Managing estate management
The Competition and Markets Authority (CMA) is reviewing estate management arrangements as part of its wider investigation into the housebuilding sector, and wants your views.
For much of the last hundred years or so, public amenities were publicly maintained. When a new estate was built, the roads would be adopted by the highways authority. The drains and sewers would go to the local water company, and any open space or play area would go to the council. Those bodies would maintain them out of council tax, rates, and bills.
This isn't true for many modern housing estates. Financial pressures have made local authorities, in particular, less keen to take on assets that might be a cost to the public purse. So we have the situation readers will be familiar with: a housebuilder hands over to a management company (or ''manco''), which could be a specialist, but is likely to have been specially set up. People buying homes on the estate then pay a service charge to cover maintenance.
What's wrong with that?
Not necessarily anything, if done fairly. But there are some common criticisms:
- Residents feel they are paying council tax, and then paying again through the service charge. If anyone can use the estate playground, for example, why is it just the residents that pay for it? It can feel unfair.
- As with other aspects of the homebuying process, there is a feeling that service charge costs are not well advertised, meaning residents end up being on the hook for unexpected costs.
- Mancos can be perceived to be remote, opaque and unhelpful. Residents have very limited remedies. Changing mancos is almost unheard of. Even when it is a resident-led manco, there can be problems getting enough residents engaged.
It is also possible that the issue lies with managing agents often appointed by mancos, against whom many of the same criticisms are levelled.
The CMA is inviting comments on how estate management is working in practice, with a deadline of 24 November. Please see CMA sets out latest thinking on new build estate management concerns - GOV.UK (www.gov.uk) if you would like to participate.
What will the outcome be? Time will tell, but the CMA has been frank about the limits of its powers. There may well be a consumer-protection type approach, with a code of practice. Anything more fundamental is likely to be much bigger than the CMA, and require government intervention, and possibly legislation, building on the new Leasehold and Freehold Bill (and for more on that, please see The King's Speech – Leasehold reform comes to fruition).