Service Charges on new build developments

serendipizzy79

Hi all,

I'm sorry if this has been asked before but I've had a quick search and can't find anything related to my query.
We are looking to buy a new home on a Redrow development, on the Wirral. It is a large garden village type development, with council housing included etc, and a service charge, as apparently the council will not pay for maintenance anymore. We have looked at a few other developments nearby and they also have service charge (they don't always call it that, but for ease of use, lets use that phrase) ranging from £100 to £200, most of them linked to inflation. I am not surprised at the charges (after all, councils are all skint now), but my boyfriend is. He bought a new house 8 years ago on a small development (15 houses, and a few council run flats) which has no service charge, and likewise, his parents bought a new house, again on a small development (maybe 10 houses), about 5 years ago with no service charge.
So they think the service charge is the builder basically running a scam on freehold houses, and it's putting my boyfriend off. We're now at the stage where we have seen a nice house on a nice plot and I don't want to lose it, but he wants to 'research' the issue first (he is a scientist lol).
Can you help?
How many of you good people own a new home on a large development and pay a service charge, or don't? How much do you pay if so?
Thanks in advance!

Viki2410

We are in the process of exchanging on our New Build in Buckshaw Village - Chorley - and our yearly service charge is £150. When you think that all the councils will do is empty the bins, I personally think it is worth it. Plus we have seen how clean and well kept the area is by the management company, so to us £12.50 a month is worth it. I personally think we should pay less council tax but that will never happen

Our breakdown of costs is as follows:

Ground maintenance - £105.00
PL Insurance - £1.50
Management Fees - £26.44
Audit & Accountancy Costs - £2.20
Company Secretary - £0.78
Sundries - £2.17
Minor Repairs - £1.80
Electric Replaires/lights/Bulbs - £1.50
Electricity - Common parts - £1.50
Health & Safety Inspection - £0.42
Tree Reserve/Replanting - £2.00
Reserve Fund - £4.69

Hannah2

Hi

I have posted a few comments on maintenance charges lately just down to us pulling out of a Redrow house once we realised what the charges involved. This doesn't mean don't do it, but you need to know exactly what you are agreeing to pay for and what is involved. I have bought new builds previously and not encountered this, but it is more and more commonplace now.
Copied below is my response to a previous post (i don't know how to link specific posts)....


"Be careful with the management company and what you are actually signing up for. Are the management company due to take over the maintenance of the road, or are the council due to adopt it?

Re. the maintenance charges, have a look into the company that they are using (Greenbelt?) and research feedback/reports on the company. Do the maintenance company own any land it is "employed" to maintain? Make sure you are aware as to what the annual fee will cover and what ad-hoc charges there might be (vandalism, play equipment maintenance, tree/shrub replacement) and if they plan to apply deadlines to pay these extra charges (eg 7 days) and late payment fees if you dont!

Be sure of the area/map that the fees will cover, is there woodland involved, open spaces, public areas, playground equipment? Make sure you plan over the next 5 years or more for the fees to increase.

Check what you need to do with the maintenance company in order to transfer your details to them when you buy the property - there is usually a fee involved. Also check what you need to do and how much it costs if you wish to sell your house in the future.

I would make sure you are happy to accept all the above, plus the unknown increases in costs before you go ahead. Although Freehold you are in effect purchasing a leasehold property due to being linked to a maintenance company (depending on the details on the TP1/deeds).

We pulled out of a new build purchase when we discovered what was involved with the management company (Greenbelt) and avoided buying a different new build when we discovered the road would not be adopted but would be "maintained" by a management company. Good luck!"

kingstreet

Why not research other developments near you and establish if they also have service/estate charges? That will tell you a lot more about the attitude of Wirral or Cheshire West & Chester Councils?

It's not going to help much if someone says they have no such charges but they're in Peterborough or Carlisle.

NeilCr

I do.

I have a freehold house on a mixed (flat/house) development of 69 properties.

I pay £500 per annum but we have quite big grounds to maintain, a private road and (money eating) electric gates.

We own the freehold and we employ a managing agent (which, obviously, costs). We have a management company and I am a director. So we have control of service charges.

Personally, I wouldn't buy on an estate where the residents didn't own the freehold.

mirv69

Hello, this is something that has come to light with me personally this week as I am in the process of selling my current home which is also on a development. We are a freehold house and the estate is mixed with flats/houses/ terraced etc and all on one estate. Now the tricky bit, the flats and houses which have shared communal areas, stairs, drives, gardens all pay maintenance charges to a management company. regardless if the houses are Freehold or not. The flats pay ground rent as leased but the houses that are freehold don't pay ground rent. The houses that don't have shared access/communal areas don't pay ground rent or maintenance charges. There is listed in deeds that an Estate Rent, ( different to the other two) is payable once the entire estate is handed over to the management company, This has not been paid by me or anyone else in 19yrs but can be invoked at any time. Clear as mud but just be careful to understand where you sit in the above scenarios. Pont to note, in 2037 all ground rents/ estate rents will be scrapped I think by government legislation.

serendipizzy79

Why not research other developments near you and establish if they also have service/estate charges? That will tell you a lot more about the attitude of Wirral or Cheshire West & Chester Councils?

It's not going to help much if someone says they have no such charges but they're in Peterborough or Carlisle.

Sorry, I should have made clear that we have already done this, we have visited pretty much every new build development on the Wirral at this point. I'd like the opinion of other people rather than more house builders, and we don't know an awful lot of people that own a new house.

dafa93

I have just reserved a new build detached house in Bedfordshire on a fairly small development, with 105 houses, detached/semis/terraced.
The maintenance fee is £150 per annum. There are a number of other developments going up in the local area, and they are all charging ground rent now regardless of Freehold or Leasehold (mine is freehold). This is your Wimpey, Persimmon, Barratt and Redrow etc

The reason is that local authorities are no longer able to adopt the roads, because of a lack of resource or something.

So it seems like this is just the norm with new builds now as councils aren't adopting them.

comeandgo

Yes, we have service charges but jointly own a lot of wooded land and streams so we need someone to look after them and arrange insurance. We are just under £200 a year and increases are in line with inflation. We, as residents, control the amount of grass cutting and work required and it's to a lot higher standard than the council.
Our council will only cut grass twice a year now.

76Shippers

My view on this having researched it when we looked at a new build.

1. These are usually tied into your deeds. Read them carefully as the ones I have seen include clauses which, if you don’t pay, mean they can take possession of your property or gain a lease on it.
2. The service charge/estate rent charge can be increased by any amount by the management company. Again, look at the deeds to see if an increase mode is stated or if it just says ‘reasonable’.

Because of 1 and 2 I was totally put off. Even if tied to inflation, imagine trying to sell a house with 10 years of (potentially uncontrolled) growth on a £400 service charge. Imagine how much extra you are paying for that house over a 20 year period.
Imagine if one year you can’t pay or miss a payment - they could, in theory, take possession of your home or place a lease on it - again rendering it unsellable.

Finally (and with apologies for the rant) today’s management companies or rent holders might be entirely scrupulous. But what if these rights are sold to another company in future? An offshore company who see it as an opportunity to make money or take possession of a load of houses.

For these reasons I walked away.

Mickygg

I’m one of those unlucky ones where I bought a house with service charges of £15 a month. They soon doubled this to £30 a month as they introduced a sinking fund for the road maintenance as the SC only covered lawns etc. When it increased they also said this was the minimum increase and may need to increase further as the road/drain cost would be considerable so a higher pool of money was needed to be built up.

I was fed up and eventually sold up and vowed never to buy one like that again. 2 houses later I did the same thing and bought a house I thought I loved which had a service charge. This time £30 a month for sewerage pump and road maintenance. I asked for a simple repair to be done in the pavement outside my house for a hole that people tripped up on.....it was never repaired despite asking probably 10 times over at least 3 years.

So a vow I now will stick to and never go back...I will never buy a house with service charges/residents fees/management fees ever again.

I have paid near £10k in such fees over the years. Ouch. _pale__pale__pale_:(