HorNet – NO to fleecehold!

Our campaign to abolish private management of public areas/amenities on new build estates has been going now for 7 years. During that time we have had 8 housing ministers, a private members bill and numerous press articles, mostly on regional networks. There have been some promises from the government which have stood for 4 years without action. Since these only covered regulating an existing exploitative system we feel perhaps this has been a blessing in disguise as the CMA (Competition and Markets Authority) have stepped in with a Market Study which is looking at private estate management as part of its work. The study began in March and a progress report has just (25/08/23) been posted along with a press release. They are now looking at investigating the area in greater depth. This is hopeful news and we are confident that they will find anticompetitive practices which impact adversely on many new build home buyers. Thanks to all HorNet supporters have worked hard to submit evidence to the CMA. Also thank you NLC (National Leasehold Campaign) – we know you raise the issue of estate charges whenever the opportunity arises.

The CMA are considering looking into private estate management via their more formal in depth legal process (Market Investigation Referral) and we feel we should encourage them to do so as it looks to see if competition law has been broken. This may be the only way current victims could ultimately get compensated for their predicament . The down side is time – another 18 months plus, but we hope it would be worth it. Our understanding is that it wouldn’t necessarily preclude the CMA from making recommendations to the government for policy changes which could stop current practices in future. To take a look at their August 25th Update click here. It’s worth spending some time reading this 70 page document – the section near the end gives more explanation of the measures they can take.

Continue reading “A Ray of Light from the CMA”

The CMA (Competition and Markets Authority) have recently published the responses to their market study statement of scope at https://www.gov.uk/cma-cases/housebuilding-market-study

This is not the study report, which is expected in September 2023, but responses from the industry which make an interesting read, from us and from consumers which we believe are mostly HorNet supporters. It is unusual for a government body to receive over 250 consumer responses so a huge thank you to those who took the trouble to write in during the fairly short time given for responses.

We hope they listen and look forward to their report in the Autumn.

The CMA team looking into the housebuilding market have advised us that they welcome evidence from home buyers past present and future describing their specific stories. Please write in ASAP to have your evidence considered. The investigation is in to the way this market works and not focused on any particular company.

Email to housebuilding@cma.gov.uk

We Suggest the Subject Line of: Evidence on Estate Charges

Attach relevant documents – small files if possible.

Remember someone has to read it and analyse the content so try to be concise.

You need to put in some basic details, your name and address, the name of the developer, management company and managing agent. When you bought into this, and how long you have been charged. Fake freehold or leasehold??

Tell them your story. You don’t need to use all of this – just what applies to your situation or is important to you.

Start with what you were told in the sales office.

Was your property described as freehold?

What were you told about the estate charge? Was it described as a service charge, or what?

Was it glossed over/minimised?

What did you know about it at the time of reservation?

Did you reserve your plot based on a sketchy (or no) description of the estate charge like “a small charge to cut the grass”?

Were you persuaded to use the builders recommended solicitor? If so how did they convince you?

Were you put under pressure (positive or negative) to exchange contracts quickly?

What did your solicitor/conveyancer tell you about the charges?

Did you know the full extent of the liability you were signing up to, or did you think it was just grass cutting?

If you have a rent charge, were you told this is a charge on the property, and that it could be repossessed if you defaulted on payment for any reason?

Were you given a detailed breakdown of what you would be paying for?

Did you know part or all of the estate was not going to be adopted by the council/water company?

Did you realise that you would be paying for the upkeep of public open space?

Did you understand that the management company/agent was not going to be accountable to you?

Did you realise the charges are uncapped and the figure you may have been given in the sales office was only a projection/estimate?

Did you know that you had no statutory rights like there are for leasehold service charges?

Do you have the option to take over the company when the estate is completed?

If not, do you have any choice in managing agent/contractor provision?

Have you had any difficulties gaining full control of your RMC?

Next would be how the estate is being managed and what problems you have had.

Do you get value for money?

Can you choose your managing agent?

Do they respond to complaints/queries?

Have you tried to make them accountable by with holding payment or suing them in small claims?

What did you do, and was it successful?

How did they respond?

Legal Framework/Option to self- manage

If you know what your set up is, can you describe it briefly – rent charge/chain of covenants/agreements with council under section 106 or section 38 (roads adoption)

Who owns the land? Who owns the rent charge?

If you have an option for self-management how is this working for you?

Are you a leaseholder or “fake freeholder”?

Then you could go on to describe how and when you found out the true picture and how this has affected you.

Has it affected the sale/value of your property? If so please describe.

Have there been any major unforeseen rises in estate charges since you bought your home? Please describe.

What have you suffered?

Financial loss? Can you quantify?

Health/relationship problems?

What would put it right for you?

Mandatory adoption?

Common hold ownership of estates?

Regulation of the current system??

Other??

You can download this article in Word to use as a template if you wish:

Wonderful news for all HorNet supporters and other estate dwellers who have worked so hard to inform the CMA (Competition and Markets Authority) of the problems associated with privately managed estates. You know who you are – thank you so much!!

The CMA have announced a wide ranging enquiry into new homes provision, land banking and planning. Included will be “unfair”estate charges – at long last! We look forward to this enquiry and will be offering evidence of detriment to consumers over mi-selling and anti-competitive management arrangements, as well as the longer term quality issues.

Why does a CMA enquiry matter?

If they confirm a problem in the market they have powers to enforce rectification and their findings often lead to a change in the law. They have just completed their investigation into doubling ground rents in new leasehold homes, and succeeded in getting these banned going forward, and the big developers to change the ground rent terms for existing properties. We know they will find problems with consumer and competition laws in the privately managed estate market and trust they will also take action in due course. We still need to be patient as it will take time, but the news they are investigation is still fantastic!

Read the press release from the CMA here

It’s not easy for residents to take over the management of their estate maintenance, even when the company set up allows it. As this example shows, you need determination and a willingness to dig into the specific set up for your development. The pay off is greater control of costs, better quality work and value for money. However self management does not remove the liability for maintenance of what is often sub standard infrastructure. Many other estates, although not this one it seems, include public open spaces.

Hornet’s goal is for these areas to be adopted, but many residents on existing privately managed estates want to self manage to get better value for money. They can then choose to run things themselves or on larger estates appoint their own managing agent, answerable to them. In this instance the residents chose to run things themselves. We thank you for sharing your experiences, which we hope will help others who wish to self manage…..