‘Fleecehold’ Call to put an end to freehold charges
AYATE councillor has called for an end to so-called ‘fleecehold’ charges in South Gloucestershire, calling the maintenance fees for new homeowners “extremely unfair”.
Mike Drew, the Liberal Democrat member for Yate North, said the estate charges for owners of new-build homes were “appalling” and asked at a public meeting what the local authority was doing to stop the practice.
Freehold and leasehold owners of homes in new housing developments are increasingly having to pay annual ‘estate charges’ for the upkeep of communal areas, such as roads, footpaths, green spaces and play areas.
These are referred to by critics as ‘fleecehold’ charges when they apply to freehold owners.
Local authorities traditionally adopted new housing developments and maintained the common areas as part of the services funded by council tax. But increasingly, developers keep possession of the communal areas and hire a private maintenance firm, or sell off contracts to them, to keep them tidy and functional.
There is no restriction on what such companies can charge, and the estate charges – also called ‘maintenance fees’ or ‘rent charges’ – can rise year on year. There is also no legal recourse for homeowners to challenge the fees as the obligation to pay is written into their property deeds.
Homeowners – even freehold owners who own their home and the land it is built on – must pay the estate charge as well as paying council tax.
Cllr Drew told the South Gloucestershire strategic sites delivery committee that some of his constituents were paying more in estate charges than council tax.
“It is extremely unfair because there’s absolutely no control on the amount that the developers can charge,” he said.
“It’s appalling that we are allowing this to happen in our areas.”
Cllr Drew asked what South Gloucestershire Council was doing to “prevent excessive charges” and “as far as we can, not allow such things to happen in South Gloucestershire”.
Council solicitor Tonya Meers told the meeting the council has no control over what management companies charge.
She said planning consent Section 106 legal agreements signed off by the council require developers to put in place a system for managing public open spaces within a new housing development.
“Usually, it is made up of the management company of the residents of the development, and it is for them to ensure that all the public open spaces are properly managed,” Ms Meers said. “Often they do get in a managing agent to do that. Obviously the issue of charging is a matter between the developer and the purchaser and that’s something which we have no control over.”
Committee chair Colin Hunt, Conservative member for Emersons Green, who is opposed to estate charges, said he would make enquiries about whether the council had raised the matter of ‘fleecehold charges’ with the Government.
The Ministry of Housing, Communities and Local Government is planning to bring in legislation to give freeholders more rights to challenge the charges.