Property Management Service Charge on Freehold Property

pgregory

My partner and I have just been through an absolute nightmare, and a very costly one, when setting out to purchase a new-build in Crowthorne. The house, one of a small number of properties on a new development, is being marketed by Prospect estate agency in Crowthorne. When enquiring about the property, and during the viewing, nothing was mentioned to my partner about the fact that there was a property management company involved, and there would be some hundreds of pounds a year extra cost associated with the property in regards to a service charge for that property management. This is not something either of us had ever heard of before, even having purchased a number of houses that have shared/common resources. If it had been mentioned, it would most certainly have been noticed, because the horror stories here on this forum would have been enough to ensure that my partner never went any further than initial investigation. The cost is beyond the budget planned, and worse, it appears that the costs are entirely unregulated or controlled, and almost guaranteed to increase year on year, sometimes to to the tune of 50% or even 100%. This clearly is not something that can be undertaken when working with a limited budget, and would certainly have been grounds to walk away long before anything else happened. My partner didn't view alone, a friend accompanied her, and both are clear that the representative from Prospect mentioned nothing at all about this aspect.


Now, some months later, it comes to the surface close to exchange only due to my deep analysis of the land registry document from our solicitors. My partner contacted Prospect on a number of occassions to get clarity on the costs and details, which were slow in coming. Despite this, Prospect have claimed in recent conversations that they provided the detail shortly after the offer was made, and deposit paid, to our solicitors. By my understanding, even if this were the case, that is of no consequence, as by that point the deposit had been paid and we were tied to the purchase, we certainly didn't engage solicitors before making an offer.


As a result of this situation, we are now out of pocket a large amount of the original deposit, the solicitors costs for purchase, and significant time. Our sale is also at risk. Prospect are adamant that their representative verbally mentioned the service charge and property management company during initial viewing, which my partner vehemently disputes. Prospect have repeatedly attempted to deflect responsibility both to our solicitor, and to the developer, refusing to take any responsibility for misinformation or poor communication on their part.



So to my points. Firstly, is anyone here aware of any further avenues I can take to get Prospect to compensate us for our losses resulting from their failure? Are there any rules I'm not aware of that dictate the level to which an agency must communicate additional costs related to a purchase with the buyer, or is verbal sufficient? If not, then this feels like a weakness in the regulation surrounding estate agents, they are fully able to withold pertinent information that they fear might influence the decision to buy, and then deny that through simple claims that it was shared verbally, which is of course completely unsubstantiable.


Secondly, a word of warning to anyone looking to buy new-build, at least in the Crowthorne/Wokingham/Bracknell area. If dealing with Prospect, be on your guard, you will have to be well informed yourself, and ask questions, because they will not share anything that they feel might be detrimental to the sale. Also, be well aware that this appears to be the new norm, at least in this area, to charge council tax for the things that the council are willing to service, and then still pay more on top to an unregulated, uncontrolled property management company for those aspects the council are unwilling to take responsibility for, and more importantly, that there are no guarantees that the price you pay in year one will be even remotely representative of the ongoing price, and be mindful that this additional cost might influence your ability to sell later.

sal_III

When you are talking about large amount of money out of pocket and losing your deposit/part of it. Are you by any chance talking about a new build reservation fee, rather than deposit?

If you haven't exchanged, you can drop from the sale and you will lose the reservation fee (or part of it anyway) but this is usually in the range of £500, plus any solicitor fees paid prior to exchange which is again in the region of £300-500.

I'm afraid things like this happen and this is part of the house buying/selling process.

Also any service charge should have been on the reservation form, even if it's otherwise hidden in small print in the advertisement or not mentioned verbally during viewing.

eddddy

That EA is a member of The Property Ombudsman Scheme.

If you think the EA has treated you unfairly, you can follow the complaints process: https://www.tpos.co.uk/consumers/how-to-make-a-complaint

The ombudsman says it is mandatory for EAs to treat buyers fairly:

2. Duty of Care and Conflict of Interest

2a You must treat all those involved in the proposed sale or
purchase including sellers and buyers fairly and with courtesy

Link: https://www.tpos.co.uk/images/documents/rules-codes-obligations/residential-estate-agents/TPOE27-6_Code_of_Practice_for_Residential_Estate_Agents_A4_-_effective_from_1_Oct_2016.pdf

There are examples of the ombudsman ordering EAs to pay compensation to buyers who have aborted sales - where the EA has mislead a buyer.

But I've no idea whether your case would reach the threshold for compensation.


Here are some examples of where EAs were ordered to pay buyers compension:

https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/storage-not-included
https://www.tpos.co.uk/news-media-and-press-releases/case-studies/item/more-problems-down-below

CraftyTwinkle

It sounds like you are describing a maintenance fee which is very common with new build properties as councils are reluctant to take on the responsibility of looking after the common areas on new estates It is not the same as the Leasehold ground rent scandal where charges could double after a few years. The maintenance fee is generally payable by all properties on the development and covers the maintenance of common areas such as grassy areas, children's play areas, tree trimming etc. However, you are entitled to an annual statement from the company with a breakdown of what the money has been spent on (so in theory they shouldn't be able to increase prices just because they feel like it) and I believe if enough residents agree, you are able to change the management company if you don't feel like they are doing a good job.

With regards to the money, have you exchanged contracts yet? It sounds like you realised what was going on prior to exchange so hopefully you haven't. If you haven't then the most you will lose by pulling out is your reservation fee and if I were you, my next course of action would be to officially complain to the developer (head office rather than sales office) to try and get the reservation fee back because you weren't informed of the maintenance cost. When we reserved a new build (which we've had to pull out of for other reasons, but still to do with developer being dishonest) we had to sign a sample annual statement at the reservation meeting to confirm that we had been told about it. It was also in a fairly prominent area of the reservation documentation that we also signed so I think you would have a good case for getting your fee back.

jennhg88

It is becoming more and more common for new build developments to have their own management companies. Not something to be completely terrified of.
In the process of buying a second new build, and both times it was made very clear about the management company and projected costs at the point of reservation. In fact with the first one for a few years we only paid £1 a month.

I think others have asked the questions I have regarding the status of your purchase etc.

kingstreet

Is this charge listed on your reservation?

http://www.consumercode.co.uk/

pgregory

eddddy wrote: »

That EA is a member of The Property Ombudsman Scheme.
...

Thank you for that, I'll explore those links and see if there is any potential for making a claim through the ombudsman. I hadn't thought of that.