The Home Owners Rights Network – HorNet https://www.homeownersrights.net/ – is petitioning government to end the “fleecehold” racket.
This is where house builders have created management companies for assets such as roads, lighting and drainage on new estates.
Local authorities are delighted to be spared the expense, and the nation’s plc housebuilders have seen the angles of creating another complex, long-term asset at the expense of their customers.
And their customers have often bought their properties with taxpayers’ aid through the Help To Buy scheme.
The public is getting thoroughly fed up with this sort of rip-off – and the fecklessness of government in doing anything about it.
The petition can be signed here:
Petition: Require local authorities to adopt all Public Open Space and roads on estates
Local authorities are avoiding increasing their grounds maintenance responsibilities on new private estates by requiring developers to form management companies to deal with the maintenance long term. These management fees are an extra tax on hard working families. Councils should adopt the land.
For most home owners, it is simply inconceivable that local authorities don’t pay for these basic amenities. These are the sort of services that are paid for with council tax.
In December, the Guardian has reported this – yet again showing its engagement with these unsexy housing issues.
Homeowners trapped by ‘fleecehold’ – the new cash cow for developers
Thousands of homeowners on private estates are facing unregulated and uncapped maintenance fees, amid allegations that developers have created a cash cow from charging for communal areas not maintained by the council. Management contracts for “unadopted” private estates are frequently sold off to speculators and property management companies in the same way as freeholds and ground rents – leaving homeowners with spiralling fees and nowhere to turn.
“Management contracts for “unadopted” private estates are frequently sold off to speculators and property management companies in the same way as freeholds and ground rents – leaving homeowners with spiralling fees and nowhere to turn,” says the newspaper.
The Guardian cited the example of Lynn Myers, who bought her two-bed leasehold house in Penrith, Cumbria, from developers Persimmon in September 2016. The sales agent told her the estate would be managed by Carleton Meadows Management Company with an estate charge of £100 a year per household for grass cutting.
When Gateway Property Management took over in July 2017 it tripled the fee to £308 a year – that’s £17,000 from the 55 residents. Myers alleges that the fee includes more than £3,000 “postage”.
Gateway Property Management Limited appears to have one director:
- Antony John Dean
Residents in Church Meadows in Great Broughton are in a similar situation. Richard Elsworth moved into his Persimmon-built freehold property in May 2013. The estate’s 58 residents each pay Gateway a service charge of £125.53 a year, amounting to £7,281 to maintain about 600 square metres of grass.
When Elsworth’s neighbours sold their home, they were charged £360 for a “management pack” for the buyer, plus £144 for a deed of covenant.
In January, the newspaper revised the subject citing Greenbelt group Limited, a Glasgow-based company responsible for maintaining the communal areas of about 550 developments, home to 52,000 households across Scotland and the north of England, with another 30,000 due to join the company shortly.
The directors are given as:
- Anthony Winston Burton
- Janet McQuillan
- Alexander Middleton
- Gerry Campbell More
- Colin David Thomson
Allegations against Greenbelt consist of overcharging and under-delivering. The firm vigorously denies the allegations.
‘Fleecehold’ complaints flood in as residents battle to turn tide
Last month Guardian Money revealed how thousands of homeowners, who bought on “unadopted” private estates, face escalating costs after developers sold off management contracts to private companies in what many describe as “fleecehold”. Following our report we were contacted by many homebuyers with tales of woe – but one name seemed to feature more than any other: Greenbelt.
The Guardian wrote: “We have been contacted by English homeowners with gripes about Greenbelt on estates in Leeds, Bradford, Middlesbrough and Bedale; and, in Scotland, estates in Kilmarnock, Kirkcaldy, Edinburgh and Menstrie.
“The complaints follow a broadly similar pattern. When they bought their homes, most were aware they would have to chip in for maintenance of the estate’s communal areas by way of “burdens” – additional responsibilities and/or obligations written into their title deeds.
“However, some householders say that costs escalated and service levels fell, with some questioning the legality of their agreements.”
A Facebook group titled “Unhappy Owners Against Greenbelt Group” has more than 700 members, while reviews site Trustpilot plays host to more than 100 Greenbelt reviews, with the company awarded just one star – the lowest possible rating.
Greenbelt has said that the Facebook discussion posts contain “disingenuous, often defamatory statements”.
We are being ripped off by private estate charges by developers and property predators just like leaseholders, says HORnet
I would add that these home owners ARE taxpayers who simply want to be treated like all other taxpayers. Many HorNets have expressed a willingness to contribute to green space maintenance on their estates, but want the council to own and run it. There must be some other solution for funding it either by council tax banding/parish precept/community interest company or whatever solution can be found. It is public open space we are talking about, so the home owners only benefit is proximity – not always a benefit when there is anti-social behaviour which cannot be policed properly because the land is privately owned.
The bottom line is home owners don’t want to be ripped off by private companies who are, as you say, maintaining a property asset either for themselves or the developer.
The other problem no one has mentioned yet is what happens if the private company goes bust a la Carillion? Putting the long term management of these estates into private hands is not a sustainable solution as required by the Town and Country planning act.
In many cases residents will find that those common areas will have been sold off to speculators who then grant a long term lease to a managing agent (who wouldn’t you just know it?) just happen to be connected to the speculator!
Researching Companies House and the Land Registry may prove instructive.
Homeowners may be shocked to find that their common areas are mortgaged to the hilt!
For many years Firstport have derived a considerable income source from this as well a securing loans against these assets.
Oh! And don’t forget? If a road is not to be adopted by the council, it can be built at a much lower standard and, of course, it will be much cheaper for the developer as well.
The homeowner also becomes liable for insuring the common areas, so the managing agent/freeholder can cop those lovely insurance commissions (Firstport used to add up to 40%) without having to disclose it!
This article is about another practice which needs to be ended now. Let’s see Government address and add this to the review of the housing market.