Estate Rentcharge

monkeylizard

Hi

Myself and my wife are in the process (nearly at exchange) of purchasing a freehold house on a (currently) private estate. The house was first purchased as a new build by the current owners in 2014. The first question we asked after our viewing was whether there was any sort of estate maintenance charge - we were told that it was supposed to be £150pa but that they'd never received a demand.

We've now seen the deed of transfer, and it's written that there is an estate rentcharge to be paid to the estate management company annually. The only detail of the amount of this charge is that it must be "fair and reasonable". There are various covenants on both the management company and freeholder with regards to the rentcharge.

Our solicitor has been in contact with the vendors' solicitor to request a management pack - so far no joy (about a month now). In the meantime we've decided to do a bit of research ourselves.

We've discovered that the responsibility for managing the estate is soon to be handed over from the current management company (developer) to a managing agent. We've contacted this new agent and they've said that they can't, at the moment, say what the charge will be or what it will cover, although they estimate £200-£250pa

We also visited the estate sales office to see what they could tell us. (The house we're purchasing is on phase 2 of the development; phase 1 was completed a couple of years ago; phases 3 and 4 have not yet been started). The sales advisor said that the average rentcharge for phase 1 was around £120pa and that this would be similar for the rest of the development.

At the moment, it feels like we're in danger of writing a blank cheque. It's worrying that there's no mention of a maximum charge, or a maximum per annum increase. It appears that, as far as freehold properties are concerned, "fair and reasonable" count for very little.

We obviously like the house, and it's possible that the rentcharge could be around the £250 mark and stay there for years to come. We wouldn't have a problem with that, as we appreciate that the public areas of the estate need to be maintained. If that were to be the case then we wouldn't want to miss out on the house.

However, it appears there's no guarantee and, along with the increase in charge, there are worries that it could affect the future value of the house and how easy it is to sell. To be honest, alarm bells are starting to ring, and we don't want to be complaining years down the line if it all goes wrong knowing now that we could be taking a risk.

If anyone has any experience of signing up for something similar (or deciding not to) then any thoughts or advice would be much appreciated.

Many thanks for your time.

ML

saajan_12

Is this a rent or a service charge?

Rent is usually a pre-determined amount paid to the freeholder. It doesn't have to reflect a particular cost, so a 'reasonable amount' is hard/impossible to judge.

Service charges are for the costs to maintain the common areas. Unforseen repair issues mean it's impossible to give a 'maximum charge' but the management company should be able to back up charges with actual costs. This can include common area building repairs, roof repairs, paving, gardening, electricity bill, cleaning..

monkeylizard

Thanks for replying.

It's listed in the transfer deed as an 'estate rentcharge', but it covers the costs of maintaining the shared public areas on the estate. The property is freehold, so electricity, cleaning, etc aren't covered.

monkeylizard

Just a quick update for the benefit of anyone else in a similar position...

Our solicitor investigated further and confirmed that there was nothing in writing to prevent the charge increasing to whatever level the managing agent demands. Apparently there's very little that a (freehold) owner can do to challenge the cost.

Based on that, the solicitor said that she had to recommend that we pull out of the purchase which, reluctantly, we have done.