Sale of Park Homes

Debate between Annette Brooke and Peter Aldous

Thursday 30th October 2014 Commons Chamber

[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.

Park Homes

Debate between Annette Brooke and Peter Aldous

Tuesday 13th May 2014 Westminster Hall

[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.