Residential Estate Management Companies

Caroline Voaden Excerpts

Tuesday 22nd April 2025 Westminster Hall

[Caroline Voaden (South Devon) (LD)]

I beg to move,

That this House has considered residential estate management companies.

I thank the Backbench Business Committee for listing this debate. It is a pleasure to serve under your chairmanship, Mr Stuart. It is good to see so many MPs back straight after the Easter break, ready to get stuck into the gritty issue of residential estate management companies, whose poor business practices have affected so many of our constituents. In that spirit, I come here today to address the Minister and to call for urgency from the Government in dealing with some serious issues, and for more regulation and new legislation.

The issues raised repeatedly by constituents cause not just frustration, but in some cases serious distress. They cost significant amounts of money and sometimes lead to the loss of the entire value of a property investment at the point of resale. The situation for both leaseholders and freeholders has become so bad that such estates are now commonly referred to as “fleecehold” instead of leasehold. We note that the Government’s White Paper on leasehold reform, published last month, said that their legislation will make conversion to commonhold easier, but we feel that that will not go far enough. We look forward to seeing the legislation laid before the House. The previous Secretary of State—then the Secretary of State for Levelling Up, Housing and Communities—said that he was a “man in a hurry” to liberate leaseholders from unfair practices. He clearly was not in quite enough of a hurry, so I urge haste on the current Secretary of State.

The Liberal Democrats have long called for reform for the 4.8 million existing leasehold properties in England. In fact, it has been a campaign of ours since Lloyd George introduced the people’s Budget in 1909. We will keep going until we see some change. We want leasehold tenures abolished for all properties, including flats, and we want all existing leaseholds converted into either freeholds or, where appropriate, commonholds. We are disappointed that existing leaseholders are not covered by the Government’s proposals and we urge a rethink.

[Matt Western (Warwick and Leamington) (Lab)]

I congratulate the hon. Lady on securing this debate. To add to the point she is making, is she not shocked by the scale of what we are seeing across the country? Of the new homes built in 2021-22 by the 11 largest developers, 80% are subject to fleecehold.

[Caroline Voaden]

Yes, I absolutely agree. I will come on to that a little later.

To get back to the core issue of estate management companies, every type of resident—leaseholders and freeholders—is affected by rogue practices. Perversely, the situation is often more difficult for freeholders, who do not have the same statutory rights as leaseholders to take challenges to a first-tier tribunal. Where the landlord of an estate is a housing association, no one has any right to go to tribunal if that landlord fails to manage the property properly. That, too, needs to be looked at, but it falls outside the scope of today’s debate.

Whichever way we look at it, residents—whether housing association tenants, private tenants, owner-occupiers or retirees, living in a house or a flat—are being ignored, dismissed, intimidated and, frankly, fleeced by management companies that are not subject to any kind of regulation. We have all seen what happened in the water industry when private operators were allowed to focus solely on the profit line, ignoring their responsibilities to the environment while keeping shareholders happy. I believe we are looking at the next great scandal of our time: companies that may be owned by a shadowy collection of overseas investors eating up the smaller players in the UK market, building up their wealth and size so that they can ride roughshod over anyone who is tenacious enough to question their methods or ask for legitimate explanations of where their money has gone.

[Calum Miller (Bicester and Woodstock) (LD)]

Across my constituency, from the largest developments with more than 1,000 homes to the smallest with just a dozen homes, residents are benighted by the lack of transparency of those who run the management companies. Does my hon. Friend agree that a great step forward would be for the Government to insist on the timely publication of itemised accounts, so it is much clearer to residents how their money is allegedly being spent on their behalf by the management companies?

[Caroline Voaden]

I absolutely agree and will come on to that as well.

As a new MP coming into this place, I realised that some issues would be pertinent only to my constituency and others would reflect similar casework elsewhere, but when I reached out to colleagues to see who else was dealing with casework about estate management and particularly FirstPort, I was shocked at the response I got. At least half my hon. Friends on the Liberal Democrat Benches are supporting residents whose properties and estates are managed by FirstPort, and a dozen of us were in the room to question managing director Martin King when he responded to our invitation and came to Parliament to answer some of our more urgent questions. Following our invitation, he was also invited by Labour and Conservative MPs. He must feel very popular with so many invitations to Parliament, but it is rather a reflection of the desperation of so many of our constituents, who have exhausted all other avenues to raise complaints with FirstPort.

Martin King’s company manages more than 310,000 homes across England, Wales and Scotland, so we are talking about at least half a million people dealing with just this one company. It is extremely disappointing to report that since the Lib Dem meeting, at which great things were promised, the only response we have received from the south-west regional operations director for the company has been one automatic email reply. It is not good enough.

[Max Wilkinson (Cheltenham) (LD)]

It is the same experience for residents, is it not? When MPs ask questions of FirstPort, we do not get any replies. People turn up, smile and say nice words—soothing things—but nothing happens. The residents get the same thing. That includes a 94-year-old woman whose daughter contacted me to say that she was refused a request to install a stairlift and she cannot sell the property, because the management fees that FirstPort charges are so high, so she is effectively trapped, unable to get up and down the stairs. Is that not a disgrace and does it not go to show that FirstPort just doesn’t give a damn?

[Caroline Voaden]

I agree that it is an absolute disgrace. We must have some kind of legislation to bring these companies to book.

In the UK, we have a rather strange situation whereby a new housing estate is built, but the council may not adopt the new area, so the builder has responsibility for roads, green spaces and communal areas and then passes that on to a third-party management company. Residents end up paying council tax on the one hand and estate management fees on the other. These charges can increase at any time, with no accountability or redress.

The Competition and Markets Authority has recommended ending the private estates model, which has been used for 40% of all new builds across Britain in the last five years, and potentially more, as the hon. Member for Warwick and Leamington (Matt Western) said. The CMA has recommended mandatory adoption by local councils of public amenities on new housing estates. Even when roads are accessible to the general public and green spaces can be enjoyed or used by anyone, residents can end up being responsible for their upkeep through service charges. The tenants of such developments pay both council tax and an estate management charge, yet they often receive a far worse service than those who live in adopted developments and are subject only to council tax, so I urge the Minister to consider ending the practice of shared ownership of public spaces for the vast majority of new developments. I would like to see a presumption that the shared areas around new developments are almost always adopted by the local authority where the development is standard in nature.

Ahead of this debate, I asked the House of Commons Library to engage with people who had signed relevant petitions. More than 1,100 people responded, one third of whom were freeholders. Ninety-four per cent said they were unhappy or very unhappy with the services provided by their management company; 94% said the service charges were unfair; and 94% said the transparency of what the service charges were for was completely inadequate.

[Olivia Bailey (Reading West and Mid Berkshire) (Lab)]

My constituents living in Beansheaf Grange and Fairfields, to name just two developments in my constituency, recognise much of what the hon. Lady is saying. They tell me about high fees, poor service and uncleared rubbish, even leading to marauding rats. Will she join me in welcoming the firm action that this Government are taking to be in a hurry to address this deep unfairness?

[Caroline Voaden]

I am glad that the hon. Lady says that the Government are in a hurry. We are looking forward to seeing the legislation come before the House.

Out of the 1,100 people to whom I was referring, only 10 were happy with the way things were going with their management company. By anyone’s measure, that is a pretty shocking state of affairs. Respondents talked of shoddy workmanship, years of delays in getting repairs done, charges for gardening where no gardens exist, charges for new windows when windows are not replaced, charges for buildings insurance when there are no communal buildings, charges for new light bulbs when there is no communal lighting—it would be funny if it were not so serious. They talked of broken lifts, flooded car parks, leaking ceilings, including one that has been leaking for nine years, exorbitant insurance charges—the list goes on and on.

[John Glen (Salisbury) (Con)]

One other aspect worthy of scrutiny is the situation whereby a developer sets up a management company made up of family members of the original developer, leaving residents with a real challenge to get to the heart of who is truly accountable. That is something that I have seen in my constituency, and I am sure that it happens across the country. It is something that the Government need to address in whatever they come forward with.

[Caroline Voaden]

The right hon. Member raises a very good point. The ownership of some of these companies is murky to say the least.

Service charges are going up way beyond inflation, with no clear explanation of what the increases are for, and management companies refuse to give clear explanations when asked. At Camomile Lawn in Totnes in my constituency, residents were told that the annual contribution to a reserve fund had been increased from £2,000 to £8,000 a year—over 265%. Service charges were raised 23% based on a 10-year plan, but the plan was not shared with the residents, even when they asked. Accounting costs went up 55% in one year with no explanation given. This is a classic example of poor communication and a refusal to engage constructively with residents who want to understand the basis on which financial decisions are made.

The lack of transparency around service charges has been debated in this House many times, not least in December 2023 on Second Reading of the Bill that became the Leasehold and Freehold Reform Act 2024. It is way past time that management companies were required to act responsibly, treat residents with respect and provide timely, straightforward and accessible information to all residents, regardless of their status as leaseholders or freeholders, and regardless of age.

One resident said:

“We feel like we are being taken advantage of because they see us as old.”

That is a common reflection of those living in retirement villages. Too often, questions go unanswered, letters and phone calls are ignored, and justifiable requests for clarity and information on charges get rebuffed or given such poor responses that they do not mean anything. A delay in bill payment caused by asking a legitimate question often leads to a penalty charge for late payment—a sharp practice that clearly has to end. What is more, people are being forced to pay for the privilege of having asked those questions. One respondent said:

“I received a bill of more than £2,000 for incurring charges trying to see where my money was being spent—£25 per email, £35 per phone call and solicitor charges on top. I felt completely robbed.”

Older people often feel bullied by management companies—scared to question charges, confused by badly written statements and threatened with legal action if they are late paying charges because of wanting to question something. One resident said:

“Our management company leverage their familiarity with legal processes and the vast financial resources at their disposal to bully and intimidate leaseholders.”

This is not just about money; it is about how people feel living in a home that they may have put their life savings into buying. These homes are often sold as offering peace of mind, but one respondent said:

“I’m drained, scared and mentally exhausted. It feels like I’m being financially and emotionally worn down for simply asking for basic transparency and fairness.”

Another said:

“My mental health has been seriously impacted by the state of our building. No one should be unhappy in their home or feel like they don’t want to go home.”

When it comes time to sell, it is yet another tale of woe. Management companies do not respond to requests for information from solicitors; sellers are charged thousands of pounds for management packs that are required for the sale but take months to arrive; buyers get frustrated and pull out, and the price of the property is impacted. Meanwhile, service charges keep rising and ground rents keep being charged.

As my hon. Friend the Member for Cheltenham (Max Wilkinson) said, people are trapped in their properties. Service charges can make it impossible to sell, as they have risen way beyond those charged on new properties in the same area. Dr Janet Richardson’s father bought a flat for £106,000 in 2006. In 2022, he had to move into a care home and she tried to sell the flat. Some months after putting it on the market she received an offer for £10,000 below the purchase price, which she accepted, but for months FirstPort did not answer requests for information, so eventually the buyer pulled out. The flat went back on the market at an even lower price, but still has not sold, three years after first being put on the market. Dr Richardson has now had to agree to sell the property through an assured buyer scheme and says there is likely to be nothing left once all the debts have been paid. She has shown me the figures—it has all gone. If FirstPort had done its job properly she would probably have sold the flat for a reasonable amount two years ago, but of course there is no offer of compensation from FirstPort.

Finally, I come to the nightmare scenario that people face if they dare to attempt to get rid of FirstPort as the management company. Resident groups that have made repeated attempts to release themselves from FirstPort’s management have met resistance and obfuscation, forcing them to retain lawyers and pushing legal fees into the tens of thousands. Those cases have taken an emotional toll on residents, many of whom are elderly. One case in my constituency has been going on for three years and is still not resolved.

South-west based Baker Estates has sacked FirstPort from a new estate at Dartington because of non-performance. The Duchy of Cornwall also sacked the company at the vast Nansledan estate in Newquay. It is more than clear that these companies are not doing their job. Their raison d’être is clearly not that of operating in the best interests of their residents. Estate management companies have had it too good for too long.

As we look again in this place at leasehold properties, we must also look at the difficult situation for freeholders on privately managed estates. We need to bring forward leasehold reform as soon as possible. Does the Minister have a timeline for introducing the leasehold and commonhold reform Bill? Will the Government bring forward legislation to allow freeholders to challenge management charges and to take over the management of a development if they wish?

Have the Government considered greater regulation of estate management companies, such as through an ombudsman, so that residents have some recourse when they encounter problems? If not, will they consider doing so? Will they introduce legislation to prevent management companies from charging residents for legal costs when they ask legitimate questions? Will they introduce legislation to professionalise the management of estates and buildings, with a basic level of service required and a mechanism for complaint and escalation that is easily accessible to residents? I look forward to the Minister’s response. I now leave it to other hon. Members to share experiences of the fleecehold nightmare.

[Several hon. Members rose—]

--- Later in debate ---

[Caroline Voaden]

I will be very quick as we are short of time. I thank all hon. Members for coming and sharing their experiences. It is clear that there is a strong feeling in the House that we need to act and that millions of people are being badly served by estate management companies. It is good to hear that looking at the behaviour of estate management companies, as well as the position of leaseholders and freeholders, is on the Government’s agenda. I appreciate that this is a complicated area of legislation; the Minister laid that out clearly. We are willing to work across the House to reach some sensible steps forward in legislation so that there can be redress for people who have until now been badly affected by estate management companies and so that the practice ends forthwith.

Question put and agreed to.

Resolved,

That this House has considered residential estate management companies.