East Devon is aiming to avoid relying on controversial estate management firms that charge homeowners fees for providing and maintaining services, such as parks.

The firms have been flagged up in a national review of the housebuilding sector, with watchdog the Competition and Markets Authority (CMA) stating that around four in every five home sold by the 11 biggest builders in 2021-2022 were subject to annual estate management charges (EMCs).

The average charge was £350, the CMA found, but it added that unplanned charges for significant repair work could cost thousands of pounds.

The charges are levied in addition to council tax, and critics say that residents are often not aware of the charges until shortly before they complete on their home purchase.

Cranbrook’s amenities were initially overseen by an estate management firm, but the town council took on its responsibilities in 2018, meaning residents were no longer subject to EMCs.

Now, East Devon District Council wants to make sure it doesn’t fall into the same trap again, and has launched a strategic review into how it delivers services for residents, particularly those of its second new town which is being planned.

Andy Wood, assistant director for growth, development and prosperity at the council, said East Devon was in a “rare position” of delivering two new towns concurrently, and that he only knew of South Cambridgeshire taking on a similar challenge.

“But it isn’t just about building houses, but about how those communities thrive and the necessary infrastructure and services needed for that,” he told East Devon District Council’s cabinet meeting.

He added that the Planning Advisory Service, part of the Local Government Association (LGA), had been commissioned to ensure East Devon was in a strong position to expand Cranbrook and deliver the new town in the west of the district as well as various employment sites.

“One of the recommendations from the LGA is about this really key issue, looking at the role the council plays in the delivery of services and community assets,” he said.

“The CMA findings highlight the risk of what I would describe as part-privatised developments coming forward for housing estates that use estate management companies, which can be quite unaccountable and poor value for money and yet are becoming the default model.

“So, this is a real opportunity for the council to strategically review how we approach that.”

Mr Wood said the council was seeking permission from councillors for an additional £80,000 to help it complete this review, as well as a review into the governance of Cranbrook – essentially looking at how the community is managed between the town, district and county councils.

Councillor Kim Bloxham (Independent, Cranbrook) welcomed the report, and hoped “lessons could be learned” from Cranbrook.

“The estate management company experience of Cranbrook was expensive and totally ineffective, and it left a legacy of poor maintenance and remediation once the town council assumed responsibility,” she said.

“The town council has been approached by other areas that want to move away from management companies but only one other has managed to do so, as it has proven to be hard.

“The best advice is to not go there in the first place and find a way to manage open spaces locally.”

Her ward colleague, councillor Kevin Blakey (Independent, Cranbrook) said estate management companies had become a “national scandal” and feared things could only get worse.

“To say they do not offer value for money is an understatement, I would avoid them like the plague,” he said.

“Now we need to consider what can be done instead for large scale open spaces, and this authority will have to think carefully about how maintenance is managed and funded.”

He added that council tax had risen in Cranbrook due to the costs of managing a country park there, but that the outcome was still better than continuing to be involved with an estate management company.

Leader Paul Arnott (Liberal Democrat, Coly Valley) said that without the “persistent contributions” from the town councillors, “we probably wouldn’t have got around to doing this”.

“As it turns out, it is something that has been extremely good in that we are rectifying a wrong that was done to the new community and we are now able to use that experience to hopefully get it right as the new community continues.”

The proposal to conduct the review provide the requested £80,000 was passed, but did include an amendment from Councillor Olly Davey (Green Party, Exmouth Town) that the authority’s incoming chief executive and other relevant planning and development staff and councillors urgently review the report and propose any additional recommendations to cabinet.