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.”