The silent toll: unpacking the King’s Speech on rising service charges
/Passle/63fcb7a0f636e91858bf05af/SearchServiceImages/2023-11-09-13-34-02-667-654cdfca3135b49ae869af41.jpg)
The recent address by the King encompassed a range of anticipated topics, approaching changes that some may perceive as straightforward solutions. However, conspicuously absent from the discourse was the burgeoning issue of service charges and estate charges, particularly in the context of new build developments.
While expectations were high for proposals that would facilitate developers in compelling local authorities to embrace open spaces and public amenities swiftly, the speech fell short. This article delves into the growing challenge of procuring adoption agreements from local authorities, as highlighted by the Competition and Markets Authority (CMA), and explores the ramifications for developers and residents alike.
The predicament of adoption agreements
Developers are currently grappling with the escalating difficulty in securing adoption agreements from local authorities, as indicated by the CMA.
Typically, the adoption of public amenities hinges on section 106 agreements, necessitating developers to remit a commuted sum for ongoing maintenance. However, the absence of an obligation for the adoption of open spaces or public amenities exacerbates the difficulty in the adoption process. This results in additional costs and responsibilities for estate residents in the long term, a consequence that merits closer examination.
Local authorities' changing stance
The CMA acknowledges a perceptible decline in the inclination of local authorities to adopt public amenities. Utilising Freedom of Information Act requests, the Home Builders Federation (HBF) has gathered data showcasing substantial disparities in costs and timescales associated with the adoption of new public highways across different local authorities.
Notably, the average time for formal adoption ranged from three months to over five years in 2021, impeding the timely completion of developments and incurring financial implications for housebuilders.
Addressing inconsistencies
The HBF proposes the establishment of a single national standard to address the considerable inconsistencies across highway authorities. This standard would encompass the calculation of inspection fees and statutory timescales, providing housebuilders with certainty regarding timing and budget for the adoption of public amenities by local authorities.
By streamlining these processes, the industry can potentially mitigate delays and financial challenges associated with adoption agreements.
Legislative framework challenges
The existing legislative framework incorporates provisions designed to shield authorities from undue commercial risks, such as requiring bonds as a guarantee or the payment of commuted sums as a condition of adoption. However, challenges persist, with HBF noting that the costs associated with these measures, particularly for small and medium-sized enterprises (SMEs), can be prohibitive.
Alternative measures in other sectors, such as sewerage undertakers requiring bonds equal to 10% of completed works, highlight the need for a nuanced approach to address varying circumstances.
Conclusion
The King's Speech, while addressing anticipated issues, overlooked the pressing concern of adoption agreements for public amenities.
The current challenges faced by developers in securing such agreements demand attention and thoughtful solutions.
By standardising processes, addressing inconsistencies, and re-evaluating the legislative framework, stakeholders can work towards a more streamlined and equitable system that benefits both developers and local authorities, ensuring the efficient adoption of public amenities for the benefit of communities at large.
