Chris NorthwoodDeputy Leader of the Lib Dem Group and Councillor on Manchester City Council
Cllr Chris Northwood examines the drawbacks of leasehold home ownership, including the unfairness of additional service charges and the need for policy action to address neighborhood privatisation and empower local councils.
My girlfriend owns and lives in a house on a regular new-build estate in Cheshire. Every month, a direct debit leaves her account – a mandatory fee because of the area she lives in. This fee covers things like pavement maintenance, grass verges, and children’s play areas but this isn’t her council tax.
This is the world of leasehold home ownership. When a rogue trader illegally dumped waste on the other side of her estate, her bill went up to cover the clean-up. If she’s unhappy with the service, she can contact a customer service helpline but there’s limited recourse beyond that, save for extreme measures. One look on this company’s website tells you who its real customers are, “house builders and investor freeholders”.
It’s easy to see how short-term decision-making has landed us here. High-quality public realm with children’s play areas makes a new-build development much more marketable to prospective buyers. Before recent reform, leasehold also meant the opportunity to collect money for nothing as ground rent. For local authorities too, the hit through austerity will have made them willing participants in this creeping privatisation – every new road left unadopted or children’s play area that didn’t need maintenance – but new council tax receipts provided relief in difficult times.
But the privatisation of our neighbourhoods has left two-tier systems where some residents get double-dipped through both service charges and council tax to contribute to the costs that benefit their community.
In theory, this additional charge is supposed to guarantee higher quality service than council tax alone would provide. But this better service is far from a guarantee.
In delivering local services to residents, it’s the governance arrangements that make or break it. Poor governance of outsourced bin contracts has been a political thorn time and time again but at least these governance arrangements are set up in such a way that they align with the interests of residents. The elected members who direct officers to set up such arrangements usually find keeping residents happy a good way of winning elections.
For these private bodies, there is no incentive to align their interests with those who live in the area that they serve. The group that manages my girlfriend’s estate also manages apartment blocks in my ward. Their lacklustre management and approach to repairs is a perennial source of casework. Ultimately, they have a one-star rating on Google.
Even with the incentive of ground rent gone, we have a huge number of leasehold homes in our country. This creeping privatisation, and the democratic deficit in our neighbourhoods, is a slow burn but the tension will build in the unfairness of the additional service charge until it, like ground rent escalators, will need to be solved too late.
We need policy and legislative action to arrest this creeping growth of neighbourhood privatisation and we need to empower councils to deliver the services needed for their local areas, rather than leave it to housebuilders to offer neighbourhood services as a marketing gimmick for new builds.