The government is proposing to ban laws that penalise homeowners for failing to pay an estate rentcharge to cover the upkeep of roads, green spaces and other shared communal areas.
Failure to pay these charges could result in homeowners losing access to their homes or having a lease imposed on them, which the government said forced them to pay to live on the land their home was on until the debt was repaid.
In some cases, the conditions state that the lease will not end after the debt has been repaid, which could leave homes unmortgageable or unsellable.
These estates are managed by third-party management companies.
In a statement made in Parliament, Matthew Pennycook, Housing and Planning Minister, said: “Residential freeholders across the country frequently report open spaces not fit for purpose, roads left unsurfaced, and drainage systems [that] are often little more than open ditches.
First-time buyer knowledge gaps – and where brokers can help
Sponsored by Aldermore
“These issues blight people’s lives, and with few of the rights to redress found in other markets and no ability to control the management of the estates on which they live, residents feel like they are treated as second-class homeowners.”
The government is proposing to replace this with stronger rights for homeowners by giving them standardised information to make it easier for them to challenge unreasonable bills and appoint a new substitute manager if there is a serious failure.
It has also been proposed to make it mandatory for local authorities to take on certain facilities, improve data and transparency, and introduce a new assessment of the financial impact on homeowners.
The government has also suggested a stronger dispute resolution process.
It will also investigate the root causes behind these housing estates, with a view to exploring whether management controlled by residents should become the default.
The government will consult on these reforms to shape its future agenda, alongside measures in the Leasehold and Freehold Reform Act 2024.
The first is around introducing more protections for homeowners, while the second seeks views on reducing the prevalence of private estate management arrangements.
Further, it is supporting the Law Commission’s project around the management of housing estates, which will consider giving homeowners and residents more control over their estates where certain criteria are met.
Pennycook added: “Far too many homeowners living on newly developed housing estates are subject to unfair private management charges as a result of infrastructure remaining unadopted.
“We are determined to end the injustice of ‘fleecehold’ by reducing the prevalence of private estate management arrangements and providing existing homeowners on freehold estates with greater rights, protections and control over the places they live.”
Sarah Cardell, chief executive of the Competition and Markets Authority (CMA), added: “Our review of the housebuilding market found that 80% of new homes sold by the UK’s biggest builders came with estate management charges – leaving many owners facing high and unavoidable costs, with no effective way of challenging shoddy work.
“The changes the government is consulting on today would deliver on our recommendations and make a huge difference for homeowners across the country.”
