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Service Charges on new build developments
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HanPop said:Nymbus said:nik_k said:FWIW, we're purchasing a new build, and, although subject to a rent-charge, this does not cover the roads as these will be adopted by the local authority. Therefore, the whole issue of service charges etc needs to be considered on a development by development basis, as what's included/not included will vary
Also someone else mentioned that it was harder to get a mortgage on a property with a management company/service charge attached - this is my second new build property and there has never even been mention of an issue and we’ve had a mortgage with Nationwide and now NatWest.0 -
76Shippers said: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.0 -
Nymbus said:HanPop said:Nymbus said:nik_k said:FWIW, we're purchasing a new build, and, although subject to a rent-charge, this does not cover the roads as these will be adopted by the local authority. Therefore, the whole issue of service charges etc needs to be considered on a development by development basis, as what's included/not included will vary
Also someone else mentioned that it was harder to get a mortgage on a property with a management company/service charge attached - this is my second new build property and there has never even been mention of an issue and we’ve had a mortgage with Nationwide and now NatWest.0 -
We looked at a few new build houses, and they all had a service charge. When we asked about what they could increase it by annually, we never got an answer. The best we had was 'Well if they try and put it up by too much, then everyone on this development is a professional, so you'll all get together and take legal action.'
Sorry, not a chance. As it happens a friend purchased a house with a service charge on a new build estate. Can't remember the exact figures, but it was something like Year 1: £150, Year 2: £300, Year 3: £500, then in Year 4, they were all sent a bill for 4 figures as something to do with the sewage pump had broken and it needed a new one.
In the end we brought a house with no service charge, and unless something happens (I've heard the government is going to bring in rules around service charges) then I'll never buy a house with a service charge.0 -
The naivety of some on here is truly staggering:
1) You're really going to trust a solicitor who was recommended to you by your developer? My goodness, even without commissions that's beyond naïve. They are not working for you, they want the huge business from the developer for the next site and the next etc. Think they'll give the developer a headache with lots of questions?
2) I was about to buy a new build with management fees until a lender said they won't lend. Think about it, a massive multinational bank said NO. That should set off huge alarm bells. Why wouldn't they lend? Because there's a large risk they won't get their money back and it's purely down to these contracts that you sign (probably after your solicitor said "sign it'll be fine").
I have walked away. This will be GroundRents scandal 2.0 in the future and will seriously affect your ability to sell your home
and....in answer to someone saying "smart alecs will say it's your fault".....yes it is, you signed !!!0 -
AlwaysPondering said:We looked at a few new build houses, and they all had a service charge. When we asked about what they could increase it by annually, we never got an answer. The best we had was 'Well if they try and put it up by too much, then everyone on this development is a professional, so you'll all get together and take legal action.'
Sorry, not a chance. As it happens a friend purchased a house with a service charge on a new build estate. Can't remember the exact figures, but it was something like Year 1: £150, Year 2: £300, Year 3: £500, then in Year 4, they were all sent a bill for 4 figures as something to do with the sewage pump had broken and it needed a new one.
In the end we brought a house with no service charge, and unless something happens (I've heard the government is going to bring in rules around service charges) then I'll never buy a house with a service charge.0 -
I’m sorry but I think some people in this thread are being wholly unfair on people who buy a new build with service charges/management fees.
In some cases new build properties are the only way for people to get into the property ladder with the help provided by government schemes. Is it their fault that they are then subject to these service/management charges which could exponentially increase over the years? No... not in my opinion because otherwise they wouldn’t be able to buy a property at all.
It’s far more a reflection of greed and blind eye by developers, management companies and councils...
We should all be trying to raise people up rather than put those down that have to pay these fees by calling them ‘stupid for signing the contracts in the first place’...
We all know it’s unfair so why aren’t we doing anything about it?1 -
I bought my new build in 2017. My service charge is around £500 a year. I bought it because there was a scheme similar to help to buy run by the Council and its the only way I would have been able to afford my house.
I would say if you don't need any of these schemes don't buy a new build. In my opinion the service charge is a rip off.
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Jimmy_Marz said:2) I was about to buy a new build with management fees until a lender said they won't lend. Think about it, a massive multinational bank said NO. That should set off huge alarm bells. Why wouldn't they lend? Because there's a large risk they won't get their money back and it's purely down to these contracts that you sign1
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davidmcn said:Jimmy_Marz said:2) I was about to buy a new build with management fees until a lender said they won't lend. Think about it, a massive multinational bank said NO. That should set off huge alarm bells. Why wouldn't they lend? Because there's a large risk they won't get their money back and it's purely down to these contracts that you sign
Gosh some people are so condescending on this thread, and I agree with another poster who said that a new build may be the only way for a buyer to get on to the property ladder. It certainly was the case for us as we could only afford a new build shared ownership property at the time, we only ever paid £10 a month charge and made £20,000 on that property which helped us step up to the next one. I do agree that people should not used the recommended solicitor and we didn’t, but in all fairness that did not prevent them from being rubbish but that’s another story.
There will always be people that buy new builds whether it is for the incentives or not, therefore it looks like service charges/management companies are here to stay. If you don’t like it don’t buy one but stop thinking everyone else who does buy one hasn’t ‘read the contract’ or must be stupid.1
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