Law Commission publishes report on valuation in enfranchisement
8th January, 2020 Today the Law [glossary_exclude]Commission[/glossary_exclude] publishes its report on valuation in enfranchisement. The [glossary_exclude]Commission[/glossary_exclude] sets out options to...
22 June 2022
When an owner of a park home on a protected site sells their home, they are required to pay commission on the sale to the site owner. The maximum rate of commission is prescribed by the Mobile Homes Act 1983 and is currently set at 10% of the sale price. So, for example, if a park homeowner sells their park home for £200,000, they will receive only £180,000 from the buyer, who must pay the £20,000 balance to the site owner.
On 16th June, the Department for Levelling Up, Housing & Communities (DLUHC) published “The impact of a change in the maximum park home sale commission”, a report it commissioned the University of Liverpool to produce exploring the potential impact on the park homes sector of a change to the maximum commission paid on park home sales in England. This follows the amendment of the commission level in 1983, when it was reduced from 15%, and the last review in 2006 in England.
The research identified 1,832 separate park home sites and 100,406 park home residential addresses (a proxy for pitches) across England. The research also estimated that there were 159,000 park home residents in owner occupation in 2021.
Each region of England contains park home sites, the South East and South West accommodate a disproportionally high number of both park home sites and pitches, accounting for some 45% of sites in England, whilst the North West, North East and Yorkshire & Humber collectively accommodate only 15%.
There is a wide variety in the number of pitches on parks, with some sites having fewer than 10 pitches whilst others have hundreds. There are many more smaller sites than large ones, with over 50% of all sites having less than 60% of the average number of pitches.
Site owners and residents have different views about the payment and there has been substantial debate in the past about whether the commission rate should be maintained, reduced or abolished. There has however been no data available to accurately assess any of the impacts. The government therefore committed to commissioning research to gather relevant data and evidence to ensure that any ongoing discussions, debates or decisions are based on facts and an accurate assessment of any impacts on the sector.
Summary of recommendations:
- Justification for the maximum commission – Work is needed to explore the rationale of the commission and to clarify this rationale for park owners and home owners.
- Strengthening the professionalism of park operatives – Poor quality practice was repeatedly identified by home owners regarding a small number of operators. Recent changes (the ‘fit and proper person test’) to the requirements of park operators were considered a positive step towards an appropriately regulated sector, but further improvements are needed to ensure that the sector works fairly for both operators and residents.
- National enforcement on parks – Further work should explore the efficacy of local authorities in undertaking this enforcement and consider whether a national enforcement body could ensure a more consistent and higher quality of park operation.
- No reduction to the maximum commission on park home re-sales without financial support for smaller parks – A reduction in the commission would result in an increase in the proportion of parks that make a loss in any year; this will disproportionally have a negative impact on smaller parks. As the majority of park home owners do not intend to move, it is not in their interest to increase regular costs (such as pitch fees) in order to compensate park owners for a reduction in the commission. As such, a reduction in the commission remains desirable for park home owners, but only if park owners (in particular smaller site owners) are supported financially through mechanisms independent of the home owner to retain the viability of parks.