Park Homes

Annette Brooke Excerpts

Tuesday 13th May 2014 Westminster Hall

[Annette Brooke (Mid Dorset and North Poole) (LD)]

It is a pleasure to serve under your chairmanship today, Mr Howarth. I begin by welcoming the Mobile Homes Act 2013, which goes a long way towards rebalancing the rights of park home owners and site owners. Overwhelming evidence of appalling practices made it an imperative to introduce legislation to prevent unscrupulous site owners from blocking residents’ sales on the open market. It was also obvious that greater protection should be made available through enhanced local authority powers and reform of the licensing system. I have spoken at some length on such issues over the years, but I will just touch on them today.

I again congratulate my constituent Sonia McColl, a park home owner who set up the national park home owners’ justice campaign and who has fought tirelessly on park home issues, particularly sale blocking. I also congratulate my hon. Friend the Member for Waveney (Peter Aldous) on successfully leading his private Member’s Bill on mobile homes through to enactment. Different parts of the 2013 Act are being implemented at different times, so it is difficult to make an early, overall judgment on the Act’s impact. What assessment has been made of the effectiveness of the Department for Communities and Local Government’s communication strategy to inform park home owners of their new rights and site owners of their new responsibilities? On one site, a notice has been erected stating that all sales must be carried out through the site owner’s office. How is the new legislation on sale blocking being monitored and enforced?

[Natascha Engel (North East Derbyshire) (Lab)]

I congratulate the hon. Lady on all her work. Without her, much of this would not have happened. The Mobile Homes Act 2013 has already made an overnight difference, but a big issue that I have always campaigned about is the 10% charge payable to site owners. Will she say a little about that?

[Annette Brooke]

I thank the hon. Lady for her great support throughout our battle to secure legislation. I called this debate in the light of a huge new petition against the up-to 10% commission on the sale of park homes payable to site owners. Sonia McColl has collected signatures from some 30,000 park home residents from 956 parks across the United Kingdom and the petition will be presented to the Government in July. I have always accepted that there needs to be a reasonable return on capital to site owners, but I do not know in detail the justification for particular levels of commission. Given the strength of feeling from park home owners, it is right to put their views forward and to examine how their concerns about being overcharged for the level of service received might be addressed. The answer may lie in more transparency and accountability. Those who have signed the petition are calling for a proper debate on the fairness of the commission payment and they argue that previous inquiries into the charge have been biased and heavily reliant on information provided by park operators, rather than park home owners.

It is interesting to note that the maximum level of commission was reduced in 1983 from 15% to 10%. While there has been no change since then, the dissatisfaction of park home owners with this state of affairs has continued. The arguments for from the site owners and their representative bodies and the arguments against from park home owners and their associations remain much the same. Park home owners argue that as a site owner does nothing to earn the commission, they do not see why he or she should receive it. The argument is reinforced when occupiers highlight how they have increased the value of their homes by adding porches and other improvements at their own expense. Many park home owners claim that there has been little investment in their sites and that essential maintenance has not been carried out. Site owners say that the commission payment is part of the income, along with pitch fees and selling new mobile homes, that they have always expected to receive to make the businesses viable. They say that if the commission was reduced or abolished, they would either have to increase pitch fees accordingly to make up the difference or go out of business.

In March 2007, the Government published the responses to their consultation on the park home commission rate, which outlined options for a more transparent payment system for mobile homes. They concluded that the current level should be retained but that there should be more transparency on the payment within agreements between park home owners and site owners. An option to reduce the rate with no pitch fee increase was rejected, although it unsurprisingly received overwhelming support from park home owners.

[Anne Marie Morris (Newton Abbot) (Con)]

Does the hon. Lady agree that the pitch fee is one of the biggest problems? It can become a tool for bullying, which then overrides everything else.

[Annette Brooke]

I thank my hon. Friend for her intervention. There seems to be a complex and opaque relationship between the pitch fee and the commission payment.

A third option, to scrap the commission on the sale of a park home for new agreements only without a limitation on a compensatory increase in pitch fees, received little support. If pitch fees increase further, I concede that there is a danger for residents on relatively low and often fixed incomes.

In 2012, the Select Committee on Communities and Local Government carried out an inquiry into the park homes industry and undoubtedly contributed to the 2013 Act. It concluded that site owners should continue to receive up to 10% commission from the sale of a park home. However, as well as some oral evidence, it relied heavily on the 2007 conclusions and on an earlier paper from 2002 when reaching its own conclusion. It is misleading to say that we have evidence from as recently as 2012 on the issue.

[Stephen Gilbert (St Austell and Newquay) (LD)]

I sat on the Communities and Local Government Committee and was part of that investigation. It is right that we concluded that any reduction in the 10% rate would lead to an increase in the pitch fees referred to by my hon. Friend the Member for Newton Abbot (Anne Marie Morris). Given that, we need to reconsider the issue and to have another debate. I commend the idea of my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on greater transparency, which should give home owners the confidence that money is being reinvested in site maintenance and upkeep.

--- Later in debate ---

[Annette Brooke]

I commend my hon. Friend and all members of the Communities and Local Government Committee, because the report was really useful and introduced elements into the 2013 Act that might not otherwise have been there.

Returning to site owners’ incomes, there are at least three elements, including the initial siting of the mobile home, the pitch fees and the commission payment. I have a scenario that outlines the siting of a new unit. Suppose that a site owner purchases a new unit for £60,000. Transport may cost £10,000 and they may have to spend a further £10,000 for connection to services and landscaping. The unit could sell for £160,000. I have no idea how realistic those figures are, but I am trying to illustrate the potential for a significant return. Suppose that the home is sold within a year, 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, which means more potential profit. It is therefore difficult to get into all the payments that are actually made by park home owners.

I must confess that I am totally confused about the respective purposes of the pitch fee and the commission payment, but they are clearly related, if the situation is such that if commission is reduced, pitch fees will have to go up. As ever, I consulted House of Commons Library briefings for clarification. The standard note on the 2013 Act states:

“The pitch fee is the sum paid to the site owner in return for permission to station a mobile home on the pitch and use the common areas of the site. The requirement to pay a pitch fee is an express term in the written agreement. Pitch fees are reviewable annually and can usually only be increased in line with RPI plus the cost of expenditure on improving (rather than maintaining) the site.”

In a recent letter, the Minister said that a commission is not an estate agency charge, but an important income strand for park home businesses, enabling them to ensure that sites are properly managed and maintained. He said that if the commission was reduced or abolished, there would need to be a compensatory increase in pitch fees to cover the shortfall in income. That is where I find it difficult to understand exactly what money is being used for what, and I can see where the questions come from park home owners.

On pitch fees, there should be available for inspection a transparent and audited set of published accounts. I have with me a file of cases from across the country. Residents have supplied evidence that owners of their sites are not properly managing or maintaining their parks, making it harder for residents to sell their homes. They have asked why site owners should receive the 10% commission if they are not supplying the services they are meant to. Park home owners argue that it is they who work hard to make improvements to their property, which helps the site owner market his business.

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 lack of maintenance or deterioration of the site; and a requirement for site owners to justify increases above the retail prices index. I would be interested to hear how the Minister envisages those provisions working; whether the historical position in which many park home owners find themselves can be addressed; and whether it would be possible to have a clear statement on the issues. I imagine that such a statement could not be made fully today, but if we could have something simple placed in the Library, it would be helpful for park home owners and Members of Parliament to see what the future holds, so that we can check whether anything else needs to be done. I fear that we will not pick up all the historical problems, but I hope that future purchasers will have clarity in their written agreements about all payments and will be clear on the annual reviews. Also, I still come back to this question: is it not reasonable to have audited published accounts on pitch fees and the expenditure out of that?

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. It seems generally accepted that the average fee is about £150 a month. For someone living on the basic state pension, while the pension is being increased by the consumer prices index, fees are being increased by the RPI. One can see how there are concerns out there.

Park home owners continually identify extra costs that creep in one way or another. Many park home owners referred to people who own flats or other dwellings, who pay a maintenance or service charge and a leasehold charge, but do not generally have to pay another 10%, on top of an estate agent’s fee, when they sell. That is where I feel published accounts would help. Park home owners pointed to providers such as McCarthy and Stone and looked at the many services provided in private sheltered accommodation. I think that there is a pretty good idea in those situations of what someone is paying for and what they are getting.

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 resold, in a year.

Many residents reported feeling trapped in their homes and unable to sell. Due to park rules, many sites are only for people of retirement age. 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.

There are other considerations. 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 issue of the 10% commission charge is undoubtedly a matter of concern.

[Peter Aldous (Waveney) (Con)]

I congratulate my hon. Friend on securing this debate and on putting her points across so eloquently. It is important, after what was probably the biggest change to the sector in many years, that we review it from time to time.

Does my hon. Friend agree that the legislation was based on proper and full research and consultation, with the Select Committee report and the consultation conducted by the Department for Communities and Local Government? The new licensing arrangements provide an opportunity for additional accountability, so does she agree that we should let the legislation bed down before reviewing it in, say, two to three years, as indeed the legislation provides for?

[Annette Brooke]

Yes, there is an important element of reviewing what is in place or is about to come in in the near future, but not all of that is entirely understood by park home owners. We need a clear statement of what is happening now and what will happen in the future, and we need to try to untangle the pitch fee and the commission to be clear what items we are talking about. For example, is the commission just for contingencies, or just for improvements? I find the issue confusing, and I do not think we have bottomed that out yet. I agree that we cannot make any big moves until we have reviewed the legislation properly, but I think we can move forward by getting more transparency.

Not surprisingly, the petition calls for a reduction in the commission rate. Petitioners are also interested in looking at whether we should consider the difference in value between the purchase and selling prices of the unit when a commission is applied. That might be quite complex if there is deterioration on the unit, but obviously, that is food for thought.

We need a full and frank debate on the issue. We need transparency on what the various payments are being used for, and we need to ensure that there is no further exploitation of park home owners. Exploitation is still going on regarding some of the utility charging. It should all be out in the open, but I am sure that we can all come forward with examples.

[Steve Brine (Winchester) (Con)]

I apologise for my discourtesy in arriving late for the debate. As my hon. Friend knows, through the work we have done with the all-party group and the many debates in this Parliament, exploitation is the key point. I agree with her point on pitch fees, about where they go, what they are for and transparency, and she knows I do. However, the point is that the fee is effectively a charge, tax or levy on one group of home owners that would not be and is not accepted for any other form of property ownership. Once again, park home owners are put in a lesser category compared with everyone else we represent. That is the point.

[Annette Brooke]

I thank my hon. Friend for his support throughout the campaign. That is a valid point.

We must not just sit back. It is great that we have the legislation, but we need a continuous full and frank debate on the issue. As I said, we need transparency, and equally we need to ensure that the industry is viable and that responsible site owners have a viable business model.

We ought to praise good practice instead of just focusing, as we have to do, on some bad practice. We should praise and look at some good sites and find sites where residents are satisfied. That would be a good approach, and then we can make comparisons.

We have achieved a lot in ending the injustices that were being suffered, but we cannot be complacent until all park home owners are treated fairly. I ask the Minister to be prepared to look deeper into the matter to ensure that we get the right balance for site owners and park home owners.

There will be a lobby, organised by my constituent, at 4 pm on 2 July in Committee Room 10. I very much hope that the Minister will attend simply to set out what is going to happen with the existing legislation as far as pitch fees are concerned. Today, I hope, is the start of a constructive debate.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

rose—

[Mr George Howarth (in the Chair)]

Order. Before I call the hon. and learned Gentleman, may I ask whether he has permission to speak from the Member who introduced the debate and the Minister, because there is very little time left?

[Annette Brooke]

indicated dissent.

[Mr George Howarth (in the Chair)]

The Member who introduced the debate has signified that you did not approach her—that is the protocol you are supposed to observe.