Thousands of buyers of new build homes are forced to accept covenants in their property deeds when they purchase their homes.
These covenants often include the obligation to pay ambiguous “estate charges” or other fees for maintaining communal areas on new build estates, such as car parks, roads or green spaces. These charges have been dubbed “fleecehold” by campaigners
The charges apply where new estates are not “adopted” by the local council. However, these households also have to pay council tax, leading to complaints that they are effectively paying for some services twice.
Estate charges are similar to service charges paid by leaseholders to maintain the communal areas of blocks of flats. However, it is a lot more difficult for freehold owners to challenge the fees levied or question the standard of the work done – or even if the work is done at all.
The CMA has now published the first in a series of ‘working papers’ – which seeks feedback on potential solutions to problems with new build estate management and the charges households are required to pay. The CMA is now considering measures which could address the concerns and is inviting feedback by 24 November 2023.
The competition watchdog is considering strengthening consumer protections for households paying estate management charges – including giving people the power to challenge shoddy work, unreasonable charges and receive information over how they are set.
It also proposes increasing the extent to which amenities on new build estates are adopted by councils, which would remove the requirement for households to pay estate management charges.
Dan Turnbull, director of markets at the CMA, said: “The number of new build housing estates with unadopted amenities has ballooned over the last five years, particularly as councils tighten their belts. This has resulted in many households being left to pick up the bill for the maintenance of roads, parks, and street lighting.
“As our study has progressed, we’ve heard concerns that some estate charges may be opaque, excessive, or result in sub-standard work. We’re therefore assessing a range of solutions to these concerns and are now seeking feedback before publishing our findings next year.”
