7. Statement by the Minister for Housing and Regeneration: Changes to the Park Homes Commission Rate

Part of the debate – in the Senedd at 6:00 pm on 5 June 2018.

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Photo of Rebecca Evans Rebecca Evans Labour 6:00, 5 June 2018

Thank you, Deputy Presiding Officer. Shortly before recess, I published the summary of the responses to our consultation on the park homes commission rate and outlined my intention to reduce the maximum rate. I am pleased to be able to provide Members with further details about the pace and rate of change and of the wider actions I propose to take to support the park homes sector. I'd like to thank everyone who took the time to respond to the consultation and the financial analysis work—there were almost 400 responses. I would also like to thank the site owners who shared financial information with our independent financial analysts.

Members will be familiar with many of the arguments on both sides of this debate. I am sure that we all want to ensure viable, well-managed sites and see them continue to offer an attractive lifestyle to people who choose to live in a park home. The issue of commission rates on the sale of park homes is one of those issues that remain polarised. It has been debated for as long as people have used park homes as a permanent residence. In the 1960s, rates were typically around 20 per cent, reducing to their current rate of 10 per cent in the 1980s. Over the last 40 years, the sector has been transformed; park home living today bears little resemblance to park home living in the 1960s.

Establishing a consensus about the way forward has not been possible because views are so polarised. And gathering sufficient evidence on which to base a balanced decision has not been easy. I've deliberated long and hard, and I have challenged my officials and the sector to provide more and better evidence and analysis to ensure that we find a balanced and proportionate way forward that best supports park home living.

The evidence that we now have supports the view that the value of a park home is a combination of the value of the home plus the pitch on which it is sited. A park home on its own costs less than one already sited, particularly if sited on a well-run, attractive site with good facilities in a sought-after location. The costs to site a home can be significant. This has been a fundamental part of the argument in favour of the commission rate over the years.

It is clear that the current commission rate impacts significantly on people who own a park home. For some, the loss of equity from the sale of their homes is becoming a barrier to being able to sell and move on to alternative accommodation or accommodation that is more suited for them. Commission may also be deterring potential buyers from purchasing a park home, as they worry about the implications of losing 10 per cent of its value if they need to sell in the future. All of this poses a risk that park home living might become less attractive and cease to offer an alternative lifestyle choice.

The independent financial analysis carried out for the Welsh Government shows that commission is an important element of income for site owners, and especially so on smaller sites. Any decision about changes to the commission rate must therefore balance the potential benefits and risks to both parties—park home owners and the site owners. If a site was to become no longer viable, the owners would need to consider how to change their business model in order to make it sustainable, usually by seeking an increase in pitch fees. The ultimate risk is that if an unviable sites close, it will leave park home owners without a pitch and having to relocate their homes. This can be a complex and costly arrangement, and homes without a pitch can have a reduced value.

I am committed to ensuring everyone can access suitable, good-quality, secure and affordable homes. Reducing the maximum commission rate will help to remove the financial barriers for residents who want or need to sell. It will also help to ensure that potential buyers are not put off buying a park home because they're worried about how it will affect them, should they need to sell in future. However, I am mindful of the need to avoid placing sites at risk of closure, whilst also seeking to protect residents from steep and sudden increases in pitch fees. It's my intention to reduce the commission rate to a new maximum level of 5 per cent. This will be done by reducing the commission rate by one percentage point each year over a period of five years.