Estate Adoption: North-east England

Tuesday 15th October 2024 Westminster Hall

[Carolyn Harris in the Chair]

15:59

[Emma Foody (Cramlington and Killingworth) (Lab/Co-op)]

I beg to move,

That this House has considered estate adoption in the North East.

Thank you for the honour of serving under your chairship, Mrs Harris. I am grateful to have this opportunity to move the motion, which is of considerable importance to my constituency of Cramlington and Killingworth. It is a newly formed constituency, made up of new towns as well as a number of villages, covering the north of Newcastle, south-east Northumberland, and north and north-west North Tyneside. As it is on the edge of different local authorities, over the past 10 to 15 years, our villages and towns have grown with significant levels of development. These developments provide important and needed homes for our communities, but there have also been significant challenges for those communities, and adoption and delivery of infrastructure are key among those challenges.

With the commitment of the new Labour Government to deliver the homes that our country needs, we need to ensure that we are not only building homes, but sustainable communities, with buy-in from residents. Delivering timely and appropriate infrastructure is a key part of that, because a home is not just the property that we live in, but the street that we live on, and the community we are a part of. For too many of my constituents, there are unacceptable delays in the delivery of even the most basic infrastructure. Residents who have worked hard, saved, and bought their first home, their family home, or their dream home, are left without adequate road surfaces, pavements, street lighting, pedestrian crossings, and road markings. Too often, people are left in limbo—passed from one organisation to the next, with each one trying to pass the buck—paying management fees and council tax, yet not having the basics, such as completed pavements, roads or communal facilities. Residents are left frustrated and angry, with a lack of communication from those responsible, a lack of accountability, and no certainty on when their estates will be finished.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

The situation which my hon. Friend describes in her constituency is mirrored in mine; it is an issue that affects properties around the country. Locals in my constituency will know the old Birds Eye site. It was a brilliant idea to bring new housing into the town centre, on a brownfield site, but latterly it has been discovered that the estate is half-finished, the roads are unpassable, and the paths unusable. Does she agree that local authorities should be given additional powers and that there should be caps on the costs that local authorities are required to pay, to force developers to complete these estates so that people can live in their dream home?

[Emma Foody]

This is an experience that is shared around the country, and we need to look at all available options to we resolve this matter. We are not talking about months that residents are left in this situation, but years—five, 10, 15 years, in which families see their children grow up and leave home before a road is completed.

Before the debate, I asked my constituents for their testimonies and experiences of the range of issues that they face. David, who lives on the Fairways estate in the west of Cramlington speaks of roads and pavements on the estate that are largely without tarmac, which has made using bikes, wheelchairs, and pushchairs dangerous outside the home. He talks of how residents are cut off from other facilities such as shops, schools, and parks, because the necessary footpaths were not built for years. He says that only after constant pressure from residents did the developer build a footpath, which is unlit and poorly laid—it would be difficult to use a pushchair or a wheelchair on it—and it links one housing estate to another through a field. If people have a car, the roads are not much better. They are often unfinished, with is a higher risk of damaging vehicles. When the roads are icy, there is more risk of traffic accidents.

Another constituent, Iain, has been contacting the developer of Five Mile Park in Wideopen for three years regarding the road surface. The estate was constructed almost 10 years ago, and he has been given excuse after excuse about why work has been delayed on the roads, pavements and footpaths. The developer informed Iain that the road had been completed more than a year ago. However, poor-quality work by contractors means that it has not been brought up to adoptable standards. That is just one case of many in which a developer will claim to have completed roads, pavements or other infrastructure, but not up to a standard for the local authority to adopt them.

[David Smith (North Northumberland) (Lab)]

This is such an important debate. Likewise, in Amble in my constituency of North Northumberland, constituents have contacted me about a private developer that has left their estate in a scruffy and untidy manner and which is using a contractual error to try to escape blame. That is in the context of a 65% decrease in planning spending in the north of England, so there is also a key issue about the resources that local authorities need. Does my hon. Friend agree that private developers should be willing to bring estates up to an acceptable standard so that local authorities are not forced to adopt unkempt and unfinished estates?

[Emma Foody]

I thank my hon. Friend for raising those issues. I know it is something that is raised with all Northumberland MPs, and I agree that we need to look at all mechanisms to ensure that estates are at an adoptable standard.

In my constituency, Dan from West Meadows, another estate, shared his worries that local football pitches would never be brought up to the standard that has been promised. Mark, who lives in Backworth View, told me how the street lighting on his road has never been switched on in the five years he has lived there, yet he is paying full council tax and management fees. Many residents express frustration that they are paying both estate management fees and council tax, yet, because the estate is unadopted, they have poorer quality infrastructure, despite paying more.

Local authorities often feel the brunt of complaints from residents, but they hold little power to compel developers to bring private unadopted estates to the standards required for them to be adopted. Local authorities should not be footing the bill for delays and lack of delivery from private house builders. Too often, local authorities are hamstrung. The developers have long since left the site, so local authorities are left fielding complaints from residents, despite having little power to compel action. A chief planning officer at a local authority told me that the current system is skewed towards developers. They pick their own contractors, timeframes and materials, which are often not up to the standard for a council to be able to adopt their work, yet it is the local authority that is left with understandably frustrated residents long after the developer has gone.

[Chris McDonald (Stockton North) (Lab)]

I have also seen problems holding developers to account in my constituency of Stockton North, where we have estates such as Willow Sage Court, Wynyard and Queensgate, which have unfinished roads, a lack of facilities and high maintenance charges. The Competition and Markets Authority said in a report earlier this year that there was an increasing trend for this type of estate, and it recommended a set of national standards. Does my hon. Friend agree that we should have a national framework of standards for private developers, as well as sanctions for developers that do not deliver?

[Emma Foody]

I thank my hon. Friend for that contribution; it is as if he has seen the next part of my speech as I am going to reference the CMA, so I will progress and touch on the issues he raised.

I have mentioned the homeowners, the local authorities and the developers, but there is another third party that has an important role: the utilities and the broadband companies that have to deliver the infrastructure as well. In Earsdon View, residents remain on an unadopted estate, as the developer and the water company have been unable to resolve adoption. A resident on the estate, Jim, feels that the water company and the developer have passed the buck, and nothing has been done on the issue. As he put it, residents are left with “stalemate”.

Often, it is the relationships between developers and utilities companies that hold back the full adoption of water mains and other utilities. The knock-on consequence is that roads are left open and untarmacked while the disputes are ongoing. While such issues between developers, third parties and local authorities are haggled over, residents are left to pick up the cost through estate management fees. That fee is meant to support a contractor while they carry out work on the estate, but residents have shared their experiences of being left unsatisfied by the system of estate management fees, which are often unpredictable, opaque and confusing. Many argue that they are being ripped off, with fees that can increase by unlimited and unspecified amounts each year. Residents such as Oliver fear that if fees continue to go up and they were unable to meet them they would be unable to sell their property.

The CMA report earlier this year says that one of the things that creates the most distress for homeowners on such estates is the disproportionate response time taken by management companies, as well as their response when homeowners are unable to pay. Homeowners have had their property seized because they cannot meet the costs levied by estate management companies, yet residents are left powerless to challenge the unfinished state and poor quality of their estate. People echo earlier remarks that the existing system is skewed towards developers, with little access to justice for residents. I am glad that the Labour Government have already pledged to end the leasehold system. A developer that has not met its promises to homeowners should not be able to profiteer in relation to those same homeowners.

I am proud that this Government are taking the necessary steps to solve our housing crisis. We have a complete shortage of housing of all types. This Labour Government are being bold, with a target of 1.5 million homes during the Parliament; reform of leaseholds to end exorbitant ongoing costs for residents to live in their own homes and of the existing leasehold system; the end of section 21; and reform of the rental market. The Government have said they intend to introduce legislation to deal with the commonhold and leasehold issues that are still prevalent in today’s housing market, fixing the system—adoption should be part of that.

[Joe Morris (Hexham) (Lab)]

To pick up some of the points made by my hon. Friend about estate adoption, in particular in areas such as Medburn, Corbridge and Hexham in my constituency, residents contact me regularly, concerned about the state of their roads and the fact that we have unsafe compounds, often outside communal areas. In the rural communities that I represent, that can be particularly toxic, and it damages ongoing faith in the community and the community spirit itself. I hope the Minister can, in his response, elucidate a little the importance of adopting such estates, in particular the smaller settlements.

[Emma Foody]

I absolutely share the sentiments of my hon. Friend. I refer him to my earlier comments about how this is not just about building homes, but about building communities. To do that properly—the Labour Government have set out that they intend to do that—we need to be able to address the issue of unadopted estates.

The CMA report talked about common adoptable standards as one solution that would set out clearly the minimum standard that has to be met for a road to be adoptable. Where the standard is met, there should be mandatory adoption of amenities, with only a few limited exceptions. I would be grateful if the Minister responded to those suggestions in his reply.

Certainty could be provided to residents about the timescales within which the adoptable standards would be met. The Minister has talked about that previously. Such measures would give residents clarity and would enable developers to be held to account on timescales and delivery against them. The measures would strengthen the hand of residents and local authorities to hold developers accountable for putting in place the most basic infrastructure that residents ought to be able to expect. The measures would address the imbalance between developers and the rights of homeowners when it comes to adoption and delivery of infrastructure.

As my colleagues in the north-east and I have set out, residents should not be left for years on estates paying fees on top of council tax while there is unfinished infrastructure and a lack of any certainty of delivery long after the developer has left the site. People who have worked hard, saved and bought their own home deserve better than that. If we are to deliver the housing that this country needs and bring communities with us, addressing this issue and the timely delivery of appropriate infrastructure on estates is crucial to getting that buy-in. I know that this is something that the Minister will be working on, and I look forward to his response.

16:14

[The Minister for Housing and Planning (Matthew Pennycook)]

It is a real pleasure to serve with you in the Chair, Mrs Harris. I congratulate my hon. Friend the Member for Cramlington and Killingworth (Emma Foody) on securing this important debate. She has only been in the House for a short time, but she has already earned a well-deserved reputation as a hard-working and conscientious Member, and a doughty champion of her constituents’ interests. I commend her for the impassioned case she just made in support of action to ensure that residential freeholders living on private or mixed-tenure estates in her constituency and across the country are better protected from unfair costs, and that the infrastructure and amenities they rely on are brought up to an appropriate standard.

The distinct set of problems faced by residential freeholders on private or mixed-tenure estates is well known and well understood. The problems include, as my hon. Friend has just set out in some detail, excessive or inappropriate charges levied for minimal or even non-existent services, charges that include costly and arbitrary administration fees, charges hiked without adequate justification, and charges levied when residential freeholders are in the process of selling their property.

The general lack of transparency and clarity experienced by residential freeholders in respect of how their estate management charges and fees are arrived at, and how they break down, is compounded by the distinct lack of control experienced by homeowners on estates that have what is known as an embedded management company. Under this arrangement, which encompasses around 20% of freehold estates, the company running the estate is set in the title deeds for the properties, and residents have no ability to change it. They therefore lack the ability of homeowners on estates run by resident-led companies, often with the support of managing agents, to exert at least some influence over the level of estate management charges and how funds are spent. During proceedings on the Leasehold and Freehold Reform Act 2024 in the last Parliament, I pressed the previous Government, in my capacity as shadow Minister, to introduce a right for residents to take over the management of their estates. We are now giving careful consideration to the merits of doing so.

Residential freeholders on privately owned and managed estates clearly suffer from inadequate transparency in other unique respects. For example, it would appear to be fairly common for residential freeholders not to be notified of their future liability for charges early in the conveyancing process. Many learn of their exposure only at the point of completion. Even in instances in which residential freeholders are notified of their future liability in good time, many have to confront the fact that their contracts do not specify limits or caps on charges and fees. There is also a distinct problem with management fragmentation on many privately owned estates that have been constructed throughout the country over recent years, with residential freeholders, even on relatively new estates, frequently having to navigate scores of management companies, each levying fees for services in a way that further exacerbates the general lack of transparency and potential for abuse they face in respect of charges and fees.

A related problem experienced by residential freeholders in many of these estates, as my hon. Friend the Member for Cramlington and Killingworth and others have mentioned, is the quality and timely delivery of infra- structure and amenities. Historically, when a local authority was to adopt an estate, it would set clear standards and provide oversight to ensure that amenities were delivered to those standards, but the delivery of such amenities is now often left to the developer, with limited engagement from local authorities. I have heard countless stories—we have heard some more today—of how this development is leaving people living in homes on unfinished estates or with facilities that at best are substandard, and at worst can be dangerous.

At the root of many of these problems are the falling levels of adoption of amenities on housing estates by local authorities. If hon. Members have not seen it, I urge them to read the CMA’s house building market study, published in February, which is the most detailed study of the problem we have come across. It detailed how the problem appears to be driven by the discretionary nature of adoption, by house builders’ incentives not to pursue adoption in the first place and by local authority concerns. That must be acknowledged, because in the last Parliament, I often heard calls from the then Government simply to put the costs on to local authorities to force adoption, but there are concerns among local authorities, in the context of pressures on their resources and finances, about the future ongoing costs of maintaining amenities that are often delivered to a poor standard.

The situation is leading to poor outcomes for homeowners and, in some cases, potentially serious detriment from exposure to costs—too often opaque and difficult to control, and levied, as my hon. Friend said, in addition to council tax—for amenities that are open to use by the general public. The Government are clear that the current situation is unfair and unreasonable, and it must be brought to an end. There is a pressing need to better protect residential freeholders who are experiencing such problems on existing freehold estates, but also an urgent need to reduce the prevalence of these arrangements, which the CMA estimates represent a significant proportion of new housing supply across the country.

Underpinning many of the issues of concern raised today is the fundamental absence of regulation or oversight of the practices of estate management companies, and the fact that residential freeholders do not enjoy statutory rights equivalent to those held by leaseholders. The Leasehold and Freehold Reform Act 2024 took steps to give existing homeowners on such estates additional protections and enable them to hold their estate manager to account for the money that is spent.

The Act created a new statutory regime for homeowners based on leaseholders’ rights. It includes improved transparency over such charges to ensure that they are reasonably set, and a new right to challenge them if they are not. Bringing those measures into effect will require detailed secondary legislation, given the considerable amount of detail and thought that we need to put into them. We are working at pace, but I hope my hon. Friends will appreciate that it is important that we take time to get the detail right. If we introduce that secondary legislation and it contains flaws, their constituents and mine will suffer, so it is important that we take the time to get it right and engage with stakeholders. Work is ongoing in that area, however.

We are clear that the measures in the Leasehold and Freehold Reform Act are not enough, which is why, in the Government’s manifesto, we committed to ending the injustice of fleecehold and better protecting residential freeholders against unfair costs. That is why we reiterated that commitment in the King’s Speech. This is a complex area of policy, which is why the Government intend to consult with homeowners, developers, local authorities, management companies and others so that we can develop meaningful and effective solutions to these problems. The consultation that we intend to publish in due course will need to consider a wide range of trade-offs, including costs to homeowners and local authorities, potential impacts on housing supply and the links to the planning system. In direct response to the question that my hon. Friend the Member for Stockton North (Chris McDonald) asked, we will absolutely consider the recommendations made by the CMA and respond to its report directly in the interim, but it is one of a number of potential solutions to this problem. We want to consider everything in the round to ensure that we have the right answer when we bring it forward.

The reforms we intend to make in this area, in whatever form they ultimately take, sit alongside our wider plans to bring the feudal system of leasehold to an end, and they need to be seen in that context. This is a distinct subset of problems on private and mixed tenure estates, but it sits alongside a range of problems experienced by residential leaseholders and freeholders. That is why the Government will take steps to enact the remaining Law Commission recommendations around enfranchisement and the right to manage; it is why we will take steps to reinvigorate commonhold and ensure that it is the default tenure; and it is why we intend to take steps to tackle specific problems, such as the injustice of forfeiture and unaffordable, unreasonable ground rents. I hope to be able to say more on that topic soon.

I am grateful to my hon. Friend the Member for Cramlington and Killingworth and other hon. Members for raising their concerns about this issue. We acknowledge that it is a problem, and I hope that they will take my assurances at face value when I say that we are working on solutions to it and will bring them forward in due course. We want to listen to the experiences of hon. Members across the country—although this is a north-east debate, the problem very much affects constituencies in all parts of England. As I say, we are committed to taking firm action to end the injustice of fleecehold and better protect residential freeholders from those costs, and I look forward to bringing further information to the House to that end.

Question put and agreed to.

16:24

Sitting suspended.