, and there is no evidence that its payment leads to profiteering. As the right hon. Member for Leeds Central and others said, that was the finding of the independent report on the economics of the industry commissioned by the previous Government in 2002. The other income strands come from selling homes and pitch fees. Income from selling homes is obviously limited because it requires the availability of pitches—land in anyone’s ownership will always be restricted to a certain amount—or site redevelopment.
Changes in pitch fees are regulated and linked to inflation, as are certain other costs that the operator incurs in running the site. Therefore, if the maximum rate of commission were to be reduced from 10%, or abolished altogether, there would need to be compensatory relief through pitch fees. The independent report noted that if the commission were decreased or abolished outright, operators would look to increase prices elsewhere. In particular, it found that abolition would result in pitch fee rises of between 20% and 32%.
As the shadow Secretary of State, the right hon. Member for Leeds Central, has said, property owners have mixed feelings about what the impact would be. It has been argued today that the report is flawed and that the views of home owners were not fully considered. It has even been suggested elsewhere—I think my right hon. Friend the Member for Mid Dorset and North Poole referred to this—that the report was not independent.
Annette Brooke
It has indeed been suggested to me that site owners and those involved in the business had quite an input into the report, albeit not in the writing-up stage. I do not know how true that is, but it contributes all the more to the case for having a review sooner rather than later. A lot of things have changed since 2002.
Brandon Lewis
My right hon. Friend makes a very good point. It is nice when we all agree from time to time.
The right hon. Member for Leeds Central also said that things have moved on in 12 years. The report is 12 years old and I agree that it had a small sample base, but it was based on a range of park home sites—from the very small to the very large. Although it was published in 2002, there is no great evidence at present to suggest that the economic structures of the industry have changed significantly in the intervening years. There was some involvement from homeowners—there had to be, given the nature of the study in preparing the report. However, the report was on the economics of the sector; it was not, to be fair to the previous Government, a consultation.
Jeremy Lefroy
Does the Minister not agree that one of the things that has changed is the value of those homes? Given that the commission is a percentage of the value, which has probably outstripped inflation considerably in many parts of the country, that is a substantial change, even since 2002.
Brandon Lewis
My hon. Friend makes a very good point, although I would point out that the proportion changes for both parties and the percentage remains the same.
Home owners also complained that the report’s findings were not borne out by the facts and, as hon. Members have said, that the 10% commission is not necessarily invested in the management and maintenance of the site, but is simply treated as profit. I have no doubt that there will be examples where that is the case. We are aware that some sites are poorly managed and poorly maintained and that operators do not invest in them. However, that does not mean that that is universally the case. The majority of site operators need that commission to maintain their sites.
Stephen Lloyd
I concur completely that it is not always the case, but does the Minister agree that, whether or not the operators maintain their sites, they still receive the 10%?
Brandon Lewis
Yes. The hon. Gentleman is absolutely right. The fact that some do not bother to maintain their sites should be dealt with. It is for the local authority to tackle the issue through the new licensing enforcement tools introduced by the Mobile Homes Act 2013, which was promoted by my hon. Friend the Member for Waveney and came into force just a few months ago, in April 2014.
The answer to poorly maintained and managed sites that suffer from a lack of investment in their infrastructure is to use that new law and report poor conditions to the local authority, which under the licensing powers can require the site owner to spend money on improving conditions.
Natascha Engel
The Minister says that a majority of sites are well managed. What evidence does he have that it is not a minority that are well managed and a majority that are mismanaged?
Brandon Lewis
Actually, what I said was that the majority of site operators need the commission to maintain their sites. On the question of whether they are poorly managed and maintained, I said that some operators are not investing in them. That is exactly what the 2013 Act—the rules and laws that came into force on 1 April 2014—deals with.
The independent report carefully evaluated the economic structure of the industry and concluded that commission was an important income strand that could not be abolished or reduced without relief. Nevertheless, the previous Government consulted on what the appropriate maximum rate should be. Although home owners favoured a reduction in or abolition of the commission rate, very few thought it should be linked, as the right hon. Member for Leeds Central has outlined, to a reduction or an increase in their pitch fees. Understandably, and as the right hon. Gentleman also said, those who generally saw their park home as their home for life wanted to retain the existing system, while other site owners wanted no change at all. The then Government’s preferred option at that time was to have a 7.5% commission on existing agreements and to abolish it on new ones, but to have unregulated pitch fee increases, for which consultees showed little support. The consultation was therefore inconclusive. It looked at options in relation to the payment but, as we all now know, it was not about reducing or abolishing commission. The then Government therefore decided that no case had been made to change the status quo.
In the spring of 2012, the issue of commission was looked at again by the Communities and Local Government Committee. It held an inquiry into the sector, and published its finding in June 2012. Its report, which identified widespread malpractice in the sector, led the Government to support the Bill introduced by my hon. Friend the Member for Waveney. We agreed with the Select Committee’s finding that there should be no change to commission. That was our view in 2012, and it remains our view today, but I will return to the issue of the review in a moment.
Annette Brooke
I am afraid that I may be anticipating the Minister, but does he think that the Select Committee conducted a thorough review? I praise it for its whole report on park homes, but I was not aware that a large part of its work related to the 10% commission.
Brandon Lewis
It is not for me to question the decisions of the Select Committee or its Chair about how they go forward, but I will turn in a few moments to how what they looked at can be taken forward. I now want to make a bit of progress with my speech.
As other Members have rightly said, the justice campaign and its founder, Sonia McColl, are to be congratulated on their fantastic, sterling work in raising issues about problems with the park home sector and on the need for reform. As I have explained, we believe that commission is a legitimate income strand. It does not result in profiteering—at the moment, the evidence does not back up such a claim—and site owners who run a legitimate business within the law are entitled, like any such business, to make a reasonable profit. If the commission were changed, compensatory relief would be needed. There are good site owners who run professional businesses within the law. I am sure that all Members want them, for the benefit of their residents and of the economy, to thrive and grow. We therefore do not want to put in place measures that could affect their continuing viability.
I appreciate that that may be unwelcome to some home owners who have campaigned for a reduction in the commission or its abolition. We should not, however, lose sight of the substantial reforms that were introduced by the 2013 Act. It targets unscrupulous and criminal operators who think that the law does not apply to them: it does, it should and it must. Apart from introducing new provisions to prevent the blocking of sales and a new scheme for selling homes, the Act requires site operators to use a statutory form, and to set out what is included in any proposed new pitch fee and how that fee has been calculated. We are therefore starting to see the transparency that we want to exist more widely. The Act has banned certain types of rules that can be used to block sales on sites. It also introduced important provisions to reform local authority site licensing, which came into force on 1 April this year. These hugely important changes for the first time give local authorities powers to take enforcement action against rogues who refuse to maintain their sites.
I want to reassure the House that the Government recognise that more work needs to be done to change the culture of the sector and to crack down on the rogues operating within it who give everybody in the sector a bad name and affect the lives of residents unfortunate to live in such areas. To achieve that, we will continue to work with partners to raise standards generally, and to remove criminality from this sector.
In particular, I am determined to stamp out the continuing bad practices in the industry, such as unlawful sale blocking, or local authorities and other agencies not using their powers effectively to protect home owners. That is why I have asked a ministerial colleague to bring together representatives from across the sector to identify evidence of poor practice where it exists, and investigate how best to raise standards further and tackle abuse. That group will significantly help to shape the review of the Mobile Homes Act.
I agree with hon. Members, not least my right hon. Friend, that the review should have an independent chair. The review will be undertaken in 2017, which will give us a couple of years to see the impact of the new laws before we review how they are working. However, I would be very happy for that group, under its own auspices, to consider a wider review of the issues that have been raised today. I hope that my right hon. Friend will take up the opportunity to be part of the group. I know that the Under-Secretary will welcome Members who want to contribute to and be part of it.
Mr Iain Wright
I might be giving the right hon. Member for Mid Dorset and North Poole (Annette Brooke) responsibilities that she does not want, but should she not chair the group?
Brandon Lewis
I hope that the right hon. Lady will take an active part in the group, but I do not want to put too many dates in her diary, unlike the hon. Member for Hartlepool. I have asked for an Under-Secretary of State to chair the group so that it is taken forward as a Government working group. I hope that other colleagues across the House who have concerns about this matter will participate in that work to improve the sector. We will also involve national resident groups and industry trade bodies, as well as representatives of local authorities and other agencies that are involved in the park homes sector.
I reiterate that we are committed to improving the sector so that those who run professional, honest businesses can prosper without unfair competition from the rogues, and so that home owners, some of whom are vulnerable, can be assured that their rights are respected, that their health and safety is protected and that they will not suffer bullying and harassment.
Annette Brooke
It is a pleasure to have you presiding over our debate, Madam Deputy Speaker, knowing that you have an interest in this subject.
I thank all Members for their excellent contributions. I thank the park home owners who have contacted us in various ways. I also take on board the representations that I have received from good site owners, who have contacted me either directly or indirectly, about how well their sites are managed. I would like them to come to the new group to showcase their good practice.
I thank the Minister for his response. I am sure that park home owners will feel very reassured that their interests are being looked at. We have to continue looking for the right balance, but I think that everybody here has acknowledged that site owners need a return on their capital and that, equally, park home owners need justice.
I liked the words from my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay) when he said that bundling everything together was preventing the free market from working. I am not always a great free marketeer, but he made a strong argument. We have vulnerable constituents who are not being given perfect information on which they can make rational choices. It is therefore important to think about the model.
In conclusion, I hope that we have taken another little step forward, but we need to deal with this issue sooner rather than later. We must bear it in mind that there is a general election coming up. I am afraid that each time we have had a general election, we have taken a couple of steps backwards in our attempts to achieve more for park home owners. I hope that we really have made progress today and I look forward to participating in future work.
Question put and agreed to.
Resolved,
That this House calls on the Government to set up a review of the current fee of up to 10 per cent of the sale price of a park home payable to the park home site owner.