Date: 2023-04-20
Richard Fuller: I am grateful to my hon. Friend for saying that. I know the Minister will be listening, because she has been listening to all the points that I have previously made on these issues. Just to cap the concerns, at the end of it, a person might want to sell their property. What we find increasingly is that, as they are going through the sales process, they  hit a snag, because the estate management company is saying, "You haven't paid charges." Sometimes, they are charges that the homeowner was not even aware that they were liable for. This is the reality for many homeowners living in areas with estate management charges: they have no voice, no explanations, no transparency, no redress and, potentially, no ability to move house. Let me give a couple of specific examples to bring those points to light for the Minister--they will largely be from my constituency, but they occur in many places. I return to Councillor Jim Weir in Great Denham, who conducted a survey to which 300 residents replied, and which identified multiple instances of excessive administrative fees. A number of my local councillors have done the same. In one scheme, the anticipated maintenance work to be carried out and the charges for electricity comprised 30% of the total charge to the residents, while 70% of the charge was fees, reserves and overheads. In a second scheme in his ward, the anticipated maintenance was 10% of the total charge, with 90% of the charge going on fees, reserves and overheads. In a third scheme, the estate manager had just one job: the management of seven lamp posts. Jim and his team compared the costs charged per lamp post with the standard cost of the local council for doing the same job and found that the management agent is charging twice the standard rate. When residents challenged the estate management company to see the electricity bills, they were informed that the bills could not be shared electronically and someone would have to visit the offices of the agent 170 miles away if they wanted to inspect them. One good resident said, "I'm up for that," and that he would go and have a look. He arranged an appointment, which got cancelled and cancelled and cancelled. After more pressure from residents, the company finally admitted they did not have any electricity bills to show. No individual should have to go through that level of turmoil to try to find out something so simple about why they are being charged something in their own area. It is ludicrous. I have a couple more examples from New Cardington of other issues relating to handovers and conflict of interest. Tom Middleton, the chair of the New Cardington Residents Association, wrote to me: "Residential management companies (RMC) are set up by developers to look after the various open spaces not placed for adoption. The directors of the RMC are usually senior directors at the developer. This means the managing agent is effectively the developer's client until handover. This is usually prolonged. Here in New Cardington the RMC was incorporated in July 2010, 13 years later the developers are only NOW starting the handover process. This means for 13 years residents have paid a service to an agent of some description but over which they have had no control." My hon. Friend the Member for Wyre Forest (Mark Garnier) has a similar problem in the Silverwoods development in Kidderminster. He cannot be here today, but he wrote to tell me: "Multiple iterations of the estate management company has resulted in absolute opaqueness in accounting and use of funds generated, whilst failure to enforce planning conditions by Wyre Forest District Council has passed on a financial burden to rectify failures onto residents. This is not good enough." There is a further point about conflict of interest that, on balance, I want to make. The Association of Residential Managing Agents has 10 standards in its  consumer charter, the seventh of which is, "Avoid conflicts of interest". Concerns have been raised by the New Cardington Residents Association that their estate management company, RMG, has created a conflict of interest by establishing a wholly owned subsidiary, Osterna Ltd, to conduct annual fire risk assessment processes. I have kindly been copied in to a letter from RMG that explains its rationale, and I am in no way asserting that there is any wrongdoing here, but it clearly changes the arm's length nature of an estate management company hiring services if some regular services, such as fire risk assessments, go untendered to related companies. Will the Minister write to companies reminding them of their obligations and calling for greater accountability and transparency? I will canter quickly through the history of Government reviews. In July 2017, there was a consultation on tackling unfair practices in the leasehold market. In December 2017, the Government said that they would legislate to ensure that freeholders who pay charges for the maintenance of communal areas and facilities on a private or mixed-use estate can access equivalent rights as leaseholders to challenge the reasonableness of service charges. In October 2018, the Government confirmed their intention to "replicate consultation requirements and obligations on the provider of services to provide information to the freeholder." In June 2019, the Government committed to equal rights for freeholders and the right to manage for freeholders. In December 2021, the then Minister told the House: "The Government also intends to give freeholders on private and mixed tenure estates equivalent rights to leaseholders to challenge the reasonableness of estate rentcharges, as well as a right to apply to the First-tier Tribunal to appoint a new manager to manage the provision of services. In addition, we will ensure that where a freeholder pays a rentcharge, the rentcharge owner is not able to take possession or grant a lease on the property where the rentcharge remains unpaid for a short period of time. We will translate these measures into law when parliamentary time allows." May I ask the Minister to confirm, first, that there has been no dilution of those commitments by the Government, and secondly, that it is the Department's desire to include this long-promised legislative change in the next session of Parliament? I say "Department" because, of course, it is the Prime Minister who has to balance the multiple claims on parliamentary time. That is why I--along with thirty of my colleagues--wrote to the Prime Minister to ask him to include the legislation in the King's Speech. The Prime Minister kindly wrote back and included the following comments: "The Government believes that it should be made clear to potential purchasers what the financial arrangements and their responsibilities are for the upkeep of communal areas. It is also important that we hold these estate management companies more accountable on how they perform and how homeowners' money is spent." He went on: "These changes will be introduced when Parliamentary time allows, and I will carefully consider your call for it to form part of our legislative session for the next Parliamentary session." I put on the record that I am very grateful that the Prime Minister wrote back. I hope that he understands the purpose of this debate and the calls by 30 of my Conservative colleagues, including the contribution from  my hon. Friend the Member for Congleton (Fiona Bruce). It is the time for the Prime Minister to take the action that has been promised for so long. We know that the issues preceded his time, but he has a great capacity for understanding problems and finding solutions. We are close--I think the Minister will be clear that the Department is ready to move--and I hope that the Prime Minister will take further consideration and action to help my constituents and those in many other places around the country.