House of Commons - Park Homes - Communities and Local Government Committee

Park Homes - Communities and Local Government Committee Contents

5 Agreements between home owners and site owners

61. During our inquiry it became clear to us that disagreements over contractual obligations between park home site owners and residents are a common problem. It is alleged that some site owners are not meeting their obligations to maintain sites and that some park home owners are unaware of their rights or have a poor understanding of the agreements they enter into. In this section we examine the legal framework that governs agreements between site owners and home owners. We then set out a number of recommendations for improving this framework and the understanding of the parties in the sector.

Legislative Framework

62. The framework that governs the relationship between residents and site owners is complicated. It is primarily shaped by the Mobile Homes Act 1983. This requires the site owner to provide advance notice of the terms that will apply to the person proposing to occupy a new park home on their site (these terms are known as 'the written statement'). The 1983 Act was substantially amended, by secondary legislation, in 2006 by the insertion of certain new terms to be implied in all written statements. The Act, as amended, gives residents certain key rights and protections, including:

security of tenure—agreements cannot be terminated except by a court and then only on specified grounds, such as breach of the terms of their pitch agreement;
the right to sell or gift their home, and to assign (pass on) the pitch agreement to the new owner;
the right to succeed to the agreement and stay in the home to persons living with the home owner on their death;
the right to be consulted on changes to the site (and associated costs), including through a recognised Residents' Association; and
limits to pitch fee increases. Generally, pitch fees should be changed by a percentage equivalent to any change in Retail Price Index (RPI). Though in reviewing the pitch fees money spent on improving the site can be considered.[87]

The 1983 Act, as amended, also gives certain rights to, and imposes certain obligations on, site owners which include:

to keep the site maintained; and
not to interfere with the resident's quiet enjoyment of the home.

Park Home Owners' Problems

63. We heard from a number of residents in Bournemouth, who described situations where site owners were not undertaking the obligations that home owners considered they had under written statement agreements. One told us that:

In the main, the park that I live on is maintained to a fairly low standard. Any problems that we have on the park are difficult to bring to any conclusion because [...] we do not have a published address or telephone number where we can contact the park owner.[88]

Another described a situation where assigning a pitch agreement to new site owners had failed:

the park [site] owner who I bought my home from has since changed. We now have a new park owner. When the park owner changes, the regulations on the site change as well, in most instances.[89]

And told us of serious incidents breaching the park home owner's right to quiet enjoyment of the site:

water pipes ruptured and pushed up through the floor to flood the home so it could not be sold, large bonfires lit to choke residents with breathing difficulties, and one home burned to the ground.[90]

Written submissions from site owners and local authorities across the country detailed similar problems.[91] Residents commonly complained that they did not see site owners re-investing money made from sales and pitch fees back into maintenance of the site. One residents' association sets out a typical case in its submission:

our site owner spends hardly any money on maintenance, repairs or the replacement of infrastructure items and communal grounds by qualified workmen. Off-pitch emergency repairs like blocked drains or water leaks are poorly fixed by itinerant bodgers and billed to residents affected by these problems—who are then bullied or harassed by the park manager until the bill is paid. Pitch fees/Ground rents produce nearly £250,000:00 a year for our site owner, yet less than 10% p.a. is spent on park maintenance or repairs.[92]

64. The 2012 Consumer Focus survey of park home residents found that 19% of residents surveyed reported having problems with written statements or pitch fees. Of these 16% reported not having a written statement with their site owner. In addition, it found evidence that many residents only received their written statement after they bought their park home (56% of those with a statement received it after the transaction). Another reported problem was that the written statement had been changed without the resident's consent.[93]

Defining Site Owners' Obligations

65. Failure to produce agreements was not the only problem. Cornwall Council explained that "ambiguities and uncertainties" in the interpretation of Mobile Home Act meant that it could be difficult for residents to take civil action against site owners and for local authorities to use trading standards legislation to take enforcement action when site owners were not undertaking their obligations to maintain sites. They called for a "major rewrite" to give residents "proper protection of their statutory and contractual rights, and to assist trading standards action" under the Enterprise Act and Consumer Protection from Unfair Trading Regulations.[94] The Trading Standards Institute agreed, explaining that the 1983 Act did not explicitly cover many of the problems faced by residents. They also advised that the legislation needed to be completely redrafted, giving consumers clear consumer protection.[95]

66. One particular area of concern, as noted above, was the site owner's obligation to maintain a site. Under the Mobile Homes Act 1983 site owners have a duty to maintain sites. They are not able to charge residents an additional amount for any maintenance work as this is already covered in the pitch fee. Site owners are allowed to charge residents for agreed 'improvement' works to a site. The difference between improvement and maintenance works and the definition of these types of work can be a matter for contention between site owners and home owners. We heard examples of site owners attempting to charge for work they should have undertaken as part of site maintenance.[96] Rushcliffe District Council told us that there is a lot of confusion as to what constitutes redevelopment on a site and difficulties in trying to get site owners to undertake maintenance work.[97]

67. The Government's consultation document provides a number of proposals that aim to clarify a site owner's obligations and the rights of home owners under the 1983 Act. This includes a number of issues we have not taken evidence on, including moving a park home, home owner's alterations, succession rights to agreements and consultations on improvement works.[98] The consultation also aims to clarify the distinction between improvements to a site, which can be charged to residents through pitch fees, and repairs to a site, which cannot, by providing an updated definition of a site owner's maintenance obligations. It sets out that a site owner would be obliged to maintain and keep in repair:

the base on which the home is stationed;
utility infrastructure;
parts of the site that are under the control of the site operator, including access ways, street furniture and, buildings in common use, and to keep these tidy;
any trees, hedges or shrubs on the site.[99]

68. We welcome the Government's proposals to clarify the obligations on site owners for maintaining their sites. This includes in particular the proposals in the consultation that define the maintenance works which must be undertaken by site owners as a statutory duty and cannot be included in pitch fee increases. We also welcome the Government's proposals to ensure that improvement works undertaken, to comply with licence conditions or enforcement action from the local authority, cannot be charged through pitch fee increases.

69. The most recent change to agreements between site owners and home owners was made through secondary legislation.[100] Because the problems associated with agreements between site owners and home owners are so widespread, and as primary legislation may be years off, we recommend that the Government enact changes, to clarify the obligations on site owners to maintain sites, through secondary legislation this session.

Site Rules

70. As well as the written agreement, many sites have rules that residents must adhere to. These 'site rules' or 'park rules' can also form part of the agreement between site owner and home owner. They can be used to help ensure the enjoyment of a site (for example, they may set a minimum age for occupants or impose restrictions on pets) or can set out general management duties (for example, on waste collection). The benefits of such rules have been discussed earlier (paragraph 23).

71. It appeared to us that some site owners were willing to break these rules. On our visit to Bournemouth, we saw evidence of increasing numbers of park homes being rented by site owners. In some cases these were being rented to people under 50 years old which contravened park rules. One resident wrote to us about the situation on his park where there was confusion about the definitive rules:

Park owners have introduced new sets of rules to suit themselves which are then provided to new residents [...]. When this happens—as it has done on this park—to whom do you go to object? There are currently three sets of rules operating on this park, and none of the changes have been lawfully approved.[101]

We also heard that site rules have been used by site owners to block sales. Sonia McColl told us that some site owners make up new rules, for example about the age restrictions on a site, to put prospective buyers off.[102]

72. The Government's consultation document recommends that site rules are deposited with licensing authorities. It also proposes that site rules cannot be changed without prior consultation with home owners and that certain rules that are unreasonable, such as those used to block a sale (for example, interview requirements for buyers), should be excluded. We welcome the Government's proposal that site owners should be required to deposit site rules with a licensing authority as this would ensure that residents on a park have access to an authoritative version of the rules governing their site, which both they and the site owner had to follow. We recommend that only those rules in the deposited set with the local authority will be capable of enforcement against a home owner. We also recommend that abiding by the site rules deposited with the authority become a requirement for every site owner under the site licence conditions. This would provide the local authority with an enforcement power to intervene when a site owner breaks site rules (for example, if they rented out properties to tenants under the age stipulated in the rules), and that this would provide stronger sanctions to deter such actions.

73. We recognise that over time site rules will need to be updated and amended. We recommend that the legislation allow site owners to change the authoritative version of the site rules providing:

a) site owners give park home owners on the site notice in writing at least 28 days before the changes are due to take effect;

b) if at least a third of the park home owners request a meeting, the site owner arrange a meeting which all occupiers are invited to attend to consider the proposals; and

c) at the meeting a majority of park home owners have to endorse the proposed rule changes.

We further recommend that purported changes to site rules that fail to follow the process required by statute have no force and that any attempt by a site owner to enforce such a rule be treated as a breach of the site licence.

74. In calling for the site owner's right to approve buyers to be abolished, in paragraph 25, we recognised that buyers would be dependent on sellers to provide information about site rules. To provide protection for buyers purchasing a home a on a site where their residence might be in contravention of the site rules, we consider that home owners should be obliged to provide information on site rules to prospective buyers. We recommend that the 'implied terms' are amended so that home owners are required to provide prospective buyers with a copy of the site rules.

Pitch Fee increases

75. The pitch fee is the amount required to be paid by the park home owner in return for being allowed to keep a park home on the pitch and use common areas of the site. The 'written statement' will impose an obligation on the park home owner to pay a pitch fee to the site owner. Pitch fees can be reviewed once a year and usually can only be increased to take into account inflation—calculated in accordance with the rate of the retail price index (RPI) plus improvement (rather than maintenance) works on a site.

76. A number of groups are campaigning to have pitch fee increase rates limited to the Consumer Price Index (CPI) and also to have them capped at a standard rate across each site. In the memorandum from the Park Homes Justice Campaign, Sonia McColl proposed that the:

increase should be regulated to an increase by CPI if this should be lower than RPI in any twelve month period. My reasoning for this suggestion is that most park home owners are of retirement age and pensions are now linked to CPI. In addition, I think that Site Fees should be capped and a standard Site Fee laid down for all single and double units. Not only would this prevent discord between Residents who are forced to pay differing rates for the same homes—but under the present system, a Site Owner is encouraged to prevent the sale of an existing home because it already has a Site Fee that is part of the contract which is sold with the home. By setting a standard Site Fee for all single and double units, new or currently existing on the park—you effectively remove from the Site Owner, the particular benefit of making added income from a new more expensive contract which at present they can attach to new homes that are sold or older homes that they are able to purchase at a vastly reduced rate if they prevent the sale of a home.[103]

The Minister, Mr Shapps, told us that he preferred to cap pitch fee increases to RPI because income linked to this rule would provide a more sustainable business model and it would fit better with other housing regulation.[104]

77. We consider that restricting pitch fee increases to CPI would be fairer. Many residents' income comes from pensions that are now linked to CPI.[105] We also see merit in fees being standardised within sites for park homes of a similar size. However, we consider that the administrative task of achieving this would be an unnecessary burden on site owners, there are likely to be cases where some pitches might legitimately attract higher fees than others and it would also be difficult to envisage that all home owners on a site would be willing to agree to this as by equalising fees some would have to increase. We recommend that the maximum annual increase in pitch fee increases be calculated in accordance with the rate of increase in the Consumer Price Index, to create a fairer link between home owner incomes and pitch fees.

Publicity and awareness of obligations

78. As we have noted, the legal framework setting out the statutory duties and rights of park home site owners and home owners is complicated, as can be the written agreements between these two parties. Despite this complexity Paul Tarr, from Berkley Parks, thought that less than 1% of buyers of park homes took legal advice when acquiring a park home and entering the contractual terms between themselves and site owners.[106] We heard a similar message from residents' campaign groups and other site owners.[107]

79. We also received a submission from residents describing a case where site owners had discouraged buyers from seeking legal assistance with buying homes.[108] One park home owner pointed out that, although legal assistance could be difficult to find, it was essential:

It is crazy that people are spending up to £300,000.00 for a park home and the sales office informs them that they do not need the services of a solicitor. Fortunately we did use our solicitor who was handling the sale of our house, he admitted that he knew nothing about park home law but found out enough to know that we had not been given the 2006 version of the Written Statement, and that we needed to have amended the "Implied" and "Express" terms in the Statement to show that we had negotiated a lower selling commission fee, as our Statement still showed 10%.[109]

We were told that so few potential buyers took legal advice because they were looking to reduce as many costs as possible when buying a park home and because few solicitors were qualified to give advice.[110]

80. The National Association of Park Home Residents said in its submission that it was:

aware there are many Residents on Mobile Home Parks who do not hold an Agreement / Written Statement and have no idea they should have been issued with one when purchasing a Park Home, it is possible that this has occurred because the Park Owner has no knowledge of the Legislation.[111]

The Trading Standards Institute added that, because many residents were not aware of their contractual rights, trading standards were not requested to investigate and pursue breaches of these agreements.[112]

81. This report sets out a number of measures to tackle the problems at park home sites, some of which are also proposed in the Government's consultation document. These proposals will provide local authorities with more resources to deal with park home issues; they increase the deterrent against offences and they make the rights and obligations for site owners and residents more clear. However, to be fully effective, they rely on residents, site owners and local authorities being aware of the changes and knowing their rights and obligations. As the evidence set out in this chapter indicates this is far from the case at present. We recommend that the Government promote an awareness campaign to make residents, local authorities, site owners and other parties aware of the regulatory regime and changes to be made to it. This campaign must encompass the park home trade bodies, estate agents, local authorities, the Local Government Association, police authorities and the legal profession. Park home residents as a group appear particularly unaware of the regulatory regime and are more than usually susceptible to mis-selling or being taken advantage of by unscrupulous owners.

82. In addition, we recommend that the Government amend the 'implied terms' in the park home owner's agreement to provide that before selling his or her park home the seller must advise a prospective buyer in writing to seek qualified legal assistance to help with transferring and explaining an assignment of the park home. In addition, all purchasers must confirm in writing to the seller and the site owner that they have received and read the written statement and site rules.

87 The terms presently in force were made by the Mobile Homes Act 1983 (Amendment of Schedule 1) (England) Order 2006 (SI 2006/1755). Back

88 Q 3 [Tony Boardman] Back

89 Q 18 [Ken Ayres} Back

90 Q 2 [Ken Ayres] Back

91 For example, Ev w38 [name redacted] , Ev w39 [John Potter and members of the Park Home Justice Campaign], Ev 128 [Cornwall Council] Back

92 Ev w57 [name redacted], para 4 Back

93 Ev 91 Back

94 Ev 129 Back

95 Ev 131 Back

96 Ev w97 [Hall Park Residents' Association], Ev w235 [Mrs Pamela Hutchins] Back

97 Ev w82 Back

98 Department for Communities and Local Government, A Better Deal for Mobile Home Owners, April 2012, paras 2.13-2.28 Back