Park homes
Speech by Housing Minister Mark Prisk to the residential parks industry in England, organised by the British Holiday and Home Parks Association and the National Caravan Council.
Introduction
Delighted to be here and to have this chance to set out the government’s plans for implementing the Mobile Homes Act.
Of course the origins of this legislation predate my own term as Housing Minister. It was my predecessor, Grant Shapps, who took up this issue, following what was considerable pressure from MPs across the House.
And it was Peter Aldous MP who took the Bill through the Commons, using his own local knowledge of this issue.
And let me pay tribute to the work of the British Holiday and Home Parks Association and the National Caravan Council for the way they have actively engaged with this issue, on behalf of you, as their members. Clearly there are controversial issues here but both trade bodies have always sought to be constructive in their representations.
The Bill
The Mobile Homes Act 2013 is the biggest shake up in the law relating to park homes, in some 30 years.
It provides the sector with both a challenge and an opportunity.
An opportunity to show that (despite representing less than 1% of the housing stock), this sector should be regarded as an integral part of the housing market.
And a challenge, to reform current poor practice where it exists and recognise that park home residents are home owners whose rights should be respected.
Today, I want to talk to about: why reform to this sector is needed and the changes that are planned - what you need to do now and what you need to do next year to comply.
Why reform is needed
We recognise that there are many good site owners who run their businesses well, keep their sites maintained properly and respect the rights of their residents.
Yet the good work of these people is often masked by a minority (which includes criminal operators) who flout the law and have no regard for the rights of home owners. These rogues are only in this business to profiteer from the exploitation of older and often vulnerable people.
But there is also a third group. These are not people who actively seek to rip off their residents, or deliberately cause damage to their sites. But they have a more casual approach to site management and perhaps less understanding or empathy for the legal rights of home owners following the 1983 Act. And very often they haven’t kept up with the law.
On those sites, the culture appears to be stuck in the 1970’s, when people who owned caravans didn’t have many rights.
But those days are long gone - since 1983, park home owners have had security of tenure and rights that go with that, including a right to sell their property.
Now inevitably, these out of date business practices (as well as the criminal minority) have attracted widespread criticism and the attention of Parliament.
As a result, the Communities and Local Government Select Committee in Parliament made the unusual decision to hold an inquiry into the sector.
It concluded that malpractice in the industry was widespread and so the government agreed that action needed to be taken. That is why my predecessor supported the Mobile Homes Bill, which has now become law.
That Bill - now the Mobile Homes Act - tackles 3 major problems in the sector. Firstly the practice of sale blocking; secondly the lack of transparency in site rules and pitch fee reviews; and thirdly the ineffective licensing regime which has been in place since 1960.
What happens next - sale blocking
With regards to the first issue, let me be clear.
Sale blocking is wrong. When a site owner blocks a sale, they stop a home owner from selling their own property. The site operator can then acquire it, as they sometimes do, for themselves, at a fraction of its true price and either sell it at full market value, or replace it with a new home for sale.
Some site owners have gone to great lengths to block sales. But it was clear that much sale-blocking was made possible by the requirement that the home owner had to seek approval of the purchaser from the site owner.
Now since 2011, the Residential Property Tribunal has dealt with a number of appeals concerning the site owner’s refusal to approve a purchaser.
In that time, there hasn’t been a single case in which the tribunal has found there was a legitimate reason to withhold approval.
So, in future, site owners will not have a role in the sales process, except in the first sale of an existing home, where their role will be limited.
I know that this is a significant change, which many of you have expressed concern about. Until now, many of you have felt that you have had a role in supporting home owners, in the process of selling their homes. But the sad fact is that far too many site owners have abused that position to block sales.
Of course, selling a home (a park home or bricks and mortar) is a complicated process and we recommend strongly that residents use a solicitor or other independent expert, as they would in selling a conventional house.
The Act also prevents site owners from blocking sales in other ways. It makes it a criminal offence for the site owner to make false (or misleading) statements to try to prevent a sale going through. It has also banned site rules that aid sale blocking, such as those that push purchasers into an interview with the site owner, or require them to provide their details to him or her.
Of course, I know that some people choose to live on park home sites precisely because there are rules about who can live there - in particular, sites are limited to people over a certain age. So I appreciate that it’s important for site owners and residents that these rules are upheld.
This is why the purchaser will need to confirm that they meet the relevant site rules when they buy a home. It’s also why site owners will be able to apply to a tribunal, if they have cause to believe that the purchaser of an existing resident’s home would not be able to comply with rules, for example about age or pets or parking.
Now I know that this is a new way of working.
But site owners need to accept that a park home owner - like any other property owner - has an unfettered right to sell their home to a person of their choice who meets the site rules, without permission, approval or involvement of the site owner.
And also it should be remembered that people who purchase park homes are adults who have made a decision that they want to move into a park home.
It is, therefore, not for the site owner to second guess that decision by deciding for them whether they are suitable for park home living. The only issue that is relevant here is whether the person purchasing the home meets site rules that apply for living on the park. If they don’t, the law gives the site owner remedies.
What happens next - pitch fee reviews
Now the second issue that has come up is the question of pitch fee reviews.
Until now, site owners have been free to set out the notice of review, in a format of their choice. This could contain as much (or as little) information that they choose to give the resident.
Now in the past, some pitch fee reviews have included charges which are in fact ineligible (such as costs of road repairs). Others have used the wrong information or have failed to explain exactly how the pitch fee has been worked out.
So from now on, if a site owner wants to increase a pitch fee, he must provide prescribed information which has been set out in a special form. The form is substantial and I don’t make any apology for that.
After all, residents should know what they are being asked to pay for and how much, so they can make informed decisions as to whether the charges are eligible and if so reasonable.
It also seems that some site owners are unaware of the rules about pitch fees. Several cases that have come before the tribunal have illustrated this ignorance all too clearly. For example, it appears that some site owners are unaware that if the last proposed review was not implemented, it cannot be used as the starting figure for calculating the next review increase.
We believe site owners will benefit alongside home owners from the use of the prescribed information in the form, which sets out in plain English, what can and what cannot be included in a pitch fee review. The form also explains when the review takes effect and the respective rights of the parties if they cannot agree the proposed amount.
The use of the form will ensure there is greater transparency in the pitch fee process and that disputes can be avoided or resolved informally without the need to recourse to a tribunal.
It has been suggested that some site owners will not provide the prescribed information because they don’t want residents to know their rights. However, any site owner contemplating trying to get around this requirement ought to remember that the tribunal would be able to rule the pitch fee review is invalid if the legal requirements have not been met.
What happens next - licensing?
The third issue revolves around licensing.
Many disputes about pitch fees relate to the quality of the management of sites. Indeed, in some cases, site owners knowingly allow parts of their sites to fall into disrepair, to make homes difficult to sell. Others have not paid their bills for utilities and services despite charging their residents. And others are just very slow to comply with site maintenance requirements.
Now this is not the norm. In fact, any right thinking site owner would clearly want to keep their site in good order.
But I’m afraid there is clear evidence of these bad practices, and up to now, local authorities have not had the sufficient resources or tools to take effective action. That is why from 1 April next year a new licensing regime will apply to park home sites.
Local authorities will be able to require works to be done through compliance notices and carry out works themselves in default, or in an emergency. They will be able to recover their costs in operating licensing schemes through annual fees, and will charge for serving notices and taking enforcement action.
Those who persist in not complying with their licensing obligations will face unlimited fines in the Magistrates’ Courts when section 85 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 is commenced.
So site owners who do not maintain their sites to an acceptable condition will in future be required to do so, by the local authority. And where they fail to do so, they will face penalties for not doing so.
Clearly, as responsible owners who understand the benefits of regular maintenance, you should have nothing to fear from this.
Indeed, regular maintenance, to be blunt, is in most site owner’s financial interests, over and above your wider responsibilities to the residents.
But let me be clear. The government also wants to ensure that good site owners are properly protected against unreasonable demands to carry out works.
Safeguards will be put in place to ensure that local authorities act proportionally and reasonably in pursuing enforcement action.
In addition, site owners who are served with a compliance notice will be able to appeal to the tribunal. And local authorities will not be able to enter the site and do works in default unless there has been a conviction.
These new licensing requirements will come into force from April next year. I am setting up a working group which will meet over this summer to determine best practices both in setting fees and enforcing licences.
I will be inviting local authority practitioners and the representatives from the industry to join the group and want today to extend a strong invitation for your input through the trade bodies into the work of the group.
The sector needs to reform but I want to ensure that we implement this legislation we do so having listened carefully to the practical concerns and ideas of the law abiding majority of site owners.
At the same time I can tell you that we will also be publishing our proposals for the scheme for making replacement site rules, late this summer.
And again I want to extend an invitation to you, through the association and others, to be involved in that process and you to share your thoughts and comments as we develop the scheme.
Conclusion
So, as I said in my opening remarks, this Act offers the sector both opportunities and challenges.
It’s been passed by Parliament because of the many complaints from home owners about the standard of service they have received. And in some cases because a criminal minority have sought to exploit the vulnerable.
This Act has the potential to remove those practices and to help restore the sector’s reputation. And we in government certainly want to work with you and the other responsible owners to ensure that the Act is implemented in a proportionate but effective way.
It does mean change and different ways of doing things. But if we get it right, it will be to the long term benefit of both residents and site owners.
Now as many of you know, in 4 years time, we will review the effectiveness of the Act. It is very much my wish that we will find that the industry has indeed changed, and there is no need to introduce “fit and proper” registration of site owners. That is, I think, something we should work on together.
Indeed, I would hope that by our actions (government and industry) over the next year or so, it will be clear that the park home sector has become a sustainable part of the housing market, offering real choice and a safe and secure alternative to bricks and mortar home ownership.
That’s the opportunity and I hope that you will feel ready now to seize it and make it your own.