In addition to this, you may need to have your home buyer approved by your park owner, and paperwork such as the Written Statement will need to be updated – though the park owner is not allowed to change the terms and conditions of the existing agreement for the new buyer.
The 10% maximum limit only applies to residential park homes and, when it comes to holiday caravans, there is no legal maximum for the commission a park owner might take on the sale of the caravan, though 15% is a typical figure. To find out what commission the park owner will take, you’ll have to look at your individual contract with them.
Legislation
The maximum 10% commission for residential park homes is set out in the Mobile Homes Act 1983, so that’s why most park owners will charge this maximum 10% fee. However, if you want to give your park home away to another family member, the legislation states that the park owner is not entitled to receive commission or any other payment in connection with giving away the home. The park owner still has the right to approve the new owner, but the law states that he/she cannot withhold the approval unreasonably. In this case, the approval process, and the role of the residential property tribunal in cases of dispute, is the same as it is for selling a home.
When you sell your park home, your buyer is effectively purchasing the home outright, together with the right to station it on the park owner’s land. This right is effectively granted when the Written Statement is ‘assigned’ to the new owner
The park home owner’s perspective
Generally, park home owners accept this commission rate to the site owner, when they sell their home, and there’s not really anything they can do, providing the commission rate is 10% or less. What upsets some residents, though, is that the 10% is payable on the value of the home when sold, and not the value of the home when they bought it. So, for instance, if you bought your park home for £50,000 in 1995, and now want to sell it for £150,000 in 2012, the 10% commission to the park owner will be paid on the £150,000 sale price and not your original £50,000 purchase price. So, you’ll be paying £15,000 commission on the sale, not £5000.
Some sellers also get upset because they will additionally be paying a percentage from the sale of their home to a local estate agent, as well as paying the 10% commission to the site owner. However, some site owners offer a service to sell your old home for you, in which case the selling fee might even be included within the 10% commission fee.
The park site owner’s perspective
Park home site owners frequently have to defend their commission charges, especially when, as above, the home sells for a lot more than the seller originally paid for it. In their defence they will often argue that they have to protect their investment in the park and the land it is on. They may have invested a lot of money over the years in the park’s infrastructure, such as the roads, drainage and the supply of utilities such as gas.
You also have to remember that the plot your home occupies is probably worth a lot more than it was when you bought your home. Were your old home to be removed from the park, instead of being sold, the park owner would be able to make a lot more money by selling an all-new home on your old pitch, than they would get by just receiving the 10% commission on the sale of your existing home.
The Government carried out its own consultation into park home sale commission rates back in 2007, and the end result of this is that the 10% commission rate stayed the same, even though lower rates were considered. Park home site owners told the Government that the loss of income, should the commission rate be reduced, would badly effect their income and could cause some of them to go out of business. Others said that they would have to put up their pitch fees if this commission rate was reduced, though it’s important to state that the law limits the amount they can increase pitch fees by for existing residents.
How the commission is paid
The 10% fee is paid on the sale of the home to its new owner, once all the paperwork has been sorted out and the Written Statement is being assigned to the new owner. It’s worth saying again that VAT is not payable on this commission, so it’s a flat 10% of the sale price of your home – unless your site owner is kind enough to charge less than this 10% figure. It’s also worth adding that Stamp Duty is not payable on the sale of park homes, so there’s a potential saving here for the buyer of your home.
In addition, your home’s buyer should pay the same monthly pitch fees as you did, and the site owner is not allowed to increase these fees for people who buy existing homes on their park – other than for the annual inflationary increases (when selling a brand new home on their site, they can set the initial pitch fee at a higher figure if they want).
It’s interesting to speculate whether park home owners would be prepared to pay higher monthly pitch fees, in exchange for a lower commission when they sell their home. However, the fact that many people buy their park home as the final retirement home, with no plans to sell it, probably means that most would prefer to pay lower monthly pitch fees instead.
Comparing to bricks-and-mortar homes
If you want to draw comparisons between the cost of a park home sale and the sale of a traditional bricks-and-mortar home, the closest type of sale is probably the sale of a leasehold flat, where the owner does not have a share in the freehold. In this type of sale, the seller doesn’t technically own the land that their flat is situated on (as with a park home), with the freeholder having a similar role to a park home site owner.
If there’s still a long lease on the flat, then the seller may get away without paying anything to the freeholder. If, however, there is a short lease, then the flat owner may have to pay the freeholder to extend the lease, and this can amount to tens of thousands.
Even on a flat that’s only worth something like £150,000, the seller may have to pay up to £30,000 to extend the lease.
Compared to cases like this, the 10% commission on the sale of a park home probably doesn’t look so bad.
Looking for top tips on legal issues? Email us: phhc.ed@kelsey.co.uk
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