‘Fleecehold’: Meet the campaigners fighting management charges on new-build estates

The joint-founder of the group, who lives in Greater Manchester, has spoken of the ‘nightmare’ of living in a new-build property on a privately-run estate.
Halima Ali in the park opposite her homeHalima Ali in the park opposite her home
Halima Ali in the park opposite her home

Campaigners who live in new-build, freehold properties - but are forced to fork out for management companies to maintain their estates - are calling for the practice to be phased out.

Residents in a number of areas have told Manchester World that affected homeowners don’t have enough say in what happens on their own streets, while others are unhappy about the standard of work carried out or have been left with unfinished roads and paths.

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And they are pushing for a return to more new-build estates being adopted by councils again, so the maintenance fees will be covered by the council tax they are already paying.

What is the ‘fleecehold’ issue?

For decades, everything outside of a home, such as roads, footpaths, green spaces or playgrounds, would be transferred to the local authority when new houses were built and the upkeep would be paid for through council tax.

However, in recent years it has become increasingly common for these things to be retained in private ownership when new-build estates are constructed.

Residents then have to pay ongoing maintenance charges to a company which has been contracted to carry out the work - even when they own the freehold to the property. Some people have dubbed the situation ‘fleecehold’.

What is the problem with this?

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The campaign group HorNet claims that in many cases the work carried out by maintenance companies is of extremely poor standard.

As they are contracted by developers, residents on the estates reckon they have little say in who is appointed and feel powerless to raise complaints or challenge any rises in the fees, often paid annually.

HorNet also says that many people are left feeling that they do not truly own their own homes, as companies have legal methods of redress if people decide to withhold maintenance payments or object to them.

The ‘convenants’ some homeowners must sign can also dictate what changes they can and can’t make to their own house - such as having to ask the management company permission to put on an extension, or even park a caravan on a driveway.

How many people in Greater Manchester are affected by this?

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HorNet says there is no official data on how many estates are not put up for adoption, so it is tricky to tell how widespread the problem is.

The campaign group’s own database shows two estates in the city-region, Newlands with 145 homes on it and Heymount with 24.

The complete file shows 751 estates involving at least 156,500 households across the UK.

HorNet says it is so rare for estates to now be adopted that it should be assumed that the majority of the 1.3 million new homes which have been built in the 10 years up to 2018 will have estate charges.

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‘I can’t believe companies like this exist and are allowed to operate’

Halima Ali co-founded the HorNet group after she moved into a property with maintenance charges on Newbold Hall Drive in Rochdale.

Around five years after she purchased her dream home from Persimmon, a company called Hazelvine was appointed to look after the estate and started sending bills.

Halima claims residents on the estate have been unimpressed with rising costs and the quality of work, with almost no opportunity to raise issues or discuss the situation.

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She described the toll it has taken on her after moving into what was supposed to be the ideal family home turned into an ordeal.

Campaigner Halima AliCampaigner Halima Ali
Campaigner Halima Ali

Halima said: “They sent us a bill with no proper explanation to manage the estate.

“Our bills have gone up from about £150 to around £180 a year. They are just going to keep going higher and higher and there’s no way to contest it.

“I just wanted a park for my children to play in. I thought it would be lovely when I moved in. The kitchen, where I spend most of my time, is at the front of the house and I would be watching my children play.

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“I wouldn’t even allow them on that park because it wasn’t hygienic or safe. My children have grown up now, that moment is gone and they’ve missed out on that part of their development.

“Residents walk their dogs there now and it’s full of litter. It’s an outrageous situation. I wrote to the council but it couldn’t do anything because it was private land.

“The maintenance isn’t up to standard, the estate doesn’t even look finished.

“The companies don’t care after they have got your money. Developers use the Law of Property Act 1925 which means they have the power to take over your home if there’s a dispute over charges.

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“You can’t change the management company so you are giving them a blank cheque.

“It’s absolutely horrifying that this is actually happening. I can’t believe companies like this exist and are allowed to operate.

“It has taken its toll mentally. This was supposed to be my dream home which I spent my life savings on.

“I would never buy a new build with a ‘fleecehold’ attached to it. I would think twice about buying any new build property.”

Why does this situation exist?

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HorNet says that the situation with external management companies charging residents to maintain privately-owned estates can be helpful for the local authorities, if not for the people living in the homes.

If estates are adopted by local authorities developers have to pay “commuted sums” for future maintenance of them.

And after years of austerity and the dwindling of town hall budgets, councils can reduce their liabilities for maintenance on these estates but still receive council tax from residents, helping cash-strapped local authorities stretch their money further.

What is the campaign doing?

HorNet is hoping to get the Competition and Markets Authority (CMA) involved to see if the management companies represent a monopoly.

It is also hoping to bring a legal test case at some point.

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Halima says there should also be far more clarity when properties are being purchased. She claims she was told there would be a “maintenance charge” for hers but says the whole situation was never fully explained to her.

The campaign group is currently desperate to get the issue back onto the agenda, saying attempts to publicise the problem have been hampered by events such as Brexit and the Covid-19 pandemic.

HorNet is trying to get politicians and councils involved in speaking out against so-called fleecehold arrangements, and is encouraging residents on estates with charges to write to their MPs.

It also wants changes to be made to planning so councils can put a stop to these arrangements when developers are initially seeking permission to construct new estates.

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Currently councils are not able to do very much if developers choose to contract out maintenance work to an external firm.

What do the authorities and property companies say?

The Government said it wants to give residents in this situation more power in their dealings with management firms.

A spokesperson for the Ministry for Housing, Communities and Local Government (MHCLG) said: “We continue to promote fairness and transparency for homeowners, ensuring that consumers are protected from abuse and poor service.

“We intend to bring forward legislation that will ensure freehold homeowners who pay estate rent charges have the right to challenge management companies to ensure these are reasonable.

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“This is part of a comprehensive programme of reform to end unfair practices in the leasehold market and on managed estates.”

Persimmon said there are ways for residents to discuss issues around their charges with Hazelvine.

A spokesman for Persimmon Homes Lancashire said: “We have not been involved with this estate for a number of years. The management company, which maintains the shared amenities, is controlled directly by the residents.

“The level of maintenance and the cost is a matter for the residents to raise directly with them.”

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A Local Government Association (LGA) spokesperson said: “Some developers will choose to make their own arrangements for repair and maintenance of estates, and where they do, councils will be unable to adopt estates where an existing management company is already in place.”

Hazelvine has been approached for comment.