Property developers must be banned from charging extortionate ‘fleecehold’ fees, say Tory MPs

The set-up has seen heated complaints about firms that carry out a poor service or charge excessive fees
The set-up has seen heated complaints about firms that carry out a poor service or charge excessive fees - Steve Parkins/Shutterstock

A ban on so-called “fleeceholds”, where people buy houses only to be charged exorbitant fees for regular council services, has been backed by 46 Conservative MPs.

The group of Tories has written to Michael Gove, the Communities Secretary, suggesting the newly emerging phenomenon be outlawed in the Leasehold Bill.

The signatories include two former communities secretaries, Sir Simon Clarke and Robert Jenrick, and two former housing ministers, Kit Malthouse and Rachel Maclean.

The number of Tory MPs behind the push is significant, since it means in theory the group has enough support to force defeat on the Government if the change is not adopted.

Little ability to challenge service

The problem the MPs have singled out is one that has come to light in recent years and is only beginning to be appreciated by politicians as an issue that needs addressing.

It refers to new private housing estates which are not adopted by local councils, meaning companies instead are contracted to carry out services such as cleaning bins.

However, the set-up has seen heated complaints about firms that carry out a poor service, for example leaving dog waste bins piled high, or that charge exorbitant fees.

There is often little ability to challenge the quality of service, since the contracts have been arranged by the developer and individual homeowners have limited power to contest issues.

Three to four million affected

It has seen MPs dub the problem “fleecehold”, since, they argue, it affects people who believed they had purchased property on freehold but are still being “fleeced”.

Between three and four million people are estimated to be stuck in such arrangements.

Tory MPs believe many of those affected are natural Conservative voters given that traditionally homeowners fall into this category.

The Competition and Markets Authority recently estimated that “over the last five years, 80 per cent of the freehold properties built by the 11 largest housebuilders – representing around two fifths of all new builds across England, Scotland and Wales – have been built on this model”.

Legislation to be debated

The Tory MPs pushing for the change want the Government to table an amendment banning the practice. The relevant legislation is being debated in the House of Lords on Wednesday.

Their letter, shared with The Telegraph, reads: “The Government is to be commended for taking forward the first comprehensive reform of leasehold for 20 years.

“The Commons debates on the Leasehold Bill have demonstrated the problems with the unadopted, private estates model, also known as ‘fleecehold’.

“As the Bill makes its way through its remaining stages, we call on the Government to go further to empower residents on existing fleecehold estates, and to end this model for new estates.

‘No prouder word than freeholder’

“Government should also address the unfair system of forfeiture, under which people can be threatened with the loss of their home over non-payment of small sums.

“Mrs Thatcher said, ‘There is no prouder word in our history than freeholder’ – we should now complete her reforms and fully implement our manifesto pledge to ban the sale of all new leasehold homes.”

Mr Gove is yet to indicate publicly that he is supportive of such a change.