Freehold Estate Fees

Sarah Jones Excerpts

Tuesday 22nd January 2019 Westminster Hall

[Sarah Jones (Croydon Central) (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 the debate and on her substantial work on the topic.

As we have heard, homeowners on private estates across the country are being fleeced through a system of spiralling fees, shoddy service, lack of choice and zero accountability. We know it is an issue that affects up to 1.3 million households and it is a problem that mirrors the exorbitant service charges and draconian standards facing leaseholders. It is a problem that the Government have had years to fix, but they have yet to do so.

We heard in colleagues’ eloquent speeches just how obscure some of the charges are. My right hon. Friend the Member for Alyn and Deeside (Mark Tami) told us about the fence that would be looked at but not actually fixed. My hon. Friend the Member for Sunderland Central (Julie Elliott) told us about the light that took six months to replace, but which was not replaced correctly. My hon. Friend the Member for Birmingham, Edgbaston (Preet Kaur Gill) spoke powerfully about people’s sense of feeling helpless and powerless. We heard from my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) about how developers are finding additional ways to fleece people and charge more and more. The Government have failed on a number of levels. I hope that today we can take a positive approach to the issues and take action on them.

My hon. Friend the Member for Bishop Auckland made some very good suggestions. Homeowners have been raising the issue for a while. In 2016, the HomeOwners Alliance said that

“this new model has crept in without democratic scrutiny or discussion and over the past 10 years or so has become the industry standard.”

Back in 2017, the Government said that this was a problem and that they would introduce changes to the law. It is not enough to accept that there is a problem—we need to act.

The second problem is that, as discussed, when the Government published proposals to fix the problem, they did not go far enough. The Government say that they will give freeholders the right to challenge the reasonableness of charges or appoint a new manager, via tribunal, in the same way as leaseholders currently can. We know from the Government’s own repeated consultations on fixing the leasehold sector that the system currently in place for leaseholders is not working. People are not going to trial because they fear the complexity and potential cost of the process. Property companies turning up with teams of lawyers make an imbalance and a mockery of the system.

My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) has previously calculated that the overcharging of leaseholders through extortionate service charges is up to £1.4 billion per year. Why are the Government presenting access to tribunals as the solution when that has abjectly failed to stop abuses in the leasehold sector? The Government admit that failure and in April last year they accepted that managing agents needed independent regulations. I understand that a working group under Lord Best is designing the new regulatory regime to cover aspects such as leaseholder service charges. Will the Minister confirm whether freehold estate management will be covered by the new independent regulator, and if not, why not?

The proposals set out by my hon. Friend the Member for Bishop Auckland are much more likely to tackle the abuse of homeowners, with caps on estate charges, minimum standards and powers for residents to take over management of communal areas. That last proposal would mirror the system of commonhold for shared residential property. I hope the working group currently designing the regulatory system will consider those proposals.

The third failure of Government is that they have let a system develop whereby roads, green spaces and other public spaces are effectively privatised. Even those who are not being ripped off are effectively paying twice, as has been pointed out. They pay council tax, which contributes to maintaining communal areas under council control, and then they pay again for the private maintenance of their own areas. The Government could stop that all together—they should act. We have discussed who is at fault; I do not think we can blame councils, because of the 50% cuts in local authority funding under this Government and the £7.8 billion predicted black hole in local services by 2024-25.

Overall, the Government have been too slow, too weak and lacking in ambition. Today’s debate shows that the Opposition could do better across the board. The Government talk a lot about their credentials on home ownership, but today’s debate is just another example of their failing people who have worked hard to buy their own home. Eight years of Conservative failure on home ownership is exacerbated by this very contentious issue, which affects many people and on which the Government could act.

I want to end by quoting the hon. Member for Bishop Auckland, who said that housing is being seen as an abstract investment rather than as the foundation of our families and communities. Homeowners want action and they want it now, and I very much agree with them.