New build estate managers are “undercutting” the prosperity which homeowners are meant to feel, an MP has said, as he called for a crackdown on fees and charges.
Labour MP Alistair Strathern warned that some house buyers in “fleecehold” relationships risk double-paying for services – through private fees and council tax – when town halls fail to adopt new build infrastructure.
He called for a new law to set rules about how quickly councils must take on new build facilities, such as roads and green spaces.
Mr Strathern also said homeowners should be able to “fire unaccountable management companies”.
Introducing the Housing Estates Bill using a Ten Minute Rule motion, the MP for Hitchin described estate management fees and charges as “a new homes stealth tax”.
He said: “We’ve failed to appreciate the extent to which fleecehold is becoming a default model for new home delivery in this country.
“It’s undercutting the very sense of security, the very sense of prosperity that new homeownership is meant to bring.”
Referring to a family friend, Mr Strathern told MPs: “Their estate had gone unadopted now for many years – no end to adoption was in sight.
“And in the meantime they were paying hundreds of pounds each year for basic services that all of the rest of their neighbours, all of the rest of their community, would be receiving through their council tax.
“But that wasn’t the worst of it.
“When they’d missed one bill which had gone up, as it happens, quite considerably at a week’s notice, rather than coming to them, rather than giving them tolerance to understand it, their estate management company used the contractual powers they had to go straight to their mortgage lender to have that amount added to that family’s mortgage, and to drive a wrecking ball through their credit score in the process.”
Mr Strathern said in one case he had heard about, homeowners were told they must pay upwards of £250 for one lightbulb change on their estate, an example of residents “forced to pay often hundreds of pounds each year for services that every other homeowner would get as part of their council tax”.
The Competition and Markets Authority estimated in its housebuilding market study that households had spent at least £260 million on estate management charges in 2022.
The watchdog also estimated that in the five years to 2023, around 80% of freehold properties built by the 11 largest housebuilders are subject to these charges.
The Bill, which will be listed for a debate on June 13, would set minimum adoptable standards for developers.
Mr Strathern also proposed adoption timelines which local authorities must meet, and “putting (buyers) back in the driving seat, giving them power to fire unaccountable management companies to make sure that they have a choice to drive up service levels, to drive up the responsibility and hopefully the performance of those who are undertaking management work”.