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:
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
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.
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.
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/
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??