Here’s a short presentation which brings together the major issues we have found from talking to home buyers and residents about estate charges over the last 5 years.
May 2021 has been a busy month with the Queen’s speech, a research report from Cambridge University for the Ministry of Housing Communities and Local Government plus interesting commentary on residential property builders in the SundayTelegraph from Liam Halligan, economist and writer.
The Queen’s speech finally announced the governments’ intention to enact their promise to reduce ground rent on new leasehold properties to peppercorn. This was always going to be the governments first step in leasehold reform. We have yet to see what will be done for existing leaseholders, but the government’s commitment to common hold seems genuine with the recent formation of a Council as a consultative body including National Leasehold Campaign membership – well done NLC!!
We at HorNets have always regarded the abuse of the leasehold system as a priority for rectification, but we need to keep pushing for reform of estate charges as well. It is very disappointing to read that the Cambridge researchers have not even questioned if estate charges are necessary and the what might be the best way to manage new estates for the community. They appear to have taken on board industry lobbying and accept private management as the norm. If we cannot counter this effectively, then all that will happen is some form of regulation and redress scheme which will effectively legitimise this type of management of estates for the future. Our supporters have very clearly in our recent survey indicated that only adoption or equivalent public ownership and management will address all of the problems of private estates. The survey is still open and currently stands at 82% supporting adoption. No one is really taking seriously yet the unknown and unlimited liability home buyers are taking on for estates which have been constructed to sub adoption standards. We plan a further campaign to highlight this.
The government also announced in the Queen’s speech a relaxation of planning laws with the aim of releasing more new homes. This is really horrifying in the light of all the building defects which are emerging post Grenfell due to inadequate regulation and profiteering. It is the property and construction lobby which spreads the myth about hold ups due to planning to disguise their hoarding of plots already granted and their slow release onto the market to maintain high prices and profit. The economist Liam Halligan refers to this practice in a recent article in the Sunday Telegraph in the context of arguing monopolistic companies which are too large and have no real competition are dominating markets and require more effective regulation than the under – resourced and under – supported CMA can deliver. We noted with regret the resignation of Lord Tyrie as chairman of the CMA last year and Liam Halligan is of the same view. If you want to hear more about Liam Halligan’s analysis of the housing market, he has written a book, Home Truths, published in 2019 or you can view his webinar with Middlesex University here.
On a positive note, work is going on in the background on policy making and we plan to look again at mounting a legal challenge over misrepresentation and anticompetitive practices in private estate management to nudge the CMA into action.
The NLC, National Leasehold Campaign. are surveying people who have bought leasehold with a doubling ground rent. If this applies to you, please take the time to complete the survey. Every piece of information supports the great work they are doing on leasehold reform. Thanks in advance and here is the link: https://www.surveymonkey.co.uk/r/7HNDYP2
We at HorNet, together with the National Leasehold Campaign and many determined individuals, have successfully raised awareness of the way the privately managed estates model is detrimental to home buyers, their communities and the quality of the estates themselves.
The governments response is to propose regulation in a similar way to leasehold, giving rights to challenge charges and change manager in the Land’s Tribunal and possibly a right to manage as well. They also say they will repeal section 121 of the Law of Property Act so that the freehold cannot be lost for non payment.
We feel that these measures will simply legitimise the private management model without making a significant improvement for the estate dwellers who pay the charges.
Only adoption or some novel form of public ownership and management will address:
The fundamental unfairness of one group paying for the upkeep of open spaces and park facilities which are open to the general public
Non adopted estates are built to a lower standard, and subsequently deteriorate more quickly in future.
Home buyers blindly take on long term liability for repair/maintenance of sub standard areas if they sign up to private estate management when they purchase. Whilst these liabilities are not of the order of defective cladding, they can still be significant. Should the estate dwellers have to pay for a defect on land which does not belong to them?
Self management is not a panacea! We have had numerous reports of rogue directors in Residents Management Companies, it is divisive and simply not necessary for these areas to be managed in this way. Some form of communal management is necessary for flats but this is not the case for estates, unless they are truly private and gated. HorNet support common hold for these latter situations.
Do you agree? Here is the survey: