Council Joins Fleecehold Exploits

South Somerset District Council has recently launched its own private company, Elleston, to provide maintenance services on privately owned estates. They justify this on the grounds of better quality and value for money together with an income for the council in terms of a projected £2.2M over two years. Talk about adding insult to injury for home owners! Councils aid the creation of privately owned estates during planning – they definitely could do more to discourage developers from implementing it, and they refuse to countenance compensating the estate dwellers for their total funding of the maintenance of designated public open space. No wonder residents are hopping mad!

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Fun Video!

But with a serious message about the fundamental unfairness of estate charges on new housing estates. These areas should be adopted by the council, but developers will not volunteer for this when it saves them so much money in construction costs and provides a nice little earner for their friends in property management.

We love that the film makers are also highlighting the arbitrary nature of who pays and who doesn’t AND the fact that estate charges affect leasehold as well as “freehold” properties. Thanks to Chris and Paul for sharing. Enjoy!!!


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The Cat is Out of the Bag!

cat with megaphone in sack
Nasty effects of rent charge discovered by mortgage lenders.

Many of us who are unwittingly trapped in the private estate model have observed what amounts to a conspiracy of silence over the true risks of the rent charge. It involves the developers, councils and property industry as a whole, but also those very many homebuyers who hope that by keeping quiet, the problem will just disappear! HorNet have taken some flak for daring to talk about it, but at the end of the day it is the mortgage lenders concerned to protect their investment who are exposing the secret.

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Roller Coaster Week!

This last week or so has been a bumpy ride for HorNets, but things are looking hopeful again, thanks to Helen Goodman MP, who never misses an opportunity to push for change. In addition the fact that newly appointed Secretary of State responsible for housing, Robert Jenrick, has previously spoken on behalf of his constituents trapped in fleecehold indicating he is sympathetic and has a good understanding of the issues. This makes us more hopeful that there will be some action to help us.

Helen lost no time in writing to the new Minister and also had recently asked his predecessor in the house to support our requests for the CMA to include fleecehold mis-selling in its enquiries. Quote: “Hundreds of my constituents have written to me similarly feeling that they have been mis-sold their freehold, so I have written to the Competition and Markets Authority asking it to extend its inquiry to cover freehold, where people have to pay excessive and ever-escalating management and service fees. Will the Secretary of State support me in this?” Read the full debate here and Helen’s letter to Robert Jenrick appears below:

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MPs Debate and Fleecehold

MPs in parliament

On Thursday 11th July MPs from both sides of the house urged the government to act on the recommendations of the select committee on Leasehold reform. In spite of its title this committee did also consider fleecehold and it is clear from what MPs are saying that there is very much greater awareness of the exploitative nature of this model too. These quotes are taken from the debate as published by They Work for You, where you can read the full debate.

Well done Hornets – all your MP briefings are paying off!

Quotes from the Debate:

Sir Geoffrey Clifton Brown , Cotswolds:

I have constituents in the Gallery who have had equal and similar problems with scams relating to freeholds. Freeholders buy their properties with a covenant—many covenants in some cases—that contain unquantified and unspecified obligations relating particularly to the common parts of their estate. When pressed, the smart salespeople in the smart furnished flat or house on the estate often say, “Well, it’s only a small amount. It will amount to a few hundred pounds.” However, when the buyer gets their first bill, they suddenly realise what they are locked into. In some cases, the charges are so high, as they can be with leaseholds, that the properties are effectively made unsaleable.

I pay great tribute to Amanda Davies from Burton Chase and Mike South in Victory Fields for bringing some of these anomalies to me. Like the hon. Member for Sheffield South East, I have written to the Competition and Markets Authority with a draft of how my constituents think the current system is being mis-sold. I hope that the CMA will take close notice of that.

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HorNet Homework

Deadline extended to July 16th

Often months seem to go by without any activity on our issues, and then suddenly several opportunities pop up all at once. This weekend is such a time. We have the chance to submit to the Competition and Markets Authority until Friday 12 July, and now there is to be a parliamentary debate on Thursday 11th mainly concerning leasehold, but we are assured “fleecehold” is also on the agenda. The civil service have just produced a briefing paper on fleecehold to inform MPs introduced by the following:

It is becoming increasingly common on new-build private estates for freeholders to be required to contribute to the maintenance of the estate’s communal areas and facilities. This practice has been referred to as ‘fleecehold’. This short paper provides background on the issue and sets out the Government’s proposed reforms. The paper covers England only.

You can read the paper here: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8497#fullreport Our response briefly is that while we welcome acknowledgement that there is a huge problem, we feel that these measures are too little to late. They do not work well for leaseholders, so why would they for fleecehold? There has been no questioning of the use of the private estate model for all new build residential developments. We do not accept that it is appropriate to use this model, which may be well suited for commercial developments, for people’s homes. It is expensive to run, unfair and anti-competitive. It has been used by developers to deliver estates on the cheap and at the same time create a new asset class. It has to be stopped!

What can HorNets do??

1) Ask your MP to attend the debate to represent your interests. You might like to add your own comments on the briefing paper! Highlight any difficulties you have personally suffered from fleecehold.

2) Email the CMA and copy in your MP

A HorNet member has produced a very detailed template email that you can adapt for this purpose if the idea of writing your own does not appeal. In this document he states :

The Competition and Markets Authority (CMA) has opened an investigation into the possible mis-selling of houses. IF the CMA eventually decides that Developers HAVE mis-sold us our “Freehold” houses (because Developers did not inform us of the true nature of our service charges), THEN:

1. The government is more likely to HALT the mis-selling of “Freehold” houses.

2. The government is likely to implement strong measures to protect house-buyers from this particular house-selling scam in future.

3. Developers may have to financially COMPENSATE “Freehold” house-owners (as after the CMA’s 2011 inquiry into the PPI scandal).

So it’s important that as many owners of Freehold houses paying annual service-charges email the CMA to make sure that the CMA understands the MASSIVE scale of the mis-selling of “Freehold” houses. If a CMA investigation does not judge that we HAVE been mis-sold our “Freehold” houses, then our situation will probably not improve. NOW is our big opportunity.

Thank you David, this IS an important opportunity for those trapped in fleecehold to gain redress. David’s document which includes a long email template can be downloaded here : https://www.homeownersrights.net/wp-content/uploads/2019/07/longCMAletter.docx

If you want something shorter to work on, then try this one : https://www.homeownersrights.net/wp-content/uploads/2019/07/shortCMAletter.docx

Both these documents contain guidance/how-to as well as suggested wording. You need to save the document on your device before editing it. This is the link to the CMA announcement.


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Don’t Delay – Write Today!

In response to the recommendations of the select committee on Leasehold Reform, which also took evidence concerning fleecehold, the Competition and Markets Authority (CMA) have finally caved and begun an investigation. Although entitled leasehold (as was the select committee) we need to submit evidence about the problems of exploitation and abuse we face over how estate charges are represented to us and then operated.

They should be interested in misrepresentation at the point of sale. So if you were told the estate charge was just for cutting some grass and later found there was much more to it, including liabilities for things like sub standard roads, broken pumping stations, contaminated land etc. this would be relevant.

If you have a rent charge were you sold the house as freehold? Were you advised there was a charge on the property which could be repossessed in the event of non payment?

Did you have any idea estate charges were unregulated and uncapped, and that you had no statutory route for redress??

Since your purchase has your charge risen dramatically? Does your management company/agent respond to requests for information to justify costs?

Do you have any choice of provider? The CMA really should be interested in the monopoly aspect.

All you need to do is to email the miscellaneous and/or mis-selling address given on this page with your story. There are full instructions on the page. The louder our voice the better, so please take action before 12th July!!! Please also copy in your MP – if you don’t know who they are or hoe to contact them you can find out here: https://www.parliament.uk/mps-lords-and-offices/mps/


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Tell Us Your Story

story book
Why not fill in these pages?

We have published two stories from members, one on estate rent charges and another on fleecehold in retirement. As the estate charges scam becomes more well known, we have more press interest. Stories of what is happening to everyday people is what interests audiences most. We would love to publish an article or series of articles relating the woes of home owners on private managed estates. If you are willing to share, you can either comment on this article or email us via our contact form.

We are starting to hear about estate management agents/companies going out of business – do you have a story about this you can share??


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Fleecehold in Retirement

This is a story submitted to us by a member who has a fleecehold bungalow in a retirement complex managed by a housing association. The leasehold system has been used and abused for many years to finance retirement housing schemes. It is felt by many that vulnerable older people are being exploited – indeed the Leasehold Knowledge Partnership started out as a pressure group for better retirement homes.

An Elder’s Story :-

Sanctuary Homeownership
My husband and I moved to Maryvale Court in Lichfield in June 2010. Having purchased a freehold bungalow we were advised to sign a covenant which we understood was to protect us should any problems arise as a consequence of an unadopted road to gain access to our property.
It was explained that we would be required to pay a monthly maintenance fee to Sanctuary which would be placed into a sinking fund to be used for repairs only and not replacement. The sinking fund has a total contribution of approximately £15,000 per annum.
Whilst residents fully appreciate the fact that management fees must be paid it is generally felt that they are somewhat excessive. Indeed, fees were increased by some 8% whilst State Pension increased by just 3%.
The age of residents varies between age 70 and 97 and many of whom are in poorer health, suffer mobility problems and are on a limited income and don’t feel that they are able to tackle the issues with the mismanagement of our complex.
During the course of the last 5 years, the management of the site has deteriorated considerably. Jobs which should have been done have taken many, many months and, in some cases, years at a cost higher than expected. Contractors are taken from a very short list of Sanctuary approved Contractors who reside many miles away and we simply don’t have a fair choice.
The last two issues have become a huge stumbling block.
We have a beautiful pool area which has not been properly maintained at all during the last 5 years. However, there are benches and previously there were some gently sloping steps enabling residents to walk around the pool area and sit in a communal area. This has now been ruined as a result of steep concrete steps being built – without consultation – together with an ugly stainless steel rail being erected at an horrific cost of some £6,000.
Residents are unhappy about the way in which Sanctuary has redesigned the pool area and despite many requests since August 2018 we are still awaiting a report from the Health & Safety Officer in particular with regard to the steps which are not easily negotiable by residents. Indeed, I personally tripped on the now raised steps and had to have my toes strapped up for 2 weeks. Despite reporting this to Sanctuary it has been ignored.
As a result of some workmen jet washing the roof of a property owned by Sanctuary but situate within the Maryvale Court complex, repairs are now required to the roof which will be carried out on 1st April 2019 at a cost of some £31,000 which will be paid for from our sinking fund.
The majority of residents have issued a formal complaint regarding this but Sanctuary fail to answer any letters or emails adequately and continue to treat all residents as if they were tenants and not freeholders.
We are required by Sanctuary to pay for a policy under our maintenance contract with them but this continues to refer to leaseholders and not freeholders and they refuse to make any changes or additions to ensure that it covers us as freeholders.
There are trees onsite which are over 100 years old and subject to a preservation order but they are extraordinarily tall for such a residential complex and we have, on a number of occasions, requested that they be made safe because over the years 3 of the bungalows onsite have been damaged but Sanctuary choose to ignore this fact and the trees continue to grow.
It would appear to residents of Maryvale Court that Sanctuary treats each and every single resident as a tenant and not a homeowner and can and will do exactly what they like.
Sadly, I lost my husband in 2017 and some of the original residents have now passed. One resident has moved because they simply couldn’t cope with the stress, mismanagement and blatant disregard to residents and even this was hampered by long and protracted battle with Sanctuary.
Having found your website, I have contacted my local MP together with the Minister for Housing and Homelessness and can only hope that with continued lobbying we can fight for a fairer deal for all who have to pay maintenance companies inordinate sums of money for very little in return.

It is clear from this that fleecehold is being used in retirement complexes, and all the issues of lack of accountability and transparency found on new build estates are the same. At least fleecehold is not discriminatory, exploitation is applied even handedly to all ages!


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Scandal in Waiting?

We love this term! Used by the BBC in its reports today online and on several local radio stations. Finally someone is picking up that estate charges as they are being applied across the UK today are the next scandal waiting to break in the housing sector.

You can read the national online article here :- https://www.bbc.co.uk/news/uk-england-46279048?fbclid=IwAR2GhO7ROng8vEVA8DRD_2XrPcm3EDbKdNrOAeOGnGGBU4Cjrkbx9Z2HLI8

And this is the BBC Midlands TV item: –

Below are a couple of BBC local radio clips from associated local radio broadcasts with Halima being interviewed for HorNet.

Home Owners Rights Network Speak on BBC Somerset
And on BBC Radio Wales

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