Homeowners on ‘fleecehold’ estates to get protection against unfair charges

Homeowners on what have become known as ‘fleecehold’ estates are to get more protection against excessive charges for the upkeep of roads, green spaces and other shared communal areas. 

Ashley Shepard, Solicitor Apprentice in our conveyancing team, provides an update.

The government says the current system is unfair and can put people at risk of losing access to their home for a debt as low as £100 or see a lease imposed on their property, forcing them to pay for occupying the land their home is on until the debt is repaid. Under these conditions the lease doesn’t end after the debt has been repaid which can potentially make the property un-mortgageable or unsellable.

The very existence of these powers, even if never used, can also lead to properties potentially being viewed as unsaleable or un-mortgageable. It is one of the many challenges faced by homeowners on these estates, managed by third-party management companies rather than local authorities.  

The government has now set out key reforms to tackle the key issues and strengthen homeowners’ rights by giving them standardised information to make it easier to challenge unreasonable bills, and to appoint a new substitute manager where there is a serious failure alongside other measures to drive up standards. 

Action will be also taken to look into the root causes behind the prevalence of these housing estates and address them by exploring whether management controlled by residents should become the default, rather than a third-party management company. 

Sarah Cardell, Chief Executive of the CMA, said: “Our review of the housebuilding market found that 80% of new homes sold by the UK’s biggest builders came with estate management charges – leaving many owners facing high and unavoidable costs, with no effective way of challenging shoddy work.”

The government intends to ban the use of enforcement powers contained within Sections 121 and 122 of the Law of Property Act 1925 for failure to pay an estate rent charge, to free people from the unnecessary fear and stress it causes.  

Further measures could see the introduction of common standards for some shared areas, making it mandatory for local authorities to take on certain facilities, improving data and transparency, having a new assessment of the financial impact on homeowners, and strengthening dispute resolution alongside other reforms to tackle incentives and identify the root causes behind the prevalence of these estates. 

Views will be sought on these reforms to shape a reform agenda for the future, alongside measures contained within the Leasehold and Freehold Reform Act 2024, to provide increased rights and consumer protections for people currently living on these estates.  

If you need advice on fleecehold estate charges or buying a property on a managed estate, please contact Ashley on 01434 603656 or click here to send her an email.