Queens Speech – Debate (4th Day)

The Queen’s Speech Debate by The Earl of Lytton is a good read. Check out the full speech here, but here are the two paragraphs, with the second one mentioning the rent charges (highlighted in bold). House builders have got away with this for too long now, hence why the Home Owners Rights Network is getting traction in advocating for the abolition of the Estate Maintenance Charge.

Help to Buy has hugely bolstered the profits of many housebuilders, with one reputedly making over £70,000 gross profit on every home it builds. Part of my work is to act for owners of potential housing land. I have several instances of corrupt and sometimes illegal activities aimed at concocting price reductions. Doubtless, the same approach is used against local authorities. Some immensely powerful organisations run rings around strapped planning departments on viability tests, and on site allocations they can secure improbably large developments in remote locations with no natural advantages or synergy with any existing settlement. As a councillor of my acquaintance might have put it, they are committing the new residents to burning massive amounts of fossil fuels just to get to a place of employment. At the same time, they crowd out SME constructors, which cannot compete with the demands of complex planning and infrastructure.

There are some real scams going on. There are escalator ground rents, where year-on-year ground rent increases are an investor’s dream but a homeowner’s nightmare when it comes to selling and no mortgage lender will touch it. I am glad that the Government are acting on this, but what about rent charges? Here, freehold purchasers find themselves committed to funding a management company that has been crafted to take on all sorts of common or uncommon liabilities which the housebuilder could not be bothered to sort out or the local authority would not risk adopting. The implications hide in obscure legal drafting masked by “free” conveyancing and early years funding, but ultimately are hobbled by long-term contracts with management companies interested only in maximum profit. Parallel developer support to local charities and community projects do not cancel out these evils.