Helen Goodman MP: We must bring to an end the 'unscrupulous' practices around Estate Maintenance Fees

Posted On: 
14th November 2018

The 'cash-cow' of estate maintenance fees are now a common feature of many private housing developments, says Helen Goodman MP.

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By now, most people are familiar with the Ground Rent scandal which resulted in leasehold homeowners being exploited by spiralling fees. This unfair practice has rightfully been exposed, but unfortunately a new cash-cow has emerged to take its place. Estate maintenance fees are now a common feature of many private housing developments.

Where communal spaces are not adopted by local councils, developers retain ownership of the land and charge homeowners inflated fees for its upkeep, often selling the contracts on to a management company. Fees rise every year, often beyond the rate of inflation, and there is little transparency about how these funds are spent.

It is estimated that over 1.3 million households are affected by estate fees, with this figure sharply rising as more new-build developments spring up across the country.

While estates do need to be maintained, the fees demanded of homeowners are completely disproportionate to the services provided – if indeed they are provided at all. Fees vary according to location, developer and management company, but are somewhere in the region of £100-£450 per household, per year. On one estate in my constituency, households are charged £100 per year for grass verges to be cut. Multiplied by the 270 homes on the estate, the management company brings in an astounding £27,000 a year for this small task.

Residents often receive very little information about work planned or carried out, and are unable to change their service provider. On one estate in South Church, County Durham, residents sought out a local gardener, saving £400 on their annual bill. The management company took their recommendation on board, but added a mysterious £400 administration charge to their invoice that year to make up for lost revenue.

In a bizarre twist of the law, it is those who own their freehold that are particularly vulnerable to being taken advantage of by property companies. Where leaseholders have a dedicated ombudsman through which to raise issues such as these, freeholders have no avenues through which to launch an effective legal challenge.  These fees are written into transfer deeds as a covenant to be observed, and many people aren’t aware they exist until a bill lands through the letterbox. This is part of a wider problem of the housing industry, where buyers are talked into using a developers’ preferred solicitor and unsavoury details in contracts are glossed over.

Worryingly, I have also received reports about management companies employing heavy-handed tactics to extract payment from homeowners who query these fees. When a household has been unable to pay, or chooses to withhold payment in response to a lack of grounds-keeping on the estate, companies have been known to send intimidating letters, bailiffs – or can even threaten repossession of the property by abusing a loophole in the Law of Property Act (1925).

My bill – titled The Freehold Properties (Management Charges and Shared Facilities) Bill – aims to address these one-sided contracts and bring this unscrupulous practice to an end. I have been working with homeowners from across my constituency and the national campaign group Home Owners Rights Network (HorNet) to develop the three main controls within the bill.

Firstly, the bill calls for a cap on estate maintenance fees, to give people the security of knowing prices cannot increase indefinitely. Second, the bill will introduce measures to ensure shared facilities are maintained to an adequate standard, heading off “money for nothing” culture of property companies. Finally, the bill will make provision for the self-management of communal areas by resident groups if this is a route they wish to take.

The Freehold Properties (Management Charges and Shared Facilities) Bill will be presented on Wednesday 14th November, after Prime Ministers Questions.

 

Helen Goodman is Labour MP for Bishop Auckland