That this House has considered unadopted estates and roads.
It is an absolute pleasure to serve under your chairship, Ms Butler, and a real pleasure to have the Minister present to respond.
I am proud to be part of a Labour party that takes the housing crisis, which affects far too many families across the country, deeply seriously. For a long time we have not been building enough homes in this country, and families in my constituency, and far too many like it right across the UK, are paying the price. As a party, we recognise the best traditions of this country: homes provide more than just a building; they are about security, stability and a platform for prosperity for each and every one of the people we are lucky enough to represent.
I will speak about a growing issue that is threatening to undercut that very principle for far too many homeowners in Hitchin, in the other towns and villages I represent, and in far too many communities right across the country. That is the growing scandal of fleeceholds, as well as the challenges with unadopted estates and the issues that the families left in them have to face.
In my constituency, we have arguably the largest number of new builds in the country; we are vying with Warwickshire for the crown of new build county. I have been inundated with requests for help with freehold management companies. My constituents are telling me the same stories they are telling my hon. Friend—and I assume other Members present—about the lack of transparency, poor communication, soaring bills and contracts they cannot get out of. To date, we have contacted Centrick, Greenbelt, Ground Solutions, Meadfleet, Premier Estates, FirstPort, Trustgreen, Virtu Property, Ward Surveyors and Hardwick Construction. Does my hon. Friend agree that it is fine time we saw an end to the fleecehold stealth tax, which effectively forces homeowners to write a blank cheque to management companies for years to come?
I thank my hon. Friend; she will be a powerful champion for the many residents in her community who are falling on the hard edge of this challenge. Sadly, she is far from alone. Far too many MPs from right across the country have been speaking to me about the issues that their constituents have been facing, too. Indeed, when we drafted a letter to try to challenge some developers about the growing prevalence of fleecehold practices, over 50 colleagues signed up in the first week, and many more have got in touch since to contribute to our work.
The Competition and Markets Authority identified that up to 80% of new homes are now going unadopted as a result of the practice, and far too often it is becoming the default model for new estate delivery across the country.
The hon. Gentleman is absolutely right. Unfortunately—or fortunately, whatever way we want to look at it—this is an issue not just in his constituency, but across the whole of the United Kingdom, including in Northern Ireland. Local councils will not go into unadopted housing estates for kerbside collection of bins in Northern Ireland because the roads are unadopted. Instead, residents must bring their bins to the entrance of the estate. Does the hon. Gentleman agree that more must be done to support elderly or disabled residents in new housing areas, to ensure that they are able to avail themselves of those council facilities that they pay the rates for, but cannot access just because they happen to be on an unadopted estate?
I thank the hon. Gentleman. Again, he will be a powerful champion for his residents at the hard edge of the challenges with unadopted estates in his constituency. The example he highlights is powerful, because it is testament to the fact that more and more families living on unadopted estates are simply not getting the services that the rest of us who live on historically adopted estates take for granted from our local authorities.
The fleecehold stealth tax is at the heart of some of the inequity that this growing challenge creates. Right across the country, more and more families are on the hook to private management companies, paying fees of typically £350 or more a year for services that every other homeowner pays for through their council tax.
I commend my hon. Friend for showing leadership on this issue and supporting not only his constituents but mine in Stockton North. I have seen high service charges in my constituency at Willow Sage Court and Wynyard, and unadopted roads on the Queensgate estate were left for four years before my intervention. Does he agree that homeowners deserve, when they buy a new property, to have an agreement with the developer on when those roads will be made up and adopted, and to have a reasonable expectation that this will happen?
Absolutely. The certainty and fairness my hon. Friend calls for is the bare minimum we should expect for our constituents and the bare minimum that families should have when moving into a new property, often one they have saved up for over a long time to take that big, exciting step. I know his constituents will be all the better for the work he has done to champion that, but it should not fall to him and other hon. Members to fight for this. It should be a matter of course for new developments.
That inequity I was talking about is a real challenge. Not only is it unfair that lots of our constituents are having to pay hundreds of pounds—and often much more than that—each year for services that others receive as standard, but the very nature of fleecehold is designed to structurally inflate some of those costs. Those management companies are very rarely accountable to the actual residents of these new estates that they in theory provide services for. As a result, there is no incentive for them to keep costs low; I have had examples of people having to pay more than £250 per household just to fix a single lightbulb on the estate. Constituents are individually on the hook for thousands of pounds across the estate as a result of road challenges, and there are many more examples of no real pressure or accountability for the costs residents have to pay.
Alongside that, the complicated legal nature of those structures, the professional fees involved, and the fact that certain estates can be subdivided into tiny blocks or pockets of five homes—each of which has to have its own management company and therefore has to pay for all those professional services over and over again—mean that a large chunk of those fees often does not go towards any service at all. It simply covers professional fees, auditing costs, and wider costs associated with a structure that is by its very essence deeply inefficient and not set up to provide a service to the residents who rely on it.
I congratulate my hon. Friend on securing this debate, and thank him for his powerful speech about the iniquity of the current situation. From talking to residents of Ebbsfleet Garden City in my constituency, I know there is growing frustration because they are paying council tax to management companies as well as service charges, with very little clarity, as he says, about what are often very high fees. Does he agree that we need clearer guidelines on timescales and standards for roads and communal areas to be adopted by local authorities, so that residents in places such as Ebbsfleet and other communities mentioned can have certainty about what they are paying for and to whom?
I know my hon. Friend is a tireless champion of his constituents who are impacted by this issue. He is spot on: this fleecehold stealth tax—because it is in essence a stealth tax our constituents are being asked to pay—is not just unfair to residents, but means they are all too often ultimately reliant on management companies to provide a service that they rarely receive. Not only are they having to pay more than those in adopted estates, but they often get a worse service, because there is no transparency or accountability around the management companies taking on those practices.
It is not just a cost issue for my constituents or many like them. There are other big non-financial costs associated with fleecehold. Far too many estates have had to band together and sink countless hours into holding management companies to account to get transparency over works, to ensure that very basic works and maintenance are carried out, and to make sure that things we all take for granted—such as safety inspections on play parks—actually take place. My constituents have had to sink days and days of their time into fighting for the bare minimum.
Alongside the very fragmented legal nature of those entities, they can also put my constituents at risk at crucial moments. I spoke to constituents whose house sales have nearly fallen through—one actually did—because the management company in question failed to provide the management pack in a timely fashion. That meant that during conveyancing they were unable to complete the sale and move to the dream property they had been looking forward to and needed to move to for their jobs.
I spoke to another constituent whose credit score was decimated when, after missing a payment by just a couple of weeks, their management company enacted some of its powers under the contract to go straight to the mortgage company, add the balance to the mortgage and extract the fee that way, with all the impact one would expect that to have on the homeowner’s credit score and sense of security.
I congratulate the hon. Member on securing this debate. We have a situation in my constituency in Groomsport on a road called The Point. There is no management company for this road; it is actually owned by the local residents who live along it. However, it has been like a dirt track for decades. We are in a situation where we cannot get the Department for Infrastructure, which is the road service, to adopt this road, because the residents would have to pay hundreds of thousands of pounds to get the DFI to adopt it. Does there not need to be some sort of special dispensation for people caught in this type of trap that will enable the Government to adopt roads when they have been in such a situation for decades?
Absolutely. The hon. Gentleman gives an example of the kind that I think will be familiar to all too many of us. Essentially, an unadopted part of our constituency—be that a road, or common ground within an estate—falls into this limbo state, where no one step ups to be accountable for it. Without action or some kind of central movement to compel some change in the future, more and more of the public realm will fall into exactly the kind of disrepair that he has just described, with all the disillusionment among people that comes with it.
The case for change is clear. We currently have a system that is not doing right by our homeowners on new estates. Indeed, all too often it falls far short of the ideals of security and prosperity that home ownership and new house building are meant to deliver. However, in the absence of any action, this situation is increasingly becoming the norm.
As I have said, the CMA estimates that over 80% of the estates built in recent years are now subject to fleecehold; that figure certainly sounds accurate for my patch and I suspect that it does for other hon. Members’ patches, too. If we do not act and make some changes in the future, there is a very real risk that a lot of the 1.5 million homes that we are so committed to building over this Parliament will also end up falling into the fleecehold stealth tax trap.
What can we do? There are several actions that I urge the Minister to ensure that the Government continue to push forward. It is very clear to me that we need to stop the existence of fleecehold estates at source. The CMA has powerful recommendations about how to do that, such as bringing forward minimum adoptable standards and mandatory adoption timeframes, which should ensure that we do not create more of this problem on new developments as we tackle the housing crisis that so urgently needs action.
I know that the Minister for Housing and Planning is committed to launching a consultation on this issue, and I urge him to move at real pace. We owe it to our constituents to listen to them about the issues they face and to ensure that in the future fewer of them have to suffer these problems. Acting on the CMA’s recommendations and speedily introducing legislation to bring them into effect will be a powerful tool to do that.
It is a pleasure to serve with you in the Chair, Ms Butler. I congratulate my hon. Friend the Member for Hitchin (Alistair Strathern) on securing this important debate, which is characteristic of the type of issues that he champions. I do not think this issue gets nearly enough coverage, and it is great that we have the opportunity to debate it this morning. It is one of those issues that, exactly as he says, turns dreams into nightmares and can ruin people’s lives or make people’s lives just that bit harder. It is exactly the sort of issue that he is passionate about and that he always uses his platform to raise, and I am grateful that he has. I am also grateful for other colleagues’ contributions.
I am grateful not just for my hon. Friend’s excellent diagnosis of the problem, but for charitably offering solutions to the Government. I am also grateful to him for raising these issues in his ten-minute rule Bill, which is a good way for Members of Parliament to raise issues with the Government and to hear our policy ideas. I make it clear that we support the underlying goals of his Bill, which aligns very nicely with our manifesto commitment to end the injustice of fleecehold estates.
It is important to recognise that, yes, this is an issue for my hon. Friend’s constituents, but we are also seeing it across the country. From Ebbsfleet up to Stockton and, in the middle, South Derbyshire—so good that it is nearly Nottingham—residents are facing these growing challenges, and we must be there to support them.
As the Minister with responsibility for building safety, I often say that in my area, and across Government more generally, we are trying to serve twin moral imperatives. The first is to make sure that people have a home. I think every day of the 6,000 children in bed-and-breakfast accommodation and the 180,000 children in temporary accommodation the previous night. We have to make sure that people have homes, but we also have to ensure that they are good homes and that, exactly as my hon. Friend says, we are not setting up people to fail. We have to make sure those homes are warm and dry, safe from fire and, in this case, do not come with overheads or lower-quality infrastructure that make owning, renting or living in that home a nightmare and a battle. Those are the Government’s goals, and they are perfectly compatible
Sitting suspended.
However, we cannot act only on behalf of new estates. We will all have constituents in existing fleecehold estates who will be very concerned that, without action, they will not only continue to face the very challenges that we have been talking about today but will also become, in effect, second-class homeowners. As unadopted estates become a thing of the past, those on legacy unadopted estates risk being at a very real disadvantage as that problem becomes more isolated and more siloed.
In the short term, there are definitely things that the Government can do to hold management companies to greater account. There is the potential to bring forward secondary legislation that would ensure we are better able to regulate the services that such companies provide, putting our householders and our constituents back in the driving seat and making them much more able to hold management companies to account if they do not provide a robust, transparent and timely service, as well as helping to drive down some of the rip-off fees that have been imposed and ensuring that they can access information in a timely and transparent fashion.
However, we know that for lots of these estates, that will not be enough. In the ten-minute rule Bill that I introduced a couple of months ago, I advanced the idea of a resident’s right to manage. It would enable residents on existing fleecehold estates to take back control, to step into the driving seat, to push out the management companies that have been ripping them off for far too long, and to be in a position where they are the controller of their estate’s future, and can commission the services they would like. Although that is not quite the council adoption that I know many residents long for in the longer term, such a powerful move would put residents back where they should have been all along—in control of their estate and of all of the public realm that they rely on to go about their day-to-day lives.
I also urge the Minister to work with the Local Government Association and local authorities across the country to consider what further measures can be taken to ensure that, over time, we put an end to all the unadopted estates that we are all currently having to advocate for as a result of this deeply inequitable situation. Far too many households are stuck in the fleecehold limbo trap. Although better regulation and a right to manage would be powerful steps forward and welcomed by many people, ultimately local authorities’ adoption of these estates will be the only answer that completely resolves all the challenges that we have talked about today.
I urge Ministers to move at speed in bringing forward the legislation needed to cut off the creation of new unadopted estates. I would also welcome Government action to hold management companies to account, including through better regulation of service charges and tighter requirements on the transparency with which managing agents must operate. I also support action on the right to manage, so that our residents and constituents on existing unadopted estates are back in the driving seat, where they desperately deserve to be. However, I recognise that we will need to continue the conversation to work towards a longer-term vision. We will need to work with local authorities, Ministers and our constituents to make sure that we finally have a pathway to adoption for existing unadopted estates, which have been neglected for far too long, as many hon. Members have said.
This Government are absolutely right to focus on the housing crisis, which is one of the biggest challenges facing the country, and I am very excited that they have such a big, bold vision for taking it on. They are not just building 1.5 million homes, but ensuring record investment in social and affordable housing, as well as much tighter regulation of key issues from solar panels to building regulations.
However, if we do not tackle the challenge of fleecehold and end the growing scandal of unadopted estates, we will still be setting up far too many of our constituents for a life of misery, a life of battling to get the bare minimum and a life of paying hundreds of pounds or more every year—money that other residents simply do not have to pay—because they happen to live on an unadopted estate. That cannot be right, and it is not a situation that I will tolerate for my constituents. I know that many other hon. Members will not tolerate it, either. I look forward to working with the Minister and this Government to make sure that we tackle it with the seriousness it deserves.
Exactly as my hon. Friend says, this issue has an impact on both supply and local authority budgets, so it is right that we take our time to assemble the best available evidence to make sure that we get the best possible change, but we appreciate that we need to get on and move at pace.
I will start close to where my hon. Friend finished, with the Competition and Markets Authority’s study of house building. The study was published last year and provides evidence for what I suspect we already knew from our constituency mailbags—over the past few years, we have seen significant growth in the number of unadopted estates. The study talks about some of the causes behind that trend, concluding that this practice is detrimental to consumers.
The Government agree with the CMA’s conclusion that, overall, the house building market is not delivering for consumers and has consistently failed to do so over successive decades. We have looked very closely at the report’s recommendations, which call for measures to strengthen protection for existing homeowners and for the Government to mandate adoption of all new estates and implement common adoptable standards for infrastructure on those new estates. We accepted many of the recommendations last October, but we believe that further work is required in some areas—I will talk a little about that. I take to heart what my hon. Friends the Members for Hitchin and for Dartford (Jim Dickson) said about the importance of certainty and fairness, which are absent from this process. Without them, people cannot build their lives properly.
Ms Butler, you will not be surprised to hear me say that, as it so often does, this starts with individual rights—residents’ rights on unadopted housing estates. As we have heard, residents living on privately managed estates with unadopted amenities are struggling with a range of problems, including poor service, excessive bills and limited to no transparency about how money is spent, onerous restrictions on the title deeds to their properties—my hon. Friend the Member for Hitchin raised a particularly egregious case—and a general lack of control over how the estate is managed. That speaks to the point made by my hon. Friend the Member for South Derbyshire.
The CMA found that approximately 20% of freehold estates have what is known as an embedded management company set in the title deeds. It found that residents may find it extremely hard—indeed, sometimes impossible —to remove or change an embedded management company, no matter what quality of service they receive. Of course, that cannot be right. My hon. Friend the Member for Hitchin talked about a lack of accountability. Well, what could be a greater lack of accountability?
In the spirit of urgency that my hon. Friend talked about, in the immediate term we need to introduce protections for residential freeholders on already-constructed freehold estates. As hon. Members may be aware, the Leasehold and Freehold Reform Act 2024, passed by the previous Parliament, created a regulatory framework that will provide for exactly the sorts of protections and rights to which my hon. Friend referred. It provides for standardised demands, an annual report, a right for homeowners to challenge the reasonableness of charges levied, a requirement for estate managers to consult homeowners where the anticipated cost exceeds an appropriate amount, and a right for residential freeholders to apply to a tribunal to appoint a manager in the event of serious management failure. That is the prize before us.
As the Minister for Housing and Planning, my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), made clear in his written ministerial statement last November, we need to act as quickly as feasible to implement those provisions, but they need to be enacted with detailed secondary legislation. We want to get this right, not least because these are, at their heart, extremely technical matters, and the last thing we want to do is give hope by promising change, and for the change not to deliver because it was not operable or effective. We will bring these measures into effect as soon as possible, but we first need to consult on the technical detail. We will publish the consultation document later this year. My hon. Friend the Member for Hitchin said that we need real pace, and my hon. Friend the Housing Minister and I have heard that strongly.
More broadly, at the heart of this, having the choice of a managing agent is really important, whether for unadopted estates or buildings in which lots of people live together. Sometimes residents step up—who knows their community better than they do?—but those are hard jobs. I have met many resident management companies in the course of my work, and there is an awful lot for them to step up and do. That is why there are sometimes frustrations. We agreed with what the CMA said about RMCs needing the right guidance and support to do the job themselves, where they choose to do so.
We also know that for many buildings or estates, there will be a really important role for managing agents. When done well, managing agents are an important part of enhancing communities and individual lives. Where that is not the case—too often, it is not—they can have all the detrimental impacts we have heard about. That is why the Government are so committed to strengthening the regulation of managing agents of leasehold properties and estate managers of freehold estates. We believe that, at a minimum, there should be mandatory professional qualifications for managing agents, whether they manage a building or an estate. We will consult on that measure later this year. That is an important part of driving up standards in the industry to make sure that all managing agents are making the positive contribution that we know they want to make, and that they should and can make when done well.
The point on adoption is often around the quality of infrastructure. Local authorities have significant challenges, and nobody expects new builds to add more burden—certainly not through the provision of poor housing or the infrastructure that supports it. Traditionally, without the challenges we see today, local authorities and water companies would adopt those respective parts of a new residential estate, whether it be the roads, the drains or the sewers, and they would set clear standards and provide oversight to ensure these were delivered to adoptable standards. Where that has not been the case, the responsibility for ongoing maintenance falls on the residents. For some on the adoption journey, which in many cases can take more than a decade because of these ongoing concerns, they pick up the bill with no resolution in sight—they live in that twilight zone.
We are conscious that, at the heart of this, developers have to build to a good standard. Otherwise there is poorer infrastructure and a lack of adoptability, never mind the lack of redress for homeowners and the lack of oversight. There are too many examples where developments have been left unfinished for years, and we do not think homeowners should be left in that limbo.
My hon. Friend the Member for Hitchin talks about complexity, and we will have more complex schemes with different ownerships, tenures and types—we want that as a Government—but that will add a degree of complexity. Similarly, there are greater expectations on developers, for good reasons. Whether it is sustainable drainage systems, biodiversity net gain, electric vehicle charging points, playgrounds or sports pitches, they all make this more challenging, which is why the clarity on standards that we intend to set from the centre is so important.
My hon. Friend has made a powerful case, which has been reflected strongly in the interventions from colleagues and in the mailbags of all hon. and right hon. Members. I am grateful that he has given them this hearing. It is vital that we take on this issue in the round to make sure that we get it right and secure a change that delivers for people. That is why we will seek views from a wide range of parties, including local authorities, management companies, developers and, crucially, freeholders and residents. I hope colleagues will help to bring the voices of their constituents into the consultations.
I make it clear that we intend to act. There is a clear commitment to act, and we have a legislative framework to do so. We will see action in this area. We want to move at the best pace that we can, and we know at the heart of this issue is a significant prize: improving the lives of many people across the country. We are very committed to doing so.