Property Management Company Fees

Stephanie Peacock Excerpts

Tuesday 7th November 2017 Westminster Hall

[Kelly Tolhurst (Rochester and Strood) (Con)]

I beg to move,

That this House has considered property management company fees.

It is a pleasure to serve under your chairmanship, Mr Evans. I am delighted to have the opportunity to lead this debate on an issue that has affected a number of my constituents in Rochester and Strood and that has no doubt affected thousands more across the country. Over recent years, we have seen a model being used by developers where development sites are managed by management companies after the delivery of freehold and leasehold properties. A rising proportion of residents of such properties are left having to deal with property management companies when they have issues.

Some property managing agents do take the work out of owning a flat and offer great value for money for residents. Everyone acknowledges that property management fees are a standard part of owning a flat, but when people buy a freehold house on a large development, those fees are not something that always comes to mind. Management companies will typically cover repairs to the communal areas of a development, including to the windows, drainage and the roof. Often they will also cover recreational spaces within grounds, such as children’s play areas or gyms. In some cases, the fees are also used to pay for other shared services, such as gardeners, landscapers, concierge services or cleaners. Understandably, service fees can differ between developments. Fees can be a flat rate for all premises, or they can be determined by the number of bedrooms or a property’s floor space. However, some agencies can charge high fees and evidently do not necessarily offer a service worthy of the amount, even by modern standards.

Research last year found that the typical annual fee for new build homes is £2,777, while for older properties it is £1,863. For many families and individuals that is a significant added living cost, and it is understandable that residents become concerned and irritated when there is no value for money. I therefore want to use this ideal setting to highlight the impact that unjustified property management service charges have on local homeowners. A number of constituents have got in touch regarding exorbitant charges from local housing associations and property management companies for services that are simply not carried out.

In my constituency, many residents of the Chimes and the Pastures estates in Hoo are having ongoing disputes with their new property management company, SDL Bigwood. When householders on the estates bought their properties, they were informed that only when the whole of the estate was handed over from Taylor Wimpey and Bellway would they incur property management charges. Until then, Taylor Wimpey and Bellway would pay them. Unfortunately, the companies failed to communicate with residents as to when any handover would be made. In fact, residents were left completely in the dark over the reality, which was that the handover of the whole estate would no longer happen. Instead, only a few parts would be handed over. It then became apparent that SDL Bigwood tried to bring forward debts from its former business for services that residents did not see being implemented.

Currently, there is no onus on the property management company to provide any evidence of the services they are charging for being carried out. They merely need to provide end-of-year accounts long after the end of the year. Some residents face paying thousands of pounds for a backlog of fees passed on from one of the former companies, with payment demanded by the end of the year. That is all despite the estate being in surplus. However, as the huge sums are still needed in advance, and as all this is legally tied up in title deeds and TP1 property transfer papers, residents find themselves having to pay with no right of challenge. It is wrong that so many people who only want to provide a roof over their families’ heads find themselves trapped and helpless and see their money wasted.

[Stephanie Peacock (Barnsley East) (Lab)]

I thank the hon. Lady for securing this debate. I recently had a case raised with me where a couple purchased a leasehold flat from a developer. Once they had completed on the purchase, they were informed that the advertised service charge was going to be doubled. They were given no explanation, and when they asked questions, the company could not explain why it was doubling its fees. Does she agree that we need to clamp down on that kind of practice? We need to tackle rogue landlords who prey on people, including a number of my constituents in Barnsley East.

[Kelly Tolhurst]

I agree with the hon. Lady. I will come to some more examples from my constituency where charges are not transparent, but this debate is about leaseholders and freeholders in particular, as opposed to people who are renting their properties. That is what I am talking about today.

To give another example, one of my constituents reported that in the past financial year, their estimated service charge increased from £85 a month to £128 a month. If that was not already bad enough, the housing association, Hyde Housing, failed to get its figures ready for the April payment. As a result, the charge the individual paid in May increased by more than 100%.

The breakdown of Hyde’s figures makes for astounding reading. For example, there is a charge for “Fire safety, including servicing and inspections” of £34 a month. The building in question consists of a block of 24 flats. If all properties are charged similar amounts, the charge brings in more than £800 a month. However, the actual inspection takes just 15 minutes, in addition to the time taken for paperwork, and only occurs annually. I understand there are fire extinguishers and a sprinkler system to maintain over the years, but £800 a month seems excessive to many of the families and individuals. In addition, there are charges of around £90 a month for grounds maintenance. I am familiar with the plots around the block, and it is clear that any maintenance is minimal, and certainly worth nowhere near a value of £90 a flat a month. My constituent’s block is also paying nearly £250 a month collectively for unspecified provisions that many residents do not understand, and those provisions are not disclosed by the association.