Contribution
I am so pleased that we are taking the time today to debate property service charges in depth. Across my constituency, residents are drowning in soaring bills, deferred maintenance, opaque accounts and a carousel of management companies passing the buck. These charges do not exist in a vacuum; they sit alongside dodgy contracts, conflicts of interest and unadopted roads—a structural failure that leaves residents feeling trapped and powerless.
Since being elected, I have had so many constituents come to me with leasehold horror stories. Of course, it is the service charge hikes are that are brought up most. In one case, a £4,600 charge in 2017 was due to increase to over £9,000 this year, in a property where many residents are retired and on a fixed income. That is not to mention the lack of transparency over what the charges were for. In this instance, residents pointed out that a £6,000 charge for staffing was levied during a time when there were no permanent on-site managers. I want to give credit where it is due. When I met the team at that management company for an explanation, they held their hands up and acknowledged that things needed to improve, and they have since followed up with residents.
Other companies, however, are not quite as reflective. Having thought about this, I will not name the companies in my speech, because I do not want to blight the developments in question, but I must warn these companies that that is an option in the future if we do not see improvements. The managing agent of one development in my constituency did not respond positively to my letter setting out residents’ concerns. Indeed, it is displaying what I have come to call the four horsemen of the managing agent: hikes in service charges, inadequate maintenance, poor communication with residents and a lack of financial transparency.
In a previous contribution in the House, I said that residents had informed me of a 150% increase in the service charge in two years. In its very blunt reply, the managing agent said that that was wrong and that the real increase was only a doubling in four years, which it considers reasonable. I do not, and nor do my affected constituents, who have pointed out that if we factor in various additional costs that used to be in the service charge but were then separated out, it is closer to the increase they cited.
Maintenance work does not get done. When residents took me around their development this year, I saw for myself the shoddily constructed steps that create hazards, plus defective drainage, malfunctioning lighting and so much more. The responsibility for some of these issues is not clear, as the developer should be taking on some issues that arose shortly after development. The lack of clarity means that residents are dealing with onerous back-and-forths, whereby responsibility is forever passed on and it seems like maintenance issues will never be solved. Just today, a resident described to me how there was a rat infestation at one point, and a contractor was apparently paid £30,000 of residents’ money to resolve it. It did not. The residents’ association was later able to sort it out, but not before that huge sum of their money was frittered away.
That brings me on to the poor communication. When highlighting the above problems, as well as concerns from residents about service charge breakdowns, I asked the managing agent what it would do to improve communication. I expected an answer that pushed back but at least agreed to look into the concerns I raised. I did not even get that. The response said it all:
“We do not consider that communication requires improvement.”
Then we come to the fourth horseman: a lack of financial transparency. I have been told by residents that they are contractually bound to an insurance policy with a £5,000 excess, making it completely unusable. A resident has shown me figures for one block that show a total insurance premium charged of over £60,000, of which just under £20,000—around 30%—was commission, in a confusing brokerage set-up, with much of that going to a company linked to the managing agent in quite clear ways, which smacks of a conflict of interest or worse. There are so many other examples of this. At another development in my constituency, accounts were provided late to residents for three of the last five years, and in the most recent two years, accounts have not been provided at all, despite much pushing from residents and leaseholders.
It is not just leaseholders in flats who are affected by service charges. I have not yet discussed the fleecehold scandal sweeping up so many of my residents in the newly built developments of Hampton. Unadopted roads are rife in new developments, meaning that residents are paying twice for their local areas to be maintained: once in their council tax, and once in a separate service charge. I counted the number of roads that need to be adopted but are without a section 38 agreement—meaning there is a long way to go before they are adopted—in the Peterborough part of my constituency. There are 289 of them, and they are mostly housing roads. That is an unjust extra charge for thousands of residents in Hampton, Stanground, Orton and elsewhere because roads are not being adopted. Some proposals have been made on how we could tackle this problem. The Home Builders Federation, for example, has made useful suggestions about common adoptable standards and mandatory adoption by public authorities.