Date: 2023-04-20
Richard Fuller: I am grateful to the House for being able to call this debate to draw attention to the problems with the current framework of legislation and regulation covering estate management and service charges that are placed on freeholders. I do so on behalf of the thousands of homeowners in my constituency who are being charged for services that ordinarily might be covered by their council taxes, who frequently are not given easy access to the scale of charges they face and who have inferior rights of legal challenge or redress when something goes wrong. I do so to support the efforts of local councillors, especially Councillor Jim Weir, from Great Denham, in my constituency, who has done so much to draw attention to these issues, and to support the efforts of those in local resident associations, such as Tom Middleton, the chair of the New Cardington residents' association. He has doggedly pursued estate management companies to get clarity and promote accountability. I also do so on behalf of 30 other Conservative colleagues who cannot be here today but joined me in writing to the Prime Minister to urge action. I want to put on the record my thanks to the Minister for her thoughtfulness in listening to the concerns I have raised with her ahead of this debate. I look forward to her response to some of the points I wish to make. Let me set out a bit of the background. Freehold service charges can cover the provision of a variety of services on housing estates, such as the upkeep of play areas, communal gardens, unadopted roads and communal parking areas, such as parking courts. The requirement to make a financial contribution is most usually defined in the deed of transfer when the property is first sold by the developer. Alternatively, a liability might arise as a result of an estate rent charge that forms part of a purchase contract. The developer then usually enters a contract with a management company to organise the necessary work on the estate and to recover costs from homeowners. Sometimes the developer will set up a residents' management company to take ownership of the communal areas. Where that happens, the residents' management company can appoint a management company to work on its behalf. That may sound a little confusing, as it did to me as I said it. I was surprised to learn that in what one might think would be a single housing development area there can be 10, 20 or 30 individual companies handling small areas, such as little parts of roads or smaller communal areas. For my constituents, that is a confusing issue if they ever want to follow up with an inquiry. I am going to talk about some of those problems in this debate. Based on my research, what is clear to me is that after the completion of a purchase these costs to homeowners can often increase significantly; that there is no clear or effective accountability; and that these arrangements have created a mini-industry of companies providing services of varying quality and charging often high fees, many of which relate to administration rather than to the services provided themselves. For the homeowner affected by estate management charges, these raise some pertinent issues that I know the Government are considering. First, the notification to home buyers of their future liability for charges is not made clearly. Secondly, when bills arrive, it is often unclear what the charges relate to or why they are being applied to a particular property. Thirdly, it is often difficult for residents to obtain information about the charges, to challenge their reasonableness or to effect change when the work is being completed inadequately. Fourthly, the regulation or oversight of the practices of the management companies is very weak, creating problems for homeowners and, increasingly, creating reputational damage to many of our major housing developers, which it would be wise to address now. It is also clear to me that the voice of homeowners is absent at a crucial stage. It is right at the start, while planning approval is going on, when the developer and the local planning authority determine who is responsible for the costs to maintain shared areas in the proposed development. In the room, there is the local authority planning authority and the developer. The people not in the room are the homeowners who will subsequently have to pay those charges. That structure means that the incentives are stacked too heavily for the developer and the local authority to stick the bill to those not represented--the homeowners themselves.