Key considerations for owners of residential park homes

Demand for park homes in the UK remains strong, with statistics from the recent Quickmove Properties Demand Index showing that almost one in five park homes had sold subject to contract across England in Q2 2024 (19.5%). This marked a quarterly demand increase in residential parks of 1.6%. This increase may well be attributed to the fact that residential park homes offer owners a more cost-effective living solution compared with traditional brick-and-mortar properties in the UK. Residential parks are often situated on sites marketed as offering a distinct lifestyle for the over 55s, with an emphasis on the convenience, safety and positive community spirit. This provides a unique offering for parks and their residents. The sector also plays a role in helping the government meet its ambitious housing targets. If you are interested in looking to buy or develop a park site, many of the points set out in our previous article on holiday parks (“10 things to do when buying a holiday home park”, 7 December 2024) will apply. However, there are additional points to consider, outlined below, when it comes specifically to residential parks. Written statements When you own a residential park, there is an added layer of bureaucracy set out in the legislation (the Mobile Homes Act 2013). The statutory agreement between site owner and homeowner is called a written statement. This is designed to protect homeowners, particularly in the day-to-day management of the park. Pitch fees Homeowners will usually pay a pitch fee to keep their home on the site. Pitch fees combine a fixed rent for siting the caravan along with a service charge fee for managing the common parts of the site, such as roads and open spaces. Park owners usually review pitch fees annually and must follow a strict process to claim any increase. While you can claim the costs of improvements, you have to follow the correct process. This includes consulting with residents on the proposed improvements, showing the improvements are for their benefit and that most residents agree with the works. Sales commission In addition to the pitch fee income, when a resident sells their home, the site owner is currently entitled to a maximum commission of 10% of the sale price. While it is possible for the site owner to accept a lower percentage commission, it is common for the full 10% to be charged. The commission is seen as a return on the site owner’s efforts in managing the overall park and a way to ensure the pitch fee is kept low. In recent years, there has been much discussion around the commission mechanism, which operates under the Mobile Homes Act 1983. Past governments have considered a reform, including reducing the maximum amount of commission chargeable or abolishing it altogether. Research published by the Department for Levelling Up, Housing and Communities in June 2022 concluded that, while a reduction in the maximum commission would support park homeowners’ ability to move homes more freely, it would need to be significant to bring about a major change. Such a reduction could result in a loss of profits for site owners, particularly affecting smaller sites, and perhaps result in a need for site owners to be supported financially through mechanisms independent of park homeowners in order to maintain business viability. It is important to keep up to date with any potential reforms to the commission structure over the coming months and years. Qualifying residents’ associations Residents on parks can set up a residents’ association (known as a qualifying residents’ association). The purpose is to help with community cohesion and create an easier communication channel with the site owner. Once established, site owners must follow set procedures and formally consult with the QRA on matters such as site improvements, developments, the provision of utilities and amending the site rules. Planning and licensing To operate a residential park, you need the correct planning permission as well as a site licence. The site licence details operational requirements as well as requiring a specific individual to take responsibility for managing the site. This person needs to apply to the local authority and complete a fit and proper person test which ensures they are appropriately trained to run a park. Summary Parks businesses are unique, so it is important both existing and prospective owners obtain expert advice to support them through the challenges that come with owning and operating residential park home sites in compliance with the legislative framework. It is also key to appreciate the regulatory landscape as it is and the potential changes that may come to avoid any surprises. Nick Dyson is a partner and head of real estate at Blacks Solicitors