Residential Estate Management Companies

John Glen Excerpts

Tuesday 22nd April 2025 Westminster Hall

[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.

--- Later in debate ---

[The Minister for Housing and Planning (Matthew Pennycook)]

It is a pleasure to serve with you in the chair, Mr Stuart. I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this debate. I commend her for giving the House a much-needed opportunity to discuss the important matter of residential estate management companies in detail. I thank her for so clearly highlighting the pertinent issues in her opening remarks. I also thank all the other hon. Members who have spoken for the insight they have provided. I assure them that I well understand the strength of feeling when it comes to this issue.

The debate as a whole has not only underscored the case for acting to tackle the problems associated with freehold estate management arrangements, but highlighted that those problems take various forms. Part of the challenge facing the Government, and why we believe appropriate consultation in this area is essential, is ensuring that the interventions we make in due course capture the diversity of models and challenges.

We have covered a large range of specific issues today. I will address as many as I can in my response. We have also strayed into leasehold and commonhold. The White Paper is very distinct from the freehold estate issues that the majority of hon. Members have spoken about today and on which I will therefore mainly focus my remarks.

The Government estimate that there may now be as many as 1.75 million homes on privately managed estates in England, although I must make clear that not all of them are liable to pay charges. As the debate has made abundantly clear, the prevalence of such freehold estates creates a wide range of problems—problems that, not least as a result of the dogged campaigning by groups such as the National Leasehold Campaign and the Home Owners Rights Network, are now well known and well understood by the public.

Historically, any given local authority and water company would adopt the respective parts of a new residential estate. They would set clear, adoptable standards and provide oversight to ensure those were delivered, but more recently, and especially over the past 10 to 15 years, we have witnessed the growth of private management arrangements, where shared infrastructure, amenities and open spaces are not adopted and responsibility for the costs of ongoing maintenance instead falls on the residents of the estate through an estate rent charge, which residents pay in addition to council tax. The infrastructure and amenities provided on these estates all too often do not meet the minimum standards for adoption. In the worst cases, residents are left living in unfinished and sometimes dangerous developments.

The problem of unfinished housing developments is obviously not confined to freehold estates, and part of the answer is the proper enforcement of planning obligations, but private management models clearly exacerbate the problems faced by many homeowners in this scenario by leaving them liable for the upkeep of the partially completed or unfinished infrastructure.

That is just one of the many problems that residential freeholders living on freehold estates across the country are struggling with. Others include poor service and abuse at the hands of unscrupulous managing agents—we have heard many such examples in the debate today—as well as limited to no transparency about how the charges they pay are spent, onerous restrictions placed on the title deeds of their properties, and a general lack of control over how their estate is managed. These problems are more acute in some cases than others. For example, the absence of any measure of control is most acute in the case of the approximately 20% of freehold estates that have what is known as an embedded management company set in the title deeds of the relevant properties. To take another example, the challenges associated with opaque fees are magnified in estates where management arrangements are fragmented, with more than one managing company; residents have to navigate multiple companies, each of which levy fees for services in a way that significantly increases the potential for abuse.

As many hon. Members mentioned, last year, the Competition and Markets Authority published its study into the housebuilding industry. I encourage any hon. Member who has not yet had the time to read that report in full to do so. The CMA identified the private management of public amenities on housing estates as a detriment to consumers and concluded that

“the root cause of the aggregate detriment…is the decrease in levels of adoption of amenities by relevant authorities”.

The Government agree with the CMA’s conclusion that the housebuilding market is not delivering for consumers and has consistently failed to do so over successive decades.

As hon. Members will be aware, the report made a number of recommendations to Government and we published a response in full. It called for measures to strengthen protection for existing homeowners, as well as for the Government to mandate adoption of all new estates and to implement common adoptable standards for infrastructure. The Government have accepted many of the recommendations in principle, but we recognise that further work is required in a number of areas.

In the immediate term, we need to introduce protections for residential freeholders on already constructed freehold estates. As hon. Members mentioned many times, part 5 of the Leasehold and Freehold Reform Act 2004 contains powers to establish a regulatory framework that to provide such protections, including the provision of standardised demands and an annual report; giving homeowners the right to challenge the reasonableness of charges levied; requiring estate managers to consult homeowners where the anticipated costs exceed an appropriate amount; and giving residential freeholders the right to apply to a tribunal to appoint a manager in the event of serious management failure. Taken together, these measures will vastly improve the situation for many residential freeholders, improving transparency and driving accountability among estate management companies.

As I set out in my written ministerial statement last November, the Government recognise the importance of acting as quickly as is feasible to implement these provisions, but the establishment of a new regulatory framework through detailed secondary legislation requires us to grapple with a range of technical questions. It is important that we carry out appropriate consultation to make sure that the new system operates effectively and to the lasting benefit of residential freeholders.

[John Glen]

The Minister is setting out a thorough analysis of the challenge that he faces. Could he say something about the distinction between existing entities and those that are yet to be set up? One of the concerns is that the Government’s legislation will not deal fully with existing arrangements, and that the none of the cases that we have heard about today will get redress from the Government’s intervention.

[Matthew Pennycook]

To be clear, the protections we are talking about, which we intend to switch on as soon as is feasible and were provided for by powers under the Leasehold and Freehold Reform Act passed by the previous Government, will benefit existing residential freeholders on existing estates. I will come to the prevalence of those arrangements in due course, but I can reassure hon. Members that we intend to carry out that consultation this year, as promised, and that I am doing everything I can to expedite it.

Beyond the short-term need to protect residential freeholders better, we have to take steps to reduce the prevalence of private estate management arrangements, which are the root cause of the problems we are considering today. In my written ministerial statement, I committed the Government to consulting on legislative and policy options to achieve that objective. I hope that hon. Members appreciate that this is not a simple and straightforward area of policy and that the implications of policy choices are potentially far-reaching.

Oral Answers to Questions

John Glen Excerpts

Monday 20th January 2025 Commons Chamber

[Matthew Pennycook]

Not least with a view to making myself the most popular Member of the House, I will happily do so.

[John Glen (Salisbury) (Con)]

On Friday, I met the leader of Wiltshire council, who asserts that the way the Government have calculated the distribution of compensation between in-house and commissioned services means that Wiltshire has not fared well in the local government settlement that was announced on 18 December. Will the Minister meet me so that I can better understand the thinking and relay it back to the leader of my council?

[The Minister for Local Government and English Devolution (Jim McMahon)]

We know that local government is feeling the pressures after 14 years that did not bode well for local and public services. We understand the pressures associated with national insurance, which is why the Treasury has committed £515 million to support councils in that endeavour. I am more than happy to meet the right hon. Gentleman about his particular circumstance.

English Devolution

John Glen Excerpts

Monday 16th December 2024 Commons Chamber

[John Glen (Salisbury) (Con)]

Fifteen years ago, just before I joined this House, we saw the reorganisation of Wiltshire county council into the unitary Wiltshire council, and the abolition of several district councils. It seems that another reform in the heart of Wessex will be the probable outcome of these proposals for Somerset, Dorset and Wiltshire. Can the Minister assure the people of Salisbury, who still have some difficulty accepting the abolition of Salisbury district council, that the proposed changes will be positive in terms of the combination of resources for strategic investment in transport and other such services?

[Jim McMahon]

In any local government reorganisation, there is always a fine balance between trying to create a cohesive new council and respecting the strong local identities that people feel—identities that are unique. When that is done right, the council can be confident in its own standing, because it knows that it is delivering outstanding services; when it is done wrong, it is trying to impose an identity on a place through the form of a council that does not reflect the local identity. For those of us in towns such as Oldham that went through the 1974 reorganisation, that is felt as keenly as in other areas, but that is not about the type of government; it is about culture and approach. When it is done well, it can work.

Oral Answers to Questions

John Glen Excerpts

Monday 2nd December 2024 Commons Chamber

[Rushanara Ali]

I am very sorry to hear about the experience of my hon. Friend’s constituent. I refer to my previous comments; I am very happy to meet and engage with her on her work to tackle homelessness and rough sleeping.

[John Glen (Salisbury) (Con)]

If Wiltshire embraces the opportunity to join Dorset and Somerset in an elected mayoral authority, will there be local elections all-out in Wiltshire next spring?

[Jim McMahon]

I thank the right hon. Gentleman for his question on devolution. We are absolutely ready to talk to any areas that are keen to take on devolution, particularly a mayoral combined authority. Any decisions on whether elections do or do not take place will be part of future consideration.

Council Tax

John Glen Excerpts

Thursday 14th November 2024 Commons Chamber

[Matthew Pennycook]

I thank my hon. Friend for that point, and I will relay it to the Local Government Minister. On the general principle, we are determined to rebuild local government from the ground up. That is why we are providing multi-year funding settlements to councils and removing a number of ringfences, and are committed, as I said, to fair funding. On his general point about the Opposition, I completely agree. It reminds me of a phrase my nan used to use: “More front than Harrods,” she used to say. That is what Opposition Members have.

[John Glen (Salisbury) (Con)]

Will the Minister rule out additional council tax bands being among any changes that the Government make?

[Matthew Pennycook]

I say to the right hon. Gentleman that we are not talking about council tax bands in this urgent question; we are talking about the thresholds that remain in place. We are committed to those thresholds. As I am sure you would expect, Mr Speaker, we will set out more details about the local government finance settlement at the appropriate point next year, in the usual way.

Budget Resolutions and Economic Situation

John Glen Excerpts

Tuesday 21st March 2023 Commons Chamber

[The Chief Secretary to the Treasury (John Glen)]

What a privilege it is to close this four-day Budget debate on behalf of the Government. I thank the right hon. Member for Wolverhampton South East (Mr McFadden) for his remarks—for someone who moved from being the high disciple of Tony Blair to sitting in a Cabinet where there was “no money left”, I think there was a lot of cheek in his remarks.

This Budget takes our collective potential and unleashes it to deliver sustainable long-term growth. We are now able to direct our attention to the future because of the difficult decisions that we took in the autumn, when we cemented stability and the prudent management of the nation’s finances, taking responsible, necessary decisions for the good of the economy—for the vulnerable, for families and for communities up and down this country. Since then, debt-servicing costs are down, mortgage rates are lower and inflation has peaked. We are heading in the right direction. The OBR’s clear assessment is that because of the action taken in the autumn, combined with the actions announced by the Chancellor last week, we are on track to meet all the Prime Minister’s economic pledges.

As has been famously said before, inflation is taxation without legislation. It makes us all poorer. That is why we said that we will halve it this year. Indeed, the OBR says that we will do more than that.

[Andrew Gwynne]

Will the Minister give way?

[John Glen]

No, I will not.

Inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023. If debt is left unchecked, it acts as a ceiling on our economic potential. That is why we are bringing it down. Under this Government, we will pay our own way.

On growth—the focus of the Budget—there were those who said that we would fall into recession in 2023, but last week the OBR said that we will not enter a recession this year. Instead, after this year, the UK economy will grow in every single year of the forecast period, including by 2.5% in 2025. As we look to the future, we are now rolling out the biggest employment package ever, we are overhauling incentives to get businesses growing, and we are unleashing our green energy sector while supporting families and businesses with bills in the short term. But, contrary to the characterisation in many Opposition speeches today, there is no complacency from this Government. There will be no let-up in our relentless focus on enabling growth.

The subject of today’s debate is halving inflation, reducing debt and growing the economy. During the course of the debate, we have heard some excellent speeches from right hon. and hon. Members on both sides of the House, and I would like to respond to some of them now. I will respond first to my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), one of my predecessors. Although he welcomed many measures in the Budget, he drew attention to the question of corporation tax. Let me draw his attention to the remarks of the Chancellor, who expressed his determination that the full expensing measure will be a permanent intervention of this Government.

I thank my right hon. Friend the Member for North West Hampshire (Kit Malthouse), my parliamentary neighbour, for his constructive suggestions about the simplification of childcare. I also draw his attention to the fact that this Government have committed £492 million over this year and next to ease the supply for those who will provide our child support.

I also want to refer to the speech from my hon. Friend the Member for South Cambridgeshire (Anthony Browne), who gave us a helpful contextualisation of the world economy and pointed out the fact that, contrary to what we heard in many Opposition speeches, since the Conservatives came to power in 2010 we have grown more than major countries such as France, Italy or Japan, and about the same as Europe’s largest economy, Germany. We have halved unemployment, cut inequality and reduced the number of workless households by 1 million. I also want to refer to my hon. Friend’s remarks on the pensions intervention. That was called for by many in the medical profession over many months, but our pension reforms benefit other experienced key workers as well as doctors, including headteachers, police chiefs, armed forces clinicians, senior armed forces personnel, air traffic controllers, prison governors, senior Government scientists, Government-employed vets and, yes, even senior people in the private sector who create jobs, sustaining growth across the economy.

I also thank my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), who had a characteristically clear understanding of how economic challenges will be met. He also mentioned the support of his local brain surgeon. Many more people working in the NHS are realising that within two weeks they will be able to continue working, knowing that their pensions are safe.

I thank my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) for his remarks on defence expenditure. I suspect that there will never be enough money for him on defence, but he shows a clear understanding of the extra commitment the Chancellor has made in the Budget to invest in continuing to support our efforts in Ukraine.

There were many other worthwhile contributions from Members on both sides of the House, and I think it is important that we recognise that one of the major themes of this Budget was levelling up across the whole United Kingdom. I welcome the contribution from my hon. Friend the Member for Barrow and Furness (Simon Fell), who drew attention to the value of the announcements on nuclear, particularly Great British Nuclear, and the transformation that will bring to his economy and to the country as a whole.

[Alan Brown]

On nuclear, and the fact that the Minister is talking about reducing debt, why does he think it is a good thing to sign bill payers up to £35 billion of debt for Sizewell C through the regulated asset model? Surely that is just a burden on all future generations.

[John Glen]

What is important is that this country knows that we have a Government who will take long-term decisions about energy security for this country.

I would like to address a number of significant themes of this afternoon’s discussions on the cost of living. Support for households with higher bills has been worth £94 billion—on average, £3,300 per household—across 2022-23 and 2023-24. That means that in this coming year more than 8 million households on means-tested benefits will receive three cost of living payments totalling £900; more than 8 million pensioner households will receive a cost of living payment of £300; and more than 6 million people on disability benefits will receive a cost of living payment of £150. Since this Conservative Government came to power in 2010, we have grown more than major countries such as France, Italy or Japan, and we are now on track.

I want to address public sector pay, which was also raised by a number of Opposition Members. Through the efficiency and savings review, Departments have reprioritised and identified further efficiencies, building on the 5% efficiency challenge set at the 2021 spending review.

We have faced a global energy crisis. We have had high global inflation. There has been a global economic downturn. We needed to bring about stability—we did. We needed sound money—we have it. We now need long-term, sustainable, healthy growth—this Budget delivers it. Many Opposition Members have asked who this Budget was for. It was for the families struggling with energy bills, the left-behind communities that will receive record investment, and the entrepreneurs who drive growth. The OBR’s forecasts show that this Budget will deliver improvements in growth and inflation, but this Government will continue to do everything we can to beat those forecasts. It is with humility, focus and determination that we tackle the challenges facing this country. We will deliver a stronger, cleaner economy for the whole of the United Kingdom, and I commend this Budget to the House.

Question put and agreed to.

Resolved,

That income tax is charged for the tax year 2023-24.

And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

The Deputy Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).