Sale of Park Homes

Hilary Benn Excerpts

Thursday 30th October 2014 Commons Chamber

[Hilary Benn (Leeds Central) (Lab)]

I congratulate the right hon. Member for Mid Dorset and North Poole (Annette Brooke) and other Members who have secured today’s debate. The right hon. Lady deserves particular recognition for her long-standing and determined campaign on behalf of 165,000 park home owners and residents to secure better protection for them. It is a cause that has attracted a number of contributions from Members who have park homes in their constituencies.

The basic principle is that park home owners deserve just as much protection as other home owners. That is why the progress that has been made during the past decade or so, including, I freely acknowledge, under this Government, to provide greater protection for park home owners has been so important. The last Labour Government established a park homes working group in 1998, and its recommendations led to not all but many of the shortcomings being tackled in the Housing Act 2004. Further proposals to amend the law were set out in 2005 and implemented later that year, and in May 2009 further consultation was published on options for improving the management of park home sites.

Significant progress has been made in this Parliament, and I pay tribute, as have many other hon. Members, to the hon. Member for Waveney (Peter Aldous) for his Mobile Homes Act, which was put on the statute book in 2013. As he would acknowledge, it drew on the work of the Communities and Local Government Committee and it had cross-party support. It is worth reminding ourselves that the reason for that was the injustices that were so clearly rife in the sector, as we have heard today, and that still continue in some places to this day. It reformed the licensing regime that applied to park home sites, it removed the ability of unscrupulous operators to try to block lawful sales by residents of their homes, and it ensured that pitch fee increases were transparent. It also included provision for the Government, should they so wish, to introduce a fit and proper person test through legislation. As I think we have heard, the reputable park home site owners, apart from anybody else, deserve not to have their reputation undermined or damaged by the rogues—the word “gangsters” was used—who sometimes act shamefully towards their residents. We have made real progress.

Today we have focused on the question of the 10% commission payable to the site owner on sale of a park home. I want to explore the arguments that have been made today, and in the previous studies, on that question. On the one hand, it is forcefully argued by mobile home owners that the site owner does nothing, in effect, to earn the commission, so they do not see why they should be paid it. As we have heard—this point was made most forcefully by my hon. Friend the Member for North East Derbyshire (Natascha Engel)—when residents have spent their own money on improving their home, and therefore its value, it is particularly galling to see 10% of the increased value paid to someone else for work that they have not funded.

On the other hand, the argument has been made—we have to acknowledge it—that the income from commission is part of the income that site owners depend on, along with pitch fees and the sale of new mobile homes to new owners coming to the site, and that it is therefore important for making their business viable. Were the rate of commission to drop or disappear—the right hon. Member for Mid Dorset and North Poole was perfectly frank in acknowledging this argument—would there need to be an increase in pitch fees to compensate?

There have been other changes that I strongly welcome. For example, commission can no longer be applied to the gift of a mobile home to someone else. The previous Labour Government looked at this matter, as we have heard. Reference has been made to the research carried out by Berkeley Hanover Consulting, which concluded at the time—I acknowledge that it was 12 year ago, as the right hon. Lady argued clearly and forcefully—that pitch fees would rise significantly if the commission paid to site owners was reduced. It argued that pitch fees could increase by about a third as a result.

Indeed, when the Communities and Local Government Committee looked at that recently, it pointed to the case of a residents association that was offered a reduction in commission in return for an increase in pitch fees. It was reported to the Committee that one in 100 of the residents so approached agreed to such a move. The Committee’s report also pointed to the previous Government’s consultation in 2006. We have to acknowledge that it would be in the interests of some residents to move in the direction of the commission disappearing, but others would prefer the status quo.

The difference is this: those who favoured a reduction in, or abolition of, the commission rate accepted that it might well result in a higher pitch fee. The residents who intended to sell their home at some point in the future thought, “Well, that’s okay.” However, the residents for whom that will be their home for the rest of their lives were, understandably, much more anxious about an increase in their pitch fee, because they could be paying it for a long time.

With people’s budgets already stretched, and as many of the people who live in park homes are on low incomes, as we have heard, I think that that is a reasonable consideration to take into account. In that sense, would we want to take a step that might result in people facing fees that they would find difficult to pay? There is genuinely a balance to be struck, and we have to consider that.

One of the ways we could help to answer that question—there has been strong consensus on this point—is by having greater transparency. It is self-evident. The right hon. Lady made that point at the start of the debate, and it has also been made by my hon. Friend the Member for Hyndburn (Graham Jones) and the hon. Member for Stafford (Jeremy Lefroy).

Let us look at the example of leaseholders. Where service charges are levied for works that the freeholder of the building undertakes, whether cutting the grass, cleaning or external painting, they have a right under legislation—the Landlord and Tenant Act 1985, I think—to see a cost summary and then the underlying documents. However, park homes were not included in that legislation, which was introduced some years ago, and I simply do not think that can be right. Why should park home owners not be able to see where the money they have paid goes and what it is being spent on? That is a matter of principle if a fee is being paid to someone else, who may or may not be providing the services in return. It would also help us answer the question raised in the argument made by site owners—that if they do not have commission income, they will not be able to continue operating sites as viable entities.

My hon. Friend the Member for Hartlepool (Mr Wright) made a point about the business model, and that is important. If someone is not entirely sure how many homes are going to be sold, how can they hope to run their business, which is dependent on something they do not control? With pitch fees, of course, there is control. We recognise that there is a balance to be struck. The hon. Member for Eastbourne (Stephen Lloyd) described one possible option: that of lowering fees. Others have argued for their removal.

There seems to be a consensus across the House in favour of a review. As the right hon. Member for Mid Dorset and North Poole made clear, a review would not say, “We’ve reached a decision about the sensible thing to do.” There is a very strong feeling on the part of home owners that the 10% commission is unfair. We could ask them whether they would be able to cope with higher pitch fees if the commission disappeared; people will have to express a view. I think it would be sensible to have a review. As I understand it, the only issue across the House is its timing. I hope that the Minister will be able to enlighten us on that.

I conclude by congratulating the right hon. Lady on bringing this debate to the House. I hope that the Government will respond sympathetically to her points and those of other Members.