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

Part of the debate – in the Senedd at 3:26 pm on 14 March 2018.

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Photo of Hefin David Hefin David Labour 3:26, 14 March 2018

Diolch, Llywydd. It's an honour to be able to propose a law in this Parliament that will be of benefit to my constituents in Caerphilly, and I believe, and I will argue, that it will be of benefit to the people of Wales as a whole.

This debate and proposed law comes about following two debates that have already taken place in this Chamber—one on leasehold properties and the limited rights faced by leaseholders, and the other one on the plight of unadopted roads and estates affected by those. This today is the missing piece of the jigsaw: the rights of freeholders who own properties on managed estates and the role in relation to those rights of property management companies and estate management companies by whom residents are often trapped in property management contracts. It's a deeply unfair, unregulated market. It is a UK-wide problem. I've got a copy of The Guardian here—well, a printed copy; a modern copy—in which it says,

'Homeowners trapped by "fleecehold"—the new cash cow for developers. They own the freehold but are forced to pay often escalating estate management fees with no accountability.'

That article contains two examples from estates in Cumbria where there is no obligation on estate management companies to keep costs down or provide evidence that the services they charge for are being carried out. This is an absolute scandal and it's unregulated. Also in Kent, from KentOnline, an online newspaper:

'Homeowners in Kent suffering extra housing charges.'

It's happening there too, with 122,000 people in that county trapped in controversial contracts. We should pay credit to the Rochester MP Kelly Tolhurst, who has raised this in a Westminster Hall debate in Westminster.

But it's happening in Wales as well. I've had casework from Cwm Calon in Ystrad Mynach where residents are trapped in these contracts, and Members from across this Chamber, from my party and others, have also mentioned that they've found constituents who have faced exactly the same issues—and I can see Members from across the Chamber nodding. Cwm Calon has an estate management company called Meadfleet, and they're managing agents to a company called Cwm Calon Management Company One Ltd. They're incorporated and registered at Companies House as the residents management company or RMC. RMCs are usually set up—recently, in modern times—on private estates to own the communal areas, with each freeholder, each householder who is a freeholder, becoming a member of that company and having the opportunity to become a director of that company.

However, Cwm Calon Management Company One Ltd was set up in April 2005, over a year before the first property on the estate was even bought, according to council tax records. No-one had the chance to become a director or a member of this company when it was set up. Furthermore, the documents of incorporation show that most of the company's directors are Redrow employees, and until the last property was completed in May 2015, these Redrow employees had a built-in controlling majority in terms of votes at the RMC's annual general meeting, and were therefore able to completely override individual freehold residents should they so wish. How can that be a residents management company, with Redrow, the developer, being the majority shareholders on the RMC—in fact, the only shareholder on the RMC? It is a clear conflict of interest, because the RMC was responsible for appointing the estate management company, Meadfleet, who are responsible for managing the estate, and therefore in the pocket of Redrow. What you see is a very clear conflict of interest. Residents refer to Meadfleet to me as 'Meadfleece', given the fact that they are paying these charges and seeing little return. 

The payment of a monthly fee to a property management and estate company is common practice among leasehold properties, where the monthly fee is known as ground rent, and leaseholders now have statutory rights, including recourse to a tribunal, to appeal against what they perceive as poor standards of service. Freeholders don't have this right.

So, I bring to you today the case of Janine Jones, who has represented many residents, regarding poor, shoddy work, and in fact, in many cases, work that was never done, has sent many e-mails to Meadfleet. In one case—I've mentioned before in this Chamber—the managing director of Meadfleet sent her an e-mail back telling her to get a life, with respect. Although Redrow were very apologetic about that, it showed that they really don't care, and they have no regulation to stop them from just taking the money and doing minimal work. That's what was happening on this estate. Janine Jones has written to Meadfleet, and to Redrow, on numerous occasions, to the extent that she's even engaged a solicitor. And the solicitor has said to her, 'There's very little we can do.' This is of course outrageous, but unlike owners of leasehold properties, freehold owners do not have the same statutory rights to challenge the decisions of the residential management company, and the property estates management company who act on their behalf. This is not good enough. [Interruption.] Yes.