Explainer: privatisation of public open green space in housing developments

Back in winter 2019, CPRE Bedfordshire used the lead article in our magazine ‘Bedfordshire Matters’ to highlight concerns about the privatisation of the ownership and maintenance of open spaces.

The issue has been raised by our planning team in response to a number of planning applications since then, including recently in Sharnbrook.

What does the privatisation of the maintenance of open green space mean?

This is where landowners/developers retain ownership of public open spaces and set up Management Companies to charge residents of housing estates for the maintenance of features such as hedgerows, grass verges, landscaping, allotments and play areas. These fees are often substantially more than a Parish or Town Council would charge for doing the same work.

Historically, developers would transfer ownership of these areas to the Parish or Town Council, together with a sum of money to cover the estimated maintenance of them over an agreed period such as ten years. After this had elapsed, the responsibility for costs would pass to the Council. The cost would then be covered through the Parish Council Precept added to the Council Tax bill.

Unlike the Management Companies set up by landowners/developers, Parish Councils have no profit motivation and their costs are minimal. Parish Councillors are volunteers receiving no salary or expenses and their motivation is to benefit the community they serve and live in.

What is the benefit to developers?

Developers benefit because they retain ownership of the land and no longer have to pay very large sums of upfront money to Councils. They can collect money from residents from day one and often there is no limit to the annual increases they can apply to the annual maintenance charge. Developers and landowners benefit by earning substantial profits in perpetuity, similar to a leaseholder arrangement.

What other issues are there for residents, besides the costs?

Under a developer led system new homeowners have no democratic means of seeking redress. If they are not happy with the service, only costly legal avenues are available.

Parish Council accounts and the costs they pay for services such as maintenance of open green spaces are available for all residents to see and challenge if they are unhappy with the service they receive. Residents can also attend PC meetings held in their communities.
Residents are often unaware at the time of purchase of their new property of the open green space management costs that they will have to pay. So unexpected bills can be quite a shock.

Residents also remain obliged to pay the Parish Council Precept element of their Council Tax.

The Competition and Markets Authority investigation

Last year, the Competition and Markets Authority (CMA) published a report on the UK housebuilding market. One of the areas they looked at was the trend for developers to build estates with privately managed public amenities – with 80% of new homes sold by the eleven biggest builders in 2021 to 2022 subject to estate management charges.

The CMA found that charges were often high, and it was unclear to homeowners what some of the fees were for. The report also noted that one-off, unplanned charges for significant repair work can cost large sums of money and lead to considerable stress on household budgets. In addition, they highlighted problems with substandard work and poor maintenance.

Over the longer term, there are concerns that landowners/developers may sell on these highly profitable Management Companies to Private Equity firms operating from overseas tax havens. There is then a fear that residents may encounter problems when trying to sell their homes because of what are effectively unregulated leaseholder type arrangements.

How have local MPs responded?

This is an issue which unites politicians of different parties. For example, both Richard Fuller (Con) and Alistair Strathern (Lab) have spoken out against the practice.

How has the government responded?

On the 22nd October 2024, the government published a policy paper. You can read it in full here.

Under the heading of ‘Private management of public amenities on housing estates’, there were five recommendations from the CMA upon which the government commented:

On recommendations 1.1 and 1.2

• We recommend that the UK, Scottish, and Welsh governments each implement common adoptable standards for public amenities on new housing estates.
• We recommend that the UK, Scottish, and Welsh governments each implement mandatory adoption of public amenities on new housing estates (outside of minor, well-defined exceptions).

The government say:
“We intend to consult publicly on the best way to bring the injustice of ‘fleecehold’ private estates and unfair costs to an end, gathering evidence to supplement the CMA report. Through this consultation, we will look to engage the full range of stakeholders, starting with residents themselves but also local authorities, developers, and existing estate management companies to produce meaningful solutions. This work will consider a variety of options for reforming this system in order to deliver reforms to protect homeowners. These will include looking at the quality of private amenities, what amenities should be adopted by local authorities, and improved consumer protections.”

The government accepts recommendation 1.3 in principle

• We recommend that the UK government, in consultation with the Scottish and Welsh Governments, introduce enhanced consumer protection measures, underpinned by a robust enforcement regime, for households living under private management arrangements.

Recommendation 1.4

• We recommend that the UK, Scottish, and Welsh governments each prohibit the establishment of new embedded management arrangements.

The government says:
“We consider that further work is required on this recommendation. The government recognises that homeowners have no say in the initial estate management arrangements that are created on each estate and notes the CMA’s view that the private estate management company reinforces the imbalance of power that exists between companies and homeowners. These issues will be considered through our announced consultation on ending the injustice of fleecehold estates.

Any measure to mandate a specific type of estate management company on future estates will require primary legislation. How estates are managed in the near future will depend largely on the approach to, and timing for, taking forward recommendation 1.2 on future adoption.”

The government accepts recommendation 1.5 in principle

• We recommend that the UK, Scottish, and Welsh governments each provide guidance to members and directors of residents’ management companies to support and enable them in effectively managing the amenities on their housing estates.

What happens next?

As yet, there is no confirmed date for a consultation on the recommendations. The updated National Planning Policy Framework (NPPF) was published in December 2024.

What would CPRE Bedfordshire like to see?

Firstly, CPRE Bedfordshire is extremely pleased that the campaigning we have undertaken on behalf of the people of Bedfordshire over the last four years to protect them from this unacceptable practice has now been endorsed by both the CMA and the government.

• CPRE Bedfordshire is pleased to see from the recently released Policy Paper that the Government is taking the issue seriously – their use of the word “fleecehold” is more than justified in our view.
• We hope that they will now act quickly to resolve the situation and put measures in place to protect those residents who are already in the deeply unsatisfactory position of living on housing estates covered by these management companies.
• CPRE Bedfordshire and CPRE nationally will be encouraging government to pursue their proposed Consultation aimed at bringing the practice of privatisation of open green space to an end, at pace.
• We call on local MPs, the Mayor of Bedford and the Leaders of Central Bedfordshire Council and Luton Borough Council, to join us in pushing government for a rapid decision making process on this matter.
• We will be suggesting to government that they work with Local Authorities to ensure that landowners/developers currently negotiating new housing developments through the planning system, should not be allowed to retain ownership of Open Green Spaces. Instead, they should follow previous practice and pass the land over to Town & Parish Councils until such time as the government’s Consultation process is completed.
• As far as Local Authorities in Bedfordshire are concerned, CPRE Bedfordshire will be encouraging them to pause any decisions regarding the privatisation of open green spaces until they have discussed the matter with the Planning Inspectorate and received a formal written notification of how they should act, in order to ensure that no local people are disadvantaged by “…the injustice of “fleecehold” as the government rightly calls it.