I beg to move,

That leave be given to bring in a Bill to make provision for a right to manage for freeholders on unadopted private or mixed-use housing estates;
to set minimum standards for public amenities on new housing estates;
to make provision about the enforcement of those standards;
to make provision about the adoption by local authorities of public amenities on new housing estates;
and for connected purposes.

In perhaps less parliamentarily precise language, but in words that might be a bit more relatable for those watching at home, the Bill will make sure we are finally tackling the fleecehold stealth tax that is affecting far too many new homeowners on new estates right across the country.

I am incredibly proud to be here as a member of a party that recognises, in some of the best traditions of this country, the importance of a secure home in which people can build stable and prosperous lives. Indeed, as a Labour MP, I am probably contractually obligated to remind the House that one of the defining missions of this Labour Government is to get Britain building again. When it come to the state of the housing market that we inherited, it is clear that far too much simply is not working for far too many people. That may be due to the following: the broken state of the house supply system, which prices far too many people out of home ownership; the lack of affordable social rented homes or insecure private rented sector accommodation, creating precariousness for families who just should not have to face that in their lives; or the broken leasehold system, on which we announced some really important measures yesterday that I know many Members across the House will have welcomed.

Today, I wish to address a slightly less appreciated issue, but one that is no less important. Fleecehold housing estates are really growing right across the country. Fleecehold arises when homes are not adopted by local authorities, leaving new occupants exposed to fleecehold stealth taxes and paying money to a private management company for services that others receive as part of their council tax. They are on the hook to an estate management company, which is often unaccountable to them and often seeks to exploit them with every available power.

I know from lots of conversations that I have had with other Members across the House that I am far from alone in experiencing this issue. It is growing in my constituency, and also right across the country. Indeed, when I am away on holiday, I cannot escape it either. Over recess, I was up in Scotland visiting my family. A family friend took me to one side to raise the issues that they have had, which is quite typical. Their estate had gone unadopted for many years. There was no end in sight to this situation. In the meantime, they were paying hundreds of pounds each year for basic services that the rest of their neighbours were receiving through their council tax. But that was not the worst of it. When they missed one bill, which had gone up quite considerably at a week’s notice, rather than giving them any tolerance, their estate management company used the contractual powers that it had to go straight to their mortgage lender to have the amount added to that family’s mortgage and to drive a wrecking ball through their credit score in the process. This injustice cannot be allowed to persist, but for far too many people, this situation is becoming the norm.

There was once a time when local authorities would typically adopt housing estates when they came forward, but that simply is no longer the case. Indeed, a Competition and Markets Authority report into this issue last year found that up to 80% of new housing estates now go unadopted, with no end in sight. Indeed, many in my constituency have gone unadopted for well over a decade after completion. In the meantime, these householders are on the hook to a private management company that they never expected to be stuck with and for a length of time that they had never considered. The impact of that relationship has many facets. First, these householders are hit with what is in effect a new homes stealth tax. They are often forced to pay hundreds of pounds each year for services that every other homeowner would get as part of their council tax.

Typically, these bills are around £350, but that is a significant amount in a cost of living crisis. However, the bills are far from limited to that. I have had correspondence from constituents who have been hit by bills running to thousands of pounds. Again, very short notice is often given for steep increases. Across the whole country in 2022, the CMA found that more than £260 million was spent by households on exactly these charges. In that time, given the growth that we know has happened and that needs to continue to happen in our housing supply, that amount will only have grown. That cannot be fair and it cannot be justified.

Part of the issue is not just the injustice of paying twice for something, but the fact that this delivery mechanism is structurally designed to maximise the costs that these households bear. The management companies are not directly accountable to the homeowners—to the people to whom they are providing service. There is no incentive for these management companies to keep bills down. Indeed, I have had correspondence from people who have been charged upwards of £250 just for having one lightbulb changed on their estate. Moreover, the small size of some of these estates, or the extent to which they can be subdivided, means that the bulk of the high fees can often just covers management and professional services fees, and bear no relation to any actual service delivered on the estate.

Indeed, one estate had been subdivided to such a level that the vast majority of the bill that every household was paying was simply the fee for how they were audited each year. That cannot be right. Alongside that, it is not just the cost that is the problem, but the way that this is undercutting the very nature of the stability and prosperity that home ownership is meant to bring with it.

By being on the hook to these management companies, residents often have to fight for years to get bare-minimum works and services and responses to their queries. They also often find that when they look to move away from this exploitative relationship, they are unable to do so because of the risk created by that fleecehold system. I have spoken to homeowners whose sales have fallen through when crucial management pack information has not been provided by management companies in a timely way or who, when they have looked to move, have not been able to because their credit score has been decimated by exploitative charges when they have not been able to pay steep increases in their service charge in what the management company viewed to be a timely manner.

I welcome the Government’s commitment to trying to do something about this, but it is important that we address it at pace. Hopefully, we will be building 1.5 million homes over the course of this Parliament, but those homes will not deliver security or prosperity for the families who take them up if they trap them in fleecehold relationships and on fleecehold unadopted estates. My Bill looks to take several important steps forward to address this. First, it looks to build on some of the recommendations in last year’s CMA report to cut off unadopted estates at source, mandating minimum adoptable standards that all developers would have to reach as part of their works and laying out minimum adoption timelines that local authorities would be accountable for delivering on. All that would ensure that unadopted estate limbo can finally be a thing of the past.

Given the perilous state of local authority finances, I am aware that this could create some financial burden. However, giving certainty over the direction of travel in the adoption of estates and creating clarity about the minimum standards for estates to be adopted would create the conditions for local authorities to be able to assess, negotiate and condition through the planning process any value that they need to extract, to ensure that they can cover the maintenance costs of that estate. Hopefully, that will enable us to undercut that iniquitous persistence of two tiers of council tax payers at source.

Alongside that, it is important that we do not walk by those who are already in these estates, particularly because until we have a solution, they will only grow in number since they are now the default model for housing provision across this country. The Bill also looks to build on amendments tabled by the then shadow Housing Minister, my hon. Friend Matthew Pennycook, in the last Parliament to give freeholders on private estates the ability to enact right to manage. This would put them back in the driving seat, give them the power to fire unaccountable management companies, ensure that they have a choice, and drive up service levels, responsibility and, hopefully, the performance of those undertaking management work.

The Bill is far from a panacea. Many homeowners will want adoption to be the end state for their estate, but it is an important step forward to drive down the ability of management companies to be exploitative and extract unjustifiable fees from new homeowners. It puts them back in the driving seat and part of those adoption conversations, hopefully to get their estate to where it needs to be, so that the inequity can finally end.

I am so excited about this Government’s housing mission, and to see the number of people in my constituency and across the country whose lives will be transformed by our commitment to stable homes. However, for a long time now we have failed to appreciate the extent to which fleecehold becoming a default model for new home delivery in this country is undercutting the very sense of security and prosperity that new home ownership is meant to bring.

I hope that the Government will act with the pace that this issue deserves. I am very excited to introduce the Bill today to start to tackle at source the root causes of the fleecehold stealth tax that is affecting thousands of homeowners across the country, who are paying millions every year in unjustified service charges. I look forward to working with the Government to do right by those affected right across the country.

Question put and agreed to.

Ordered,

That Alistair Strathern, Emma Foody, Abtisam Mohamed, Yuan Yang, Connor Naismith, Amanda Hack, Ben Coleman, Tom Rutland, Callum Anderson, Mr James Frith, Luke Murphy and Mrs Sarah Russell present the Bill.

Alistair Strathern accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 13 June, and to be printed (Bill 190).