Freehold Management Company Charges

bigjim13

Hi - be very grateful for some advice!
Buying a Freehold property on a private estate of 9 houses. The Developers have set up a Property Management Company and are charging £1 per square foot for the service charge. This seems extortionate to me (it was originally £1.50 a square foot) as nothing more than grass, trees and a couple of short access roads. After complaining, they have fixed this sum for 5 years and agreed that any increases after 5 years will be no more than current rate of inflation (and this term will hold if they sell the Property Management company).
Very concerned we are being ripped off or that there may be a loop hole which might mean we are stuck with ever increasing charges if they sell the management company in future.

Any advice would be much appreciated!

G_M

how many square feet are there?

flashg67

I have a similar situation but in ours, each homeowner is a shareholder in the management co. As such, I actually took over running it for a few years, and have only just appointed a seperate company to manage the management co (IYSWIM). There are 25 houses, each paying £20 p/m to cover the management company fees, insurance, fund for repairs etc. (I gave up because so many people didn't pay and I couldn't spend time chasing them)
If yours is similar, it might be worth looking to self manage or find another company to take over.

bigjim13

Hi - thank you for replying.
Our house is 1650 sq ft (annual charge of £1650) but in total there will be about 12,000 sq ft of property across the whole development i.e. £12,000 per year to the management company - which seems a huge amount to me?

bigjim13

Thank you! They have already formed there own management company and want us to sign a Transfer document stating we will pay £140 per month(on a 1650 sq ft house). They are not allowing self management - they stated that "a residents association could get first refusal if they decide to sell". Sounds like we are getting ripped off as nothing remotely unusual about our development - a few grass verges and some trees lining the boundary!

flashg67

12k doesn't sound impossibly high but is no bargain either. Have they given a breakdown of the fee?

I think you might be stuffed as 'right to manage' doesn't apply to houses, only flats AFAIK

Set up a residents association and make them an offer? Likely be expensive to buy them out though.

Have you studied, or got a solicitor to study the wording of the title document - unlikely, but there may be something to give you some hope.

My developer couldn't wait to get rid of or management company when they left site. 12k a year is hardly going to make them millionaires.