Justin Madders – 2022 Speech on New Homes and Management Companies

The speech made by Justin Madders, the Labour MP for Ellesmere Port and Neston, in the House of Commons on 5 January 2022.

It is a pleasure to see you in the Chair, Mr Betts. Happy new year to everyone who is here today. I congratulate the hon. Member for Wantage (David Johnston) on securing the debate, on his useful introduction and on the interesting points he made. This may be the first debate of 2022 and it may be a new year, but, as we have heard, many of the issues we are debating are not new and, aside from the leasehold scandal, have had insufficient attention from this place.

We absolutely need more places for people to live; I doubt there is a Member in this place who disagrees with that. While the Government set some general targets about how many homes should be built, the detail is rightly left, in the main, to local councils. In reality, they and the communities they represent have limited say over what sort of homes are built, where they are built and, as the hon. Member for Wantage mentioned, how the infrastructure that goes with them is delivered. That is the nub of the problem, because we are often told that the wrong type of home is being built in the wrong type of place. That can be argued ad infinitum, and it often is. The bottom line is that we are continually falling short in achieving enough decent affordable housing.

Decent housing is critical to the national infrastructure. It is the bedrock of people’s lives, yet it is too often left to the market to resolve, and the market is clearly failing. In my experience, developers all too often show contempt for local communities by riding roughshod over the development conditions imposed on them: working longer hours, making more noise, and building higher and closer than they should to existing properties. That creates more work for the beleaguered planning department and puts more demands on councils that, after a decade of austerity, simply do not have the powers and resources to keep up.

By the time the council manages to catch up with a complaint, quite often the house is already built and the drains put in. It is a massive financial, logistical and legal battle to get developers to stick to plans when they have got that far down the road. Many councils simply do not have the capacity to get into such fights, especially when the case is about a couple of metres. It might not look much on a plan, but for someone living next door, a couple of metres makes a huge difference.

What about roads being brought up to an acceptable standard, so that they can be adopted by the local authority? People are waiting years for roads to be adopted. I do not blame the local authority, which sets out what needs to be done but does not have the resources or time to continually chase developers who have sold the homes and moved on. Where is the incentive for developers to come back and finish the job they started?

I want to say a few words about the massive expansion of estate management companies. It seems that the idea of the developer paying the local authority a commuted sum to cut the grass and maintain common parts has had its day. This reduces developers’ costs, although it does not seem to lead to cheaper house prices. It costs the homeowner far more in the long run because they are, in effect, paying twice for the maintenance of open spaces: once through a management fee and once through their council tax. Once again, though, it is the council that gets lumbered with all the grief and blame.

With developers looking to replace their lost funding streams, with what I hope will be the end of leasehold, I am concerned that estate management companies will become the new payment protection insurance of the house building industry. There is little regulation or transparency and, if we are honest, little need for estate management companies in most settings, so why do we have them? House builders build houses—that is their core business; they are not interested in managing estates. Indeed, they cannot wait to get rid of them to a company that specialises in such things.

Developers creating an estate management company is nothing more than a calculation on the balance sheet. They have zero interest in keeping the verges neat and tidy after they have gone. If they can make the bottom line look more attractive by getting in a management company, they will. They keep getting away with it because we let them. Why can we not start from the basic principle that the local council should be doing those jobs and that estate management companies are an unnecessary tax on homeowners? How many people are told of the implications of an estate management company or how much it costs?

What developers say to new buyers in the showroom and what is in the final contract are often very different. By the time the paperwork arrives, it is too late. People may have spent thousands on the move, never mind the psychological commitment they have made. What is said in the showroom often does not appear in any documentation. There is a classic example in my constituency where residents now look out on a 30-feet-high warehouse, which the developers conveniently forgot to mention already had planning permission when they sold buyers their homes. They are still waiting for the KFC that they were told was going to be there. Because that is just sales patter, there is no legal accountability for the lies that are told.

This is the biggest single purchase people will ever make. There needs to be far greater accountability for what developers say and what they build. At the moment, they seem to have a free pass. Developers with household names work across the country, moving from one project to the next, sometimes leaving behind problems that take years to resolve. Another development in my constituency has ended up in court, with one group of residents pitted against another and maintenance bills racking up in their thousands, because the developers did not do the paperwork or the job properly in the first place. I know that they are causing havoc elsewhere, because other hon. Members have told me. What can councils do? They have no grounds to refuse planning permission on the basis that the developer has been a poor performer elsewhere. How about a fit and proper person test for the directors of those companies?

In conclusion, I would like much greater political direction and oversight of the house building industry. After all, it will build the homes that we need, but at the moment it quite understandably organises affairs to maximise profits. Housing is a critical part of our infrastructure—having a roof over one’s head is fundamental—but it has been shown time and again that we cannot rely on the market alone to deliver that. Four and a half years on from Grenfell, we still have not really had a decision on who is liable for the defects that were created there, and there is clearly a reluctance in Government to grasp the nettle and take some ownership of the industry.