Earlier this year, the Petitions Committee called on the Welsh Government to take action to address unregulated housing estate management fees.
It highlighted a growing problem, labelled by campaigners as ‘fleecehold’, where residents are locked into paying fees for the upkeep of green spaces and amenities, with limited rights to challenge the cost or quality of work.
In the past, local authorities would usually take responsibility for maintaining roads and green spaces on new housing estates. However, the Competition and Markets Authority (CMA) has found that fewer new estates are being adopted by councils, leaving more residents footing the bill for ongoing maintenance.
Ahead of a Senedd debate on the Petition Committee’s report, this article looks at the problems associated with fleecehold practices and how the UK and Welsh governments are proposing to address them.
Are estate charges unfair?
Estate management companies currently have wide discretion in setting estate charges, and there are no legal limits on how much charges for freeholders may increase from year to year. A Welsh Government consultation in 2020 found the average estate charge was £169 per year, with charges ranging from £50 to £500.
The Committee heard from Dr Hefin David MS, who was a “noted campaigner” on fleecehold issues and had proposed a Bill to regulate estate management companies in 2018. In his evidence, he described the lack of regulation of estate management companies as “a wild west”. Freeholders currently have no legal rights to challenge unfair charges, and some freeholders face the threat of having their home repossessed if they do not pay. The Committee also heard about the unfair situation where residents are effectively paying twice for the upkeep of public spaces, through their estate charge and their council tax.
The Welsh Government had concluded in 2020 that “the practice of estate charges does not work effectively for everyone under the current arrangements”.
Are there plans to improve the law for homeowners?
In its report, the Committee said it would like to see “swift implementation of a regulatory regime that ensures prospective purchasers in Wales do not face these problems in the future”.
The Welsh Government has been working jointly with the UK Government on legislation to improve the law for homeowners. Some notable changes were introduced through the Leasehold and Freehold Reform Act 2024, including measures to:
- improve the transparency of estate charges and management charges;
- give freeholders the right to challenge unreasonable fees and poor quality work through the Leasehold Valuation Tribunal; and
- allow freeholders to apply to appoint a substitute manager where their estate management company is failing.
However, most of these measures have not yet been implemented and some of the problems associated with fleecehold were not addressed in the Act.
An end to fleecehold?
In November 2024, the Minister of State for Housing and Planning said the UK Government is “determined to end the injustice of ‘fleecehold’ entirely”. It intends to consult on protections for freeholder homeowners sometime in 2025.
In its response to the CMA in October 2024, the UK Government said that its consultation would consider “the quality of private amenities, what amenities should be adopted by local authorities, and improved consumer protections”.
Responding to the Petitions Committee report, the Welsh Government said it would continue to work with the UK Government on the implementation of the 2024 Act. Its response suggested the UK Government’s planned Leasehold and Commonhold Bill may address some areas covered in the Committee’s recommendations, and said:
Once the details of the UK legislation are known fully we will consider whether separate Welsh legislation is appropriate, including detailed competency analysis to identify appropriate powers which could be used.
The Welsh and UK governments have also launched a joint consultation which includes proposals to improve the standard of services provided by managing agents by introducing new qualification requirements. The consultation document says these measures are “not the final step in the regulation of managing agents”, and that the UK Government is looking again at recommendations made by the Regulation of Property Agents working group in 2019.
Should local authorities be required to adopt new estates?
In its report, the CMA identified a number of factors which have led to a decrease in the adoption of public amenities by local authorities. These include:
- the discretionary nature of much of the legal framework underpinning adoption;
- inconsistent and sometimes opaque processes involved in seeking and achieving adoption;
- funding and resourcing constraints for local authorities; and
- commercial incentives for housebuilders to minimise costs.
The CMA made several recommendations to the Welsh Government aimed at preventing the proliferation of private estate management arrangements. They argued for measures to improve the efficiency and consistency of the process of adoption, and for the mandatory adoption of public amenities on housing estates.
In her response to the CMA in July 2024, Julie James MS, then Cabinet Secretary for Housing, Local Government and Planning, said:
My ambition remains that local authorities should adopt public amenities. I do not agree that this should be a mandatory requirement.
The Petitions Committee also stopped short of suggesting that local authorities should be required to adopt new estates, but recommended the Welsh Government legislate to achieve “a more holistic and standardised approach” to the adoption of assets.
The Welsh Government accepted this recommendation in principle, noting that the current approach to securing and paying for site infrastructure was “fragmented”. It said:
Careful consideration, including engagement with local authorities, will need to be given to options to ensure that a range of options can be delivered reflecting local circumstance rather than imposing a highly standardised approach such as standard road layouts and materials.
The Committee recognised there were significant legal and financial barriers to councils retrospectively taking on the management of existing housing estates. However, it recommended the Welsh Government explores options to provide financial support for local authorities to adopt assets in cases where there is “an unreasonable ongoing financial burden on residents”.
The Welsh Government rejected this recommendation, stating that this would “divert funding from other pressures and priorities”.
Follow the debate
The Senedd will debate the Petitions Committee report in Plenary on Wednesday 17 September 2025. You can follow proceedings on Senedd.tv.
Article by Gwennan Hardy, Senedd Research, Welsh Parliament.
