Protection for Homebuyers

Liz Twist Excerpts

Thursday 13th December 2018 Westminster Hall

[Liz Twist (Blaydon) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma.

I thank my hon. Friend the Member for Stretford and Urmston (Kate Green) for securing this important debate. It is not before time that the House has had the opportunity to turn to the issues faced by homebuyers, in particular the buyers of new-build homes. At a time when we all recognise the need for substantial home building, we perhaps give too little thought to what happens after the homes are built, bought and sold, and to what happens to the buyers.

My hon. Friend has already spoken about the problems faced when defects are found after purchase and the difficulty of getting a response, let alone a solution, from the house builders. I can certainly echo her concern from experience in my constituency, but I want to look at a couple of other issues that also affect my constituents. The first is that of the completion and adoption of new housing estates. It has very much been a preoccupation for me, not just as an MP but as a local councillor in the years before that.

A new Barratt/David Wilson Homes and Persimmon Homes development was started more than 10 years ago. I will not name it because the residents have mixed views on whether that would be a good thing. Some householders were already living on the site when development stalled in about 2011, because many would-be buyers were unable to find mortgages after the banking crisis. It picked up again, however, and the last house was sold nearly two years ago—most of them long before that.

Families moved in with the promise of play areas for their children, but it took years for them to appear and, as many of those who bought early said, their children were now grown up and not interested in play areas—although, thankfully, the many younger children on the estate are. Buses that were promised to take people from the estate to the local bus interchange, avoiding the need to use a level crossing, did not materialise. The council proposed a price to adopt play areas and public open spaces, but the developers thought the price too high and opted to go with a private management company. Even now, however—one of the companies, Barratt’s David Wilson Homes, has been updating me—they are still arguing about the cost and arrangements of that contract, meaning that residents are concerned about maintenance and safety into the future, and of course about the appearance of their estate.

A spine road runs through the estate, in a loop from one entrance to the other, but it was not until this year that work started on completing the surfacing of the road and installing kerbs for drainage. Checking that latest update I received, I find that the date for completion of the work has been pushed back to January ’19. Residents are very concerned about that, with lots of young children on the estate and cars flying about on a very uneven surface. They are worried about damage to the cars but they are much more worried about damage to the children, who until recently had nowhere else to play. Furthermore, no fees have yet been paid to the council for the adoption of the roads, despite its best efforts, and street lighting is not finally sorted out. I could go on—but we get the picture.

We—residents, local councillors and me—have not sat back and let that happen. We have met with the developers, looked at enforcement action and complained like hell. We even had a liaison committee with the two developers, to work through all the issues, but, sadly, despite hours of talk, everything seems to come down to money and the developers not wanting to spend the money on the estate to complete it.

[Mrs Hodgson]

My hon. Friend is making some valuable points that have not been mentioned so far. The issue of unadopted roads came up on a new-build development in my constituency, especially with regard to an area where shops, the takeaway, restaurants, pubs and things have been built. The roads are unadopted, so people can just park wherever they like, creating huge issues with knock-on effects, such as on safety, which she has mentioned. I raised this in an Adjournment debate on the Floor of the main Chamber, and it would be great if something came out of this debate regarding unadopted roads on new-build estates.

[Liz Twist]

My hon. Friend reminds me of something else that I should have mentioned: at the time of buying the properties, my homebuyers were told that there would be a shop, a pub and a bus, but none of those things has come to pass. Even while we were telling residents that that was not going to happen, new buyers towards the end were still being told that there was going to be a pub on site—all the residents already knew that that was not going to happen. That is an important point, and she made another one about safety. As we all know, parking on new developments is a huge issue, with residents feeling it is insufficient and with the dangers that that can present.

[Mrs Hodgson]

On that very point, I am grateful that my hon. Friend has given way, because I do not think that I made myself clear—though she probably knew what I meant. Because the roads are unadopted, there are no yellow lines. On the roundabouts, articulated lorries can pull over to park, and no one can move them on because there are no yellow lines or anything—the roads are all still unadopted. That is a major problem in the whole area. Some measure should provide for temporary adoption of the roads for safety reasons, even while the estate is still being built.

--- Later in debate ---

[Liz Twist]

Thankfully, we do not have articulated lorries—we do not have a shop on the estate either—but there is a real problem of people parking wherever they want to because there are no lines. That is one of the issues we have talked about over the years.

It cannot be right that developers can start estates, build homes and sell them all, and then lost interest and leave them. We need measures in place to allow us to tell developers, “You must complete this work by this timescale and to an adoptable standard.” I know many residents on the estate; they are hugely frustrated by the process.

The second issue I wish to raise, which has been raised already, is future adoptions and maintenance of new developments. With local authorities seriously cash strapped, many are looking at policies that increasingly involve private management companies taking on maintenance of grounds and roads for a service charge. It is vital that there are clear and transparent ways in which those management companies are accessible and responsive to residents, and that residents have a voice in the condition of their estate. It is not good enough just to pass over a lump of money for someone to maintain part of an estate in perpetuity, with no way of redress thereafter.

That brings me on to the third issue I wanted to mention: leasehold. Service charges have some common features with leasehold. My hon. Friends the Members for Poplar and Limehouse (Jim Fitzpatrick), for Washington and Sunderland West (Mrs Hodgson) and for Ellesmere Port and Neston (Justin Madders) have talked quite a bit about leasehold issues so I will not go over them all again, but I want to raise two points: service charges and the use of developers’ solicitors, either through encouragement or referral fees.

My hon. Friend the Member for Ellesmere Port and Neston referred to the inquiry of the Housing, Communities and Local Government Committee. As a member of that Committee, I heard from some leaseholders and other witnesses. Service charges are particularly important to leaseholders because of shared areas, but they affect new homebuyers, too, under the new arrangements where management companies may be involved in maintaining estates. It is important that people are clear about what their rights are and that they have redress when things go wrong. The problem of developers encouraging people to use their nominated solicitors affects both freeholders and leaseholders.

The residents on the anonymous estate that I mentioned and the leaseholders who gave evidence to the Select Committee said that they were not informed of important issues about their properties or their estate, whether they were planning issues, were about the leasehold or were about increasing ground rents. For leaseholders, that can have particularly long-reaching effects. Not being told about ground rents and service charges or the way they increase means that some buyers of first homes are trapped in what was their dream first home, because they have a growing family and need to move. The Select Committee heard evidence that a number of people are trapped by increasing ground rent and the wariness of mortgage lenders to lend on those properties. Those people are especially affected, having been told they can buy the freehold in future, when they find out it has been sold on to developers at extortionate costs. That cannot be right.

It cannot be right that referrals fees, arm twisting or inducements such as new carpets or garden landscaping can be used by the seller to encourage the purchaser into using their preferred solicitor. There are codes of practice that solicitors are bound by, which should protect buyers, but the number of people who told us that they were not aware of conditions shows that something is going wrong. The system has to be seen to fair and right. I hope the Minister will address that issue.

Homebuyers deserve protection and better ways of effectively addressing their concerns, whether they are freeholders or leaseholders. The proposed changes that my hon. Friend the Member for Stretford and Urmston told us about would be helpful. However, as she said, voluntary codes are useful, but much more rigorous action needs to be taken to protect homebuyers. I hope the Minister will assure us that homebuyers will get the protection that they so need.