8. Debate on a Member's Legislative Proposal: Estate Management Companies

Part of the debate – in the Senedd at 3:42 pm on 14 March 2018.

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Photo of David Melding David Melding Conservative 3:42, 14 March 2018

Can I thank Hefin and I also thought his hwyl on this this afternoon was very, very appropriate, because I think it really is the purpose of a legislature that's reflecting on the interests of the people it serves effectively to allow this sort of avenue where backbenchers can identify really key issues. It's not possible for the Government always to feel the force of these things, because we are in more contact, often, with the person on the street who is facing these difficulties. And this is surely an area of law that is screaming out for regulation and it needs to be updated, or, in effect, a legal process put in place for the first time, to govern the sort of practices that we are now seeing, which were largely absent as my colleague Suzy Davies outlined, 10, 20 or certainly 30 years ago. So, I think it's very, very important. 

I note that the research by consumer group Which? thinks that unfair practices in this sector could amount to about £700 million of unnecessary service charges, because there isn't clarity in terms of governance. It's not transparent, costs that are charged don't have to meet the actual costs of any service  and also management companies can be part of a wider portfolio and can offset costs in one particular estate or even against different business, it appears. It is absolutely outrageous, and, indeed, the UK all-party parliamentary group on leaseholds, which has also looked at this area, think the excessive costs could amount to £1.4 billion. It really is an outrageous practice, and as somebody who really believes in the market when it's effectively regulated, I do think it's a pretty poor show that these practices have developed, largely as a result of private sector building companies. It is something that we now need to see action on. I think Hefin is quite right in point 2(c) of this motion to note that the UK Government is concerned in terms of England, for which it has housing policy responsibility and is working to examine the situation, then rectify it appropriately with legislation, and I certainly think we should have a similar commitment. 

I think a lot of us were shocked when we realised for the first time the prevalence of these abuses and the whole business model that's now emerging, in that you're not developing some estates so that they are adoptable or largely adoptable anyway. It really is something that should stop and I would certainly encourage Hefin to go on in this vein.