Freehold Estate Fees

Catherine McKinnell Excerpts

Tuesday 22nd January 2019 Westminster Hall

[Helen Goodman (Bishop Auckland) (Lab)]

I beg to move,

That this House has considered freehold estate fees.

It is a pleasure to see you in the Chair, Mr Hollobone. The residents of Hazelbank in Canney Hill in my constituency first brought this issue to my attention. I am grateful to them and to homeowners in the Burton Woods, Durham Gate, Grangefields, Merrington Park, Middridge Vale and Moorcroft developments who have shared their experiences with me. I also thank Cathy Priestley and Halima Ali from the national Homeowners Rights Network—HorNet—campaign group.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate my hon. Friend and north-east colleague on securing this important debate and on her Freehold Properties (Management Charges and Shared Facilities) Bill, which I am pleased to co-sponsor. I am also pleased to add my thanks for the work of my Great Park constituent Cathy Priestley, whom my hon. Friend rightly mentions. I commend Cathy, who has worked tirelessly to raise awareness of these issues. Does my hon. Friend agree with me and Cathy that one of the key concerns for private homeowners in such developments is the sheer lack of transparency about what they are paying for?

[Helen Goodman]

My hon. Friend is absolutely right. The lack of transparency is a significant problem across the country. I did a survey, which I thought would be for people in Bishop Auckland, but I got responses from Ulster to Plymouth, which shows what a massive problem this is.

If offered the choice between a leasehold property and a freehold property, most prospective homebuyers would opt for freehold. Who would not want the permanent and absolute tenure of their property, with all the freedom and security that promises? However, the large property developers—Barratt, Bellway, Persimmon and Taylor Wimpey—sell properties that are not free from hold but come with financial obligations and restrictive covenants administered by property management companies such as Greenbelt, Gateway, FirstPort and Trinity Estates, which take ownership of communal spaces once the developer has moved off the site.

--- Later in debate ---

[Mark Tami (Alyn and Deeside) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing this debate.

I am old enough to remember when developers would build estates that were brought up to adoptable standards, a bond was put down and the council would adopt and take responsibility for generally doing what we all expect to be done around our homes. A lot has changed. Councils now do not have much money and are probably keen to pass that responsibility on. As my hon. Friend the Member for Bishop Auckland said, developers have found another money-making exercise—a bit like leasehold, really—to squeeze even more money out of their sales.

In my own area, companies such as Persimmon in Buckley, Taylor Wimpey in Penyffordd and Bloor Homes in Broughton have passed that maintenance requirement on to maintenance companies: my hon. Friend has mentioned Greenbelt, and Trinity is another one of the big players. A person needs only to look on the internet and Google those companies to see what the average resident thinks of the service they are providing.

When people move in, perhaps the charge is only £100 a year at first; it does not seem too much and people are not that bothered about it. The lawyers have perhaps not pointed it out because, as my hon. Friend the Member for Bishop Auckland has said, they may well be close to the people selling the properties.

By year two, that charge may have risen to £200, and by year three, it may be £300 and so on. There is very little explanation of exactly what the charge is for, or indeed what the tendering process is for the people supposedly doing the work, when the work is actually done in the first place. These are not luxury London developments that have a swimming pool, a gym, and perhaps someone sitting on the front desk. The charge is for cutting the grass and, in some cases, maintaining a play area and maybe a nature area as well.

On top of the standard charge, there are things that are not covered—a very vague category. Greenbelt, in its nice, glossy little brochure showing happy, smiling people who are no doubt delighted to be paying the fees that the company charges, has a list of services. One of those is fencing, and under “What is covered?” it says “Fences will be checked as part of the routine supervisory inspections. The condition of the fence will be monitored and any repairs instructed as and when required.”

If we move on to things that are not covered but are chargeable, we find “fencing works”, which “will be identified as part of the routine supervisory inspections. The conditions of the fence will be monitored and any works instructed as and when required.” Now, to the ordinary person, those sound very similar, yet people are being charged extra for the work that is not covered.

Indeed, the list of things that can be charged for in these circumstances is a very open one; as I have said, residents in many cases are not aware of what they are being charged for. When people move in, certainly in their first year, there does not appear to be any breakdown of the charges. As my hon. Friend the Member for Bishop Auckland said, when a breakdown is provided, it appears that half of that charge—if not more—is the management fee. In my experience, that management fee is never broken down, and it is never explained exactly how that large sum of money comes about.

[Catherine McKinnell]

I see a lot of similarities in the speech that my hon. Friend is making. Does he agree that there is frustration not only about the charges being levied, but about the fact that the standards being maintained are often not as good as they would be had those estates been adopted? I know of some cases in which children have practically lived in a home, left that home and gone to university before they have the basics, such as pavements, on their estates.

[Mark Tami]

My hon. Friend is right. The issue of how estates are left is a broader one: quite often, the moment the last house is sold, the developer does not want to know. As for the standard of work that is being carried out by the maintenance companies, I have heard from loads of people who say that they go out themselves and cut the grass in the communal areas, because those are left in such a terrible state.

Many people have described the charges as like a second council tax. They are now reaching a level that is not the £100 that people started off with; it is a much higher figure, particularly for something that most people thought was covered by the council tax that they pay in the first place. Freeholders who face those charges are now coming to me and saying they are increasingly worried that they could affect the saleability of their property in the future, just as leaseholders are telling me that sales are falling through because people look at a property and say, “I am not going to buy that.” That is just not acceptable.

At the moment, there are effectively no legal protections for people. Leaseholders have some, but they are very weak. My constituency has a lot of mixed estates where, between two houses next to one another—often both exactly the same—one is leasehold and one is freehold. What they have in common is that they both have to pay management charges.

I will summarise because I know other hon. Members wish to speak. People feel abandoned. They feel that the law does not actually protect them and that they do not have any redress. I welcome what the Government have said about leaseholds. My concern is that that relates only to people building houses, selling them and moving on. What about the people already affected by the arrangements, just as leaseholders are? We need to look after them and ensure that they have fair redress against unfair charges. Residents should have the ability—where they want to—to form their own management companies, run their own maintenance and put out tenders. The council might want to tender for some of that work and could provide it at a considerably cheaper cost. The charges are unfair. We really need to get to grips with the issue because otherwise we will store up huge problems for people in the future.