I rise to speak to new clause 1, which was tabled in my name, and in support of a number of new clauses and amendments tabled by right hon. and hon. Members from both sides of the House.
I tabled new clause 1 because, as was said by the hon. Member for Harborough (Neil O’Brien), who is no longer in his place, fleecehold is a scam. It attempts to deal with the issue whereby a freeholder is trapped in a situation where they pay estate management charges for the areas around their development, be they roads, play areas or open spaces. Critically, the new clause also deals with the shared assets that might be in use to service their homes, such as ground source heat pumps, septic tanks or sewage pumps. I am sure that there are many instances in which the management company does a great job and charges reasonable fees for its work, but my inbox—like those of many hon. Members—contains horrifying examples of the management company, which is usually directly owned by or related to the developer in North Shropshire, failing to do a good job, or to do any sort of job at all.
There is a freeholder in my constituency, for example, who must obtain an information pack from their estate management company in order to sell their house.
Despite repeated requests, my constituent has not received that information pack, so their sale has been significantly delayed and is at risk of falling through altogether. The management company is apparently just a shell—it does not respond to correspondence, hold annual general meetings or provide accounts—so the affected residents are powerless and cannot take control of the company and appoint a reliable professional to provide the services that they so desperately need. New clause 1 would allow them, where the management company has gone AWOL and will not respond to anything that they request of it, to take control of the company and do those things themselves.
The new clause also extends to assets, which may be more of a rural problem when it comes to shared estate charges. In one example in my constituency, a developer installed a ground source heat pump to provide all the heating and hot water for a barn conversion development that involved several houses in the same set of barns.
That developer has two separate companies: one is the management company through which he charges the owners of those houses for their electricity bill, and another, totally separate company that was nothing to do with the sale process, which is where he placed the heat pump. As such, he is able to cream off all the renewable heat incentive income for himself; he provides accounts to residents through the management company, but does not provide them with any information about the fundamental asset that is servicing their home. Those residents are unable to benefit from the renewable heat incentive that accrues from that asset, and do not know whether it is being properly maintained and serviced. They are unable to do so themselves—they have no rights in relation to that heat pump.
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That is quite a complex situation, in which I suspect fraud may also be involved, but there are other examples where residents are unable to get their street lights fixed or their potholes sorted out, or where drainage is a huge problem, and they cannot get any kind of response from the management company responsible. New clause 1 would allow residents to take over their estate management companies in such instances, which would hopefully provide management companies with a significant disincentive to fail to provide the services that they are presumably making quite a lot of money out of. Crucially, new clause 1 would also enable those trapped in existing arrangements to exit them.
As other Members have mentioned, once people with a full-time job have bought a home, they do not have time to endlessly chase up their management company and take them to court and tribunals over services that that company has failed to provide. One of the residents I have been dealing with said to me, “I just don’t have the time to deal with this. I’m a full-time truck driver.” The idea behind new clause 1 is to make it easier for those people to take control of those companies and take control of their own lives.
As has already been pointed out, it is very worrying that these arrangements have been allowed to proliferate across the country. Many residents are now paying both council tax and service charges for street lighting, grass cutting and drain clearing that would normally be provided by a local authority. Those people are literally paying more for the same service; that is indefensible, and
millions of people are trapped in those arrangements. Amendment 18, tabled by the hon. Member for North East Bedfordshire (Richard Fuller), attempts to address that issue by preventing such charges from forming part of the estate management charge. That would certainly disincentivise developers from using that model, but although it is beyond the scope of the Bill, I urge the Government to prevent those awful arrangements from happening in the first place. It is much better for a road to be adopted and maintained by the local authority so that everybody is paying for the same services on the same level playing field.
Where people have a shared asset and are trapped by an estate management company, if their developer has failed to pay a section 106 fee, they are also on the hook for that money. I have residents in my constituency who have a charge of £30,000 over their shared area for a section 106 fee that was not paid, and other residents paying £1 million between 14 people to bring a sewage pump up to standard because it is an environmental health hazard. If those problems had not been allowed to occur in the first place—if the local authority had had to require a financial bond to be placed so that, if the development was not up to scratch when it was finished, the local authority had the money to bring it up to scratch and adopt it—those residents would not be in that awful situation. I really encourage the Government to take that away and think about how we can protect people in the future.