In 2017, following the implementation of the Mobile Homes Act 2013, the Government undertook a review to consider the effectiveness of the changes made by the Act and to consider the implementation of further legislation within the parks sector. Some of the recommendations from that review have now been implemented. The new Fit and Proper Persons test is one such example.
Whilst outside the scope of the review, the question of commission on park home sales (currently fixed at a maximum of 10%) arose as a result of submissions made by residential park homeowners during the course of the review. Therefore, in October 2018 the Government resolved to research to gather relevant data to enable a detailed assessment of the likely impacts of a change to the 10% commission on residential homeowners and park owners.
What changes have been considered?
The scope of the research was limited to the impacts of a reduction in the commission from 10% to any of 7.5%, 5%, 2.5%, or zero. The question of any increase was not considered. The research was designed to assess, in particular, the effect of a reduction in commission on the residential mobility of residential park homeowners and the financial impact on the park owners. The research findings have recently been published here and reach no firm conclusions.
In brief, the findings/recommendations from the research are:
- Further work is required to assess the rationale for the commission rather than simply the impact of its reduction or removal.
- Dissatisfaction with the management of parks outweighed residential park homeowners’ concerns regarding the commission. A proposal emerged to consider moving enforcement from local authorities to a national enforcement body.
- There should be no reduction in the commission without financial support for smaller parks.
There is also some implication in the recommendations that a reduction in commission might be offset by an increase in pitch fee. However, it is also noted that as most residential park homeowners do not intend to move, it is not in their interests to increase the pitch fee for the purpose of reducing the sale commission.
Is a reduction or abolition of commission on sales likely?
Whilst the idea that commission upon the sale of park homes could be reduced or abolished is concerning for park owners, there are some reasons to believe that a change is not likely at the moment:
- Previous reviews by the Government in 2006 and again by the independent Communities and Local Government Select Committee in 2012 ultimately decided that the park owner's right to the commission should remain.
- A large reduction in the commission would be required to have a significant impact on the residential mobility of the homeowners. On the other hand, the research acknowledges a potentially significant financial impact on smaller parks if a large reduction in commission was made. The sale of a park home involves not just the sale of the owner’s home but of the right to station it on the park’s pitch. If the right to charge for this is removed, it should be compensated in some way.
- Additionally, some parks (particularly smaller parks) would need financial support if the commission were reduced or abolished. As has been noted it is not in most homeowners’ interests to increase the pitch fee, which is the most likely mechanism for providing that financial support. It is presently unclear where the support might come from.
In summary, therefore, this issue has been considered twice before. Residential park homeowners generally think that park management issues are more important than the commission and want to keep ongoing charges (such as pitch fees) down. The research acknowledges significant financial implications for parks would have to be addressed. The case for a change has not been made.
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