27 February 2024 , 10:01
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The Competition and Markets Authority (CMA), a watchdog, has warned homeowners about high and unclear estate management charges.
These charges are for the upkeep of things like roads, drainage, and green spaces in their area. The CMA is worried that people buying homes might not know enough about these charges and what they mean in the long run.
They found that more and more developers are building estates with privately-managed public amenities. In fact, 80% of new homes sold by the 11 biggest builders between 2021 and 2022 had these charges.
The bills can be big, often including administration or management fees, and future bills could be even higher as things start to wear out over time. The CMA also said that estate management companies have a lot of power and don't face much competition, which means they can charge high prices without necessarily providing good services.
While the average charge was £350, unexpected one-off charges for big repair jobs can cost thousands of pounds and cause a lot of stress for homeowners. The report raised concerns that many homeowners can't switch estate management providers, don't get enough information upfront, have to put up with poor work or bad maintenance, and face unclear administration or management charges which can often makeup 50% or more of the total bill.
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The watchdog's analysis also suggests that a growing number of homeowners are reporting a higher number of snagging issues. The CMA's research showed that a significant minority had also experienced particularly serious problems with their new homes, such as staircases and ceilings collapsing.
The watchdog said it wants to see a housebuilding market that consistently delivers better quality new-builds, with consumers having an effective way to sort out problems, as well as less harm to consumers from the private management of public amenities on new-build estates.
It is making suggestions to the UK, Scottish and Welsh Governments in areas where there could be chances to improve market outcomes without big trade-offs with other policy goals. The CMA also said it is asking the Governments to think about options to support the adoption of public amenities on estates currently under private management arrangements.
A spokesperson for the Department for Levelling Up, Housing and Communities stated: "It is vital to address the unfair situation facing homeowners on freehold estates. That is why through the Leasehold and Freehold Reform Bill they will have greater rights to challenge unreasonable estate rent charges and change the management of services if necessary."