February 2018By Manjit Rai, LEASE Legal Adviser
At LEASE-Park Homes we receive many queries about pitch fee reviews. This article will focus on what the pitch fee review process entails and some of the common issues that arise.
Pitch fee review
The pitch fee can only be changed either by agreement between the occupier and site owner or by a determination of the First-tier Tribunal (Property Chamber). It can be reviewed annually as at the review date, a date which is usually specified in the pitch agreement.
The pitch fee review process
At least 28 clear days before the review date the owner must serve on the occupier a written notice setting out their proposals in respect of the new pitch fee. If the park home owner agrees to the proposed new pitch fee, then it shall be payable as from the review date.
The written notice must be accompanied by a pitch fee review form. This form is designed to provide transparency in the Pitch Fee Review and to help occupiers understand the amount that they are being charged. It is also to ensure that a site owner is not able to add unfair charges onto the pitch fee.
What can be included in the pitch fee review?
There is a presumption that the pitch fee will be increased only by RPI (Retail Prices Index) in England, and CPI (Consumer Prices Index) in Wales. Although, as the implied terms* make clear, that when determining the amount of the new pitch fee, particular regard shall be had to the following:
- costs of improvements to the site
- deterioration in the condition, decrease in the amenity, of the site or any adjoining land which is occupied or controlled by the owner
- reduction in the services that the owner supplies to the site, pitch or mobile home, and any deterioration in the quality of those services
- direct effect on the costs payable by the owner in relation to the maintenance or management of the site of any enactment which has come into force since the last review date
What cannot be included in the Pitch Fee Review?
The site owner cannot include charges such as legal fees, costs incurred by the site owner in relation to the site licence, local authority enforcement action or costs for expanding the site.
One issue that comes up often is whether a site owner can recover their costs for improvements on the site, through the annual pitch fee review.
Improvements are changes or additions that are for the benefit of the occupiers of mobile homes on the protected site, which were the subject of consultation and to which a majority of the park home owners have not disagreed in writing. If a majority of residents have disagreed then, in the case of such disagreement, the Tribunal would need to decide whether those improvements should be taken into account when determining the amount of the new pitch fee.
How is the consultation carried out?
The site owner shall consult all of the occupiers about improvements to the protected site in general, and in particular about those which the site owner wishes to be taken into account when determining the amount of any new pitch fee.
To “consult” means to give the occupier at least 28 clear days’ notice in writing of the proposed improvements which:
- describes the proposed improvements and how they will benefit the occupier in the long and short term;
- details how the pitch fee may be affected when it is next reviewed; and
- states when and where the occupier can make representations about the proposed improvements
The site owner must take into account any representations made by the occupier about the proposed improvements before undertaking them.
How the pitch fee is calculated
The calculation of the fee takes into account; the current pitch fee adjusted by the Retail Prices Index ‘RPI’ (in England) or Consumer Prices Index ‘CPI’ (in Wales), any recoverable costs and any relevant deductions.
The RPI/CPI figure is calculated by using the last figure that was published, 28 days before the review date. For example, if the review date is 1st April 2014, the latest RPI figure prior to 4th March 2014 will be used. The official RPI/CPI figure can be found on the Office of National Statistics website.
What to do if there is a dispute
If an occupier disagrees with the pitch fee increase, then they can pay the current amount and withhold the increase. Either party (site owner or the occupier) may make an application to the First-tier Tribunal (Property Chamber) for a determination on the amount of the new pitch fee.
Another common issue – licence fee recoverability through the pitch fee review.
Since 1st April 2014, local authorities have been able to charge a site owner an annual fixed site licence fee. This applies to ‘protected sites’ i.e. ones that do not have any restrictions on the times of year when the site can be occupied or that are exclusively for holiday use only.
The local authority must prepare and publish a fees policy before imposing an annual licence fee. Site owners can recover the annual licence fee by adding it onto the pitch fee so that it is paid, pro-rata by park home owners. It then becomes an integral part of the pitch fee which is usually increased by the RPI/CPI each year.
It had been understood that under the implied terms to the Mobile Homes Act 2013, site owners could only take into account an annual licence at the time of the first pitch fee review after the law had changed, in this case a period between 2 April 2014 and 1 April 2015.
Unfortunately, some local authorities had not published their fees policy during that period, so could not impose the annual licence fee in the first year but did so in later years. This created uncertainty, it was unclear whether site owners could add the annual licence fee to the pitch fee review after 1st April 2015.
Clarification of the legal position
In early 2017, The Upper Tribunal (Lands Chamber) clarified the issue, by issuing two related decisions in the cases of Vyse v Wyldecrest Parks (Management) Ltd  UKUT 24 (LC) and Wyldecrest Parks (Management) Ltd v Kenyon and Others  UKUT 28 (LC).
In the Kenyon case, The Upper Tribunal determined that the annual licence fee could be included in the pitch fee because the delay in invoicing the site owner was the fault of the local authority.
In Vyse, the Upper Tribunal decided that: the starting point for a pitch fee review is the RPI but also allows other ‘weighty’ factors to be considered unless it would be unreasonable to do so; The pitch fee is a composite fee and the components should not be treated separately; The Upper Tribunal felt that it would be unreasonable to say that any changes in the site licence fee could never be passed on to the residents.
In Vyse, however, the increase in annual licence fee was not allowed as it was considered the increase was related to the poor management of the site.
The important point here is that it is now clear that the site owner can include the annual licence fee in the pitch fee review, even if it is included in the pitch fee review after 1st April 2015.