Park Homes

Peter Aldous Excerpts

Tuesday 13th May 2014 Westminster Hall

[Annette Brooke]

I commend my hon. Friend and all members of the Communities and Local Government Committee, because the report was really useful and introduced elements into the 2013 Act that might not otherwise have been there.

Returning to site owners’ incomes, there are at least three elements, including the initial siting of the mobile home, the pitch fees and the commission payment. I have a scenario that outlines the siting of a new unit. Suppose that a site owner purchases a new unit for £60,000. Transport may cost £10,000 and they may have to spend a further £10,000 for connection to services and landscaping. The unit could sell for £160,000. I have no idea how realistic those figures are, but I am trying to illustrate the potential for a significant return. Suppose that the home is sold within a year, the commission clicks in. In another scenario, a park home owner could replace their home, meaning that they will be charged for connections to services and landscaping, which means more potential profit. It is therefore difficult to get into all the payments that are actually made by park home owners.

I must confess that I am totally confused about the respective purposes of the pitch fee and the commission payment, but they are clearly related, if the situation is such that if commission is reduced, pitch fees will have to go up. As ever, I consulted House of Commons Library briefings for clarification. The standard note on the 2013 Act states:

“The pitch fee is the sum paid to the site owner in return for permission to station a mobile home on the pitch and use the common areas of the site. The requirement to pay a pitch fee is an express term in the written agreement. Pitch fees are reviewable annually and can usually only be increased in line with RPI plus the cost of expenditure on improving (rather than maintaining) the site.”

In a recent letter, the Minister said that a commission is not an estate agency charge, but an important income strand for park home businesses, enabling them to ensure that sites are properly managed and maintained. He said that if the commission was reduced or abolished, there would need to be a compensatory increase in pitch fees to cover the shortfall in income. That is where I find it difficult to understand exactly what money is being used for what, and I can see where the questions come from park home owners.

On pitch fees, there should be available for inspection a transparent and audited set of published accounts. I have with me a file of cases from across the country. Residents have supplied evidence that owners of their sites are not properly managing or maintaining their parks, making it harder for residents to sell their homes. They have asked why site owners should receive the 10% commission if they are not supplying the services they are meant to. Park home owners argue that it is they who work hard to make improvements to their property, which helps the site owner market his business.

The 2013 Act will introduce some accountability, with an annual review of pitch fees; an opportunity for park home owners to challenge pitch fees on lack of maintenance or deterioration of the site; and a requirement for site owners to justify increases above the retail prices index. I would be interested to hear how the Minister envisages those provisions working; whether the historical position in which many park home owners find themselves can be addressed; and whether it would be possible to have a clear statement on the issues. I imagine that such a statement could not be made fully today, but if we could have something simple placed in the Library, it would be helpful for park home owners and Members of Parliament to see what the future holds, so that we can check whether anything else needs to be done. I fear that we will not pick up all the historical problems, but I hope that future purchasers will have clarity in their written agreements about all payments and will be clear on the annual reviews. Also, I still come back to this question: is it not reasonable to have audited published accounts on pitch fees and the expenditure out of that?

Research by the National Association of Park Home Residents in November 2013 revealed that monthly pitch fees in 1,075 parks varied from £40 to £382. It seems generally accepted that the average fee is about £150 a month. For someone living on the basic state pension, while the pension is being increased by the consumer prices index, fees are being increased by the RPI. One can see how there are concerns out there.

Park home owners continually identify extra costs that creep in one way or another. Many park home owners referred to people who own flats or other dwellings, who pay a maintenance or service charge and a leasehold charge, but do not generally have to pay another 10%, on top of an estate agent’s fee, when they sell. That is where I feel published accounts would help. Park home owners pointed to providers such as McCarthy and Stone and looked at the many services provided in private sheltered accommodation. I think that there is a pretty good idea in those situations of what someone is paying for and what they are getting.

Park operators have argued that they cannot remain in business without the 10% commission charge. Yet our petitioners have pointed out that it would be foolish for a business to rely on an income that is unpredictable. It is difficult to predict how many new homes will be purchased, or used homes resold, in a year.

Many residents reported feeling trapped in their homes and unable to sell. Due to park rules, many sites are only for people of retirement age. The need to move into a nursing home or some other form of residential care is a real possibility. Having to give the park operator such a high percentage from the sale of their home reduces the amount the seller has to put towards their care.

There are other considerations. The Government acknowledge that the park homes sector plays an important role in the provision of low-cost housing for the elderly and that it frees up under-occupied homes that are much needed as we face a housing crisis. However, with pitch fees, other overheads and the 10% commission, many residents worry that the costs of owning a park home are becoming unviable. The issue of the 10% commission charge is undoubtedly a matter of concern.

[Peter Aldous (Waveney) (Con)]

I congratulate my hon. Friend on securing this debate and on putting her points across so eloquently. It is important, after what was probably the biggest change to the sector in many years, that we review it from time to time.

Does my hon. Friend agree that the legislation was based on proper and full research and consultation, with the Select Committee report and the consultation conducted by the Department for Communities and Local Government? The new licensing arrangements provide an opportunity for additional accountability, so does she agree that we should let the legislation bed down before reviewing it in, say, two to three years, as indeed the legislation provides for?

[Annette Brooke]

Yes, there is an important element of reviewing what is in place or is about to come in in the near future, but not all of that is entirely understood by park home owners. We need a clear statement of what is happening now and what will happen in the future, and we need to try to untangle the pitch fee and the commission to be clear what items we are talking about. For example, is the commission just for contingencies, or just for improvements? I find the issue confusing, and I do not think we have bottomed that out yet. I agree that we cannot make any big moves until we have reviewed the legislation properly, but I think we can move forward by getting more transparency.

Not surprisingly, the petition calls for a reduction in the commission rate. Petitioners are also interested in looking at whether we should consider the difference in value between the purchase and selling prices of the unit when a commission is applied. That might be quite complex if there is deterioration on the unit, but obviously, that is food for thought.

We need a full and frank debate on the issue. We need transparency on what the various payments are being used for, and we need to ensure that there is no further exploitation of park home owners. Exploitation is still going on regarding some of the utility charging. It should all be out in the open, but I am sure that we can all come forward with examples.