Our hugely subsidised housebuilders’ latest income-eroding wheeze – to the detriment of their own customers – is to have private estate subject to a property management company, with income streams that can then be sold on.
A number of MPs raised this issue in the Leasehold and Commonhold Reform Bill, which LKP urges the government to include right to manage on fleecehold management companies to stop the scams.
“Estate management companies are a massive and growing issue in my Dartford constituency,” said Tory MP Gareth Johnson (above). “Some 7,000 new homes have been built in my constituency over the last 10 years, and they are predominantly “looked after” by management companies.
The same point was made by Natalie Elphicke, Conservative MP for Dover, who said:
“We have a failed development — Sunningdale homes — and a long-standing problem with Persimmon Homes in relation to Sholden. Both situations relate to the lack of adoption by local authorities, and to service charges and other management arrangements … Will there will be any retrospective help for situations that have remained unresolved for many years?”
At the other end of the country in North Durham, Labour MP Kevan Jones highlighted the same problems:
“In my constituency, Persimmon Homes’s business model was structured around not only selling on the leaseholds, but the tactic of including areas of the estate that traditionally would have been passed over to local authorities as the responsibility of the leaseholders. Would he [Michael Gove] agree that the Government need to take some responsibility for the tsunami of money they threw at some of those developers, and for turning a blind eye to what they were doing in their business models?”
Mr Johnson said that power needed to be transferred back to the residents who had actually bought these houses.
“It is absolutely right that power is transferred away from management companies and into the hands of local residents, because at the moment management companies seem to do pretty much whatever they like. They can put up the charges they levy on residents way above inflation while providing a very poor service, and local residents can do very little about it.
“Local residents find themselves completely restricted in challenging what is, on occasion, a hideously poor service with extortionate fees. They are trodden on by the management companies.
“Of course, residents question why they have to pay council tax at the same time as paying management fees, as they often find that their management fees are used to pay for, say, play parks that the whole community can use for free. They have to pay for it, they have to pay for the maintenance and they have to pay council tax, too, which seems very unfair.”
Sir Peter Bottomley pointed out that many property management companies were now amalgamating into giants:
Mr Johnson said: “We often see two management companies sending two people to mow the grass on the same estate. Residents look out of their window and see the grass on one side of the estate being mowed by one company and the grass on the other side of the estate being mowed by a different company.”
The Dartford MP added that “20% of the people attending my surgeries are there to complain about management companies”.
“It is only right that we tackle this issue with management companies, because it totally undermines the concept of freehold. The Secretary of State rightly says that he supports home ownership, yet we have a system that undermines the principle of home ownership.”
“People bought these houses in my constituency because they are nice homes in a nice area, and they often bought them in a seller’s market. They were literally standing in a queue, with other people waiting behind them to buy the same property. If they had not signed on the dotted line there and then, there were plenty of people behind them who would have. They signed without a full appreciation of the terms of the contract, which effectively said that the management company can put up its management fees way beyond inflation, and there is nothing that can be done about it.”
https://www.parliamentlive.tv/Event/Index/049c012d-0c14-4997-bfcb-c4c1a1c1ac69
Related posts:
Labour MP Helen Goodman fights ‘fleecehold’ rip-offs with Private Members’ Bill
‘Fleecehold’ property trap returns to parliamentary agenda with new private member’s bill
Companies like ARMA member SDL Bigwood are ripping off homeowners in private estates, Parliament is told
Welsh government grapples with ‘fleecehold’ woes, issues call for evidence closing April 3
‘Fleecehold’ petition launched to stop housebuilders creating YET ANOTHER revenue stream from their customers
Clive Betts: removing onerous ground rents is ‘completely compatible with the European convention on human rights’
Just look at the reviews on Google of some of these management companies, they’re all crooked. Employees of Blue Property (my management company) were fraudulently writing 5 star reviews of themselves on Google in an attempt to manipulate their true terrible overall score even using their own real names! I know of people that have been threatened with legal letters for writing honest reviews about them. They are pathetic. It’s the 21st century PPI scam.
Richmeister,
They are all “at it” just have a good look on of “Trustpilot” and form your own opinion.
Freeholders of private estates often employ connected Company’s to manage the common areas, it is a disgrace and must be ended. Any “bottom feeder” can set up as a MA and “rip off” the Great British Public for eternity, they are not accountable to the bill payer, do not have to justify the cost, and no one especially the bill payer can do anything about that racket?
I am aware of a lot of Freeholders who are regularly billed for goods and services that they simply do not receive, and quite simply there is absolutely nothing they can do about it.
It is a disgrace.
Typo, Leaseholders, not Freeholders.
Stephen Burns, re. your “typo”, actually your statement applies to so-called freehold homes as much as it does to leasehold homes. The owners of so-called freehold homes on almost all new estates throughout the UK are subject to annual estate rent charges payable to managing agents appointed by builders..
Could Parliament legislate to refund the council tax paid by freeholders of houses and leaseholders of flats on these private estates? It would be a good start
Massimo,
That is a very good point, when a local authority abdicates its responsibility on private estates, why should the Leaseholder – Freeholder have to cough up money to some third party, to undertake works already included in the payment of the community charge?
Would the builder have to achieve a higher quality of build in the event the Local authority were to choose not to adopt the common areas of private estate?
The website of Homeowners Rights Network- HorNet look into the matter in some detail and provides some useful and interesting material: https://www.homeownersrights.net/welcome-to-hornet/