Brandon Lewis
Main Page: Brandon Lewis (Conservative - Great Yarmouth)
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.