Helen Goodman, Labour MP for Bishop Auckland, has launched a private members bill in the House of Commons which aims to ban so-called “fleecehold” charges on private estates.
The Freehold Properties (Management Charges and Shared Facilities) Bill examines fees payable by owners of freehold homes on new build estates where communal land is not adopted by the council.
Instead roads, lighting and communal spaces are retained by the developer which either charges residents directly for maintenance, or sells on the contract to a property management company who collect the fees.
If bills remain unpaid, developers or their agents can use section 121 of the 1925 Property Act to place charges on the property, send bailiffs and threaten repossession.
Goodman told MPs there are several issues with this arrangement which affects an estimated 1.3m households.
She said: “The first issue is that the public spaces are not made up to a proper standard. After eight years one man I met is still living on an unmade road. Promises of green areas, woodland, play facilities and even street lighting are broken.
“Secondly, the fees are high, rising, uncapped and unregulated. One constituent told me their fee had risen from £60 to £134 in four years – at this rate it will be £3,313 in 16 years’ time. Another constituent faced a 50 per cent rise in one year.”
According to Goodman’s research, there is a lack of transparency about the way the fees are made up. There is no cap on fees and management companies are under no obligation to account to homeowners for work carried out or costs incurred.
Although estate fees are often included as covenants in the transfer deeds on freehold properties, many homeowners don’t know they exist until a bill arrives. Many homeowners were advised by solicitors recommended by housebuilders when buying their homes, and they routinely claim that the consequences of not paying estate fees were not adequately explained.
Another problem is that when challenged over the fees or upkeep by residents, the management companies adopt an aggressive stance, often with threats of high court action or bailiffs.
The Freehold Properties (Management Charges and Shared Facilities) Bill calls for developers to be obligated to ensure shared facilities are maintained to an adequate standard. To help existing homeowners, the bill will cap and regulate estate maintenance fees. It will also make provision for the transfer to genuine self-management to end the “stranglehold” of managing agents.