Service Charges on new build developments

Jimmy_Marz

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

Are you sure that's what was going on? I'm not aware of any lenders who have a blanket policy of not lending to properties which have a management fee - they wouldn't be doing much business if they did.

Definitely, I actually found out by accident too because I should have used a "new build specialist" at the mortgage broker - surprise surprise, a contact recommended by the builder - but I just went via the main phone number on the broker's website. Got a mortgage offer but then all of a sudden got told they've just realized it's got management fees and offer withdrawn. Not happy I called the lender directly and not via the broker, they told me it's related to the management fees creating too much unknown about your future abilities to sell the property or pay the monthlies. 

I'll add.....this was specific to my developer, I guess their management fee contract was heavily not in my favour. It could be different for other developers / contracts. But that's one well known bank, and one well known building society who have both said no. 
I did get an offer for a mortgage from a different lender and unsurprisingly the rate was higher. Caution everyone and please please read the terms of the management fee agreement, do not let your solicitor or the sale reps pass it off as "its fine all developments do this"

SallyDucati

I do think it depends on the type of management company/service charge.
Management Companies that are run by the developers or a company they employ for the developers benefit - no I would run away from.
Resident Management Companies, which are jointly owned by all the freeholders and they have control - not a problem.  I live on one such estate, the park/play area is much better looked after than any local council run one round here.  We know what our money is spent on exactly, and the Directors (who are nominated Freeholders) can control what is done when.
I agree paying the Council the exact same Council Tax is a little bit galling, but not enough to have stopped me buying this house.

Nymbus

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

Is there not an important principle here? If people refuse to buy these houses with charges then the system will collapse and councils will again adopt the estates. 

How will the council magic up the money to look after the green spaces on new build developments?? It’s all well and good saying that if people don’t buy new build houses that the council will have to pay for them but the money has to come from somewhere.
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.

The council is charging the same council tax on a managed estate whilst doing less on these estates than on others that it has adopted. I currently live on a council adopted area with green spaces. I own my own home - we are creating a two class system. This is not something I am going to fuel. I’d feel forever fleeced if I bought on a mew build estate. 

I recognise the problems councils face but it is not a solution to simply start charging some Homs owners twice. It still remains the case that councils are making more money from council tax payers on managed estates, as they charge exactly the same amount as on other adopted sites without any reduction. I will continue to voice my concerns. I have pulled out of a purchase on a new build estate for this reason. If I want to view a house that is advertised by an estate agents I also ask the agents to confirm a “ newer” property does not have a management fee. I have declined to view two houses for this reason.  I am not going to be fleeced in this way. 

davidmcn

Nymbus said:

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

Is there not an important principle here? If people refuse to buy these houses with charges then the system will collapse and councils will again adopt the estates. 

How will the council magic up the money to look after the green spaces on new build developments?? It’s all well and good saying that if people don’t buy new build houses that the council will have to pay for them but the money has to come from somewhere.
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.

The council is charging the same council tax on a managed estate whilst doing less on these estates than on others that it has adopted. I currently live on a council adopted area with green spaces. I own my own home - we are creating a two class system. This is not something I am going to fuel. I’d feel forever fleeced if I bought on a mew build estate. 

I recognise the problems councils face but it is not a solution to simply start charging some Homs owners twice. It still remains the case that councils are making more money from council tax payers on managed estates, as they charge exactly the same amount as on other adopted sites without any reduction.

How much of a reduction would you be expecting? What proportion of your council tax do you think actually goes towards maintaining the bit of road outside your house?

Nymbus

davidmcn said:

Nymbus said:

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

Is there not an important principle here? If people refuse to buy these houses with charges then the system will collapse and councils will again adopt the estates. 

How will the council magic up the money to look after the green spaces on new build developments?? It’s all well and good saying that if people don’t buy new build houses that the council will have to pay for them but the money has to come from somewhere.
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.

The council is charging the same council tax on a managed estate whilst doing less on these estates than on others that it has adopted. I currently live on a council adopted area with green spaces. I own my own home - we are creating a two class system. This is not something I am going to fuel. I’d feel forever fleeced if I bought on a mew build estate. 

I recognise the problems councils face but it is not a solution to simply start charging some Homs owners twice. It still remains the case that councils are making more money from council tax payers on managed estates, as they charge exactly the same amount as on other adopted sites without any reduction.

How much of a reduction would you be expecting? What proportion of your council tax do you think actually goes towards maintaining the bit of road outside your house?

Again I pay council tax like everyone else. Those of us on council adopted sites do NOT have to be part time accountants. The council tax should be reduced by the amount of the estate charge. 

GDB2222

Nymbus said:

davidmcn said:

Nymbus said:

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

Is there not an important principle here? If people refuse to buy these houses with charges then the system will collapse and councils will again adopt the estates. 

How will the council magic up the money to look after the green spaces on new build developments?? It’s all well and good saying that if people don’t buy new build houses that the council will have to pay for them but the money has to come from somewhere.
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.

The council is charging the same council tax on a managed estate whilst doing less on these estates than on others that it has adopted. I currently live on a council adopted area with green spaces. I own my own home - we are creating a two class system. This is not something I am going to fuel. I’d feel forever fleeced if I bought on a mew build estate. 

I recognise the problems councils face but it is not a solution to simply start charging some Homs owners twice. It still remains the case that councils are making more money from council tax payers on managed estates, as they charge exactly the same amount as on other adopted sites without any reduction.

How much of a reduction would you be expecting? What proportion of your council tax do you think actually goes towards maintaining the bit of road outside your house?

Again I pay council tax like everyone else. Those of us on council adopted sites do NOT have to be part time accountants. The council tax should be reduced by the amount of the estate charge. 

Many of the people who live on these new-build estates have school age children  - far more than the average for the council. Schooling is the single largest expense for nearly all councils. Clearly, if the council tax is to be adjusted downwards to allow for estate charges, it should be adjusted upwards to allow for schooling.  Plus larger families produce more waste than an average family. Their cars are heavier than average, thus causing more wear on the road surface. And so on.

teachfast

GDB2222 said:

Nymbus said:

davidmcn said:

Nymbus said:

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

Is there not an important principle here? If people refuse to buy these houses with charges then the system will collapse and councils will again adopt the estates. 

How will the council magic up the money to look after the green spaces on new build developments?? It’s all well and good saying that if people don’t buy new build houses that the council will have to pay for them but the money has to come from somewhere.
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.

The council is charging the same council tax on a managed estate whilst doing less on these estates than on others that it has adopted. I currently live on a council adopted area with green spaces. I own my own home - we are creating a two class system. This is not something I am going to fuel. I’d feel forever fleeced if I bought on a mew build estate. 

I recognise the problems councils face but it is not a solution to simply start charging some Homs owners twice. It still remains the case that councils are making more money from council tax payers on managed estates, as they charge exactly the same amount as on other adopted sites without any reduction.

How much of a reduction would you be expecting? What proportion of your council tax do you think actually goes towards maintaining the bit of road outside your house?

Again I pay council tax like everyone else. Those of us on council adopted sites do NOT have to be part time accountants. The council tax should be reduced by the amount of the estate charge. 

Many of the people who live on these new-build estates have school age children  - far more than the average for the council. Schooling is the single largest expense for nearly all councils. Clearly, if the council tax is to be adjusted downwards to allow for estate charges, it should be adjusted upwards to allow for schooling.  Plus larger families produce more waste than an average family. Their cars are heavier than average, thus causing more wear on the road surface. And so on.

Schooling is paid for by devolved funding from the ESFA, not council tax. And more children are now in Academies than state schools, negating this even more. 

If councils don't adopt the roads then people paying council tax should get a reduction, not by all of the maintenance but by some of it. Anything else is simply unjust. 

comeandgo

Why should people get council tax reductions?  The council don’t own the land so if there was no management company then the land would get no attention from the council anyway.

Rachlou_25

I owned a new build from 2012-2020 and I was told the management fee would be ‘roughly’ £250 a year, from year 1 it was around £350. Not a disaster but definitely more than I was led to believe.
Fast forward to 2019 and the management contract was awarded to a new factor, I got an email about it like ‘same service for the same cost, nothing to be worried about etc’.  The cost actually doubled.  Before I sold, the residents were getting together to log a complaint and go through the motions of taking over the management themselves.

Management fees for new builds are common but you do feel like a blank cheque.  My fees would go up if other residents failed to pay their bill on time, if someone called out emergency home care etc. You can’t do much about it and you can’t lock the developer in to any kind of commitment on the fees...one of the drawbacks of a new build!

Jimmy_Marz

Sorry but I haven't used the emergency services in decades (part funded by council tax), or the local library, don't use social services, don't use many roads surrounding my village or wear them out with my bottom of the range land rover / SUV (the car of choice for the new house estate brigade) - should I therefore get a reduction in my council tax? NO.

Just because you have a management company replacing the lighbulbs or emptying the septic tank on your one little street why shouldn't you pay full council tax for everything else they provide? This whole thing that keeps coming up of not having to pay council tax if paying a management fee is a null and void argument. I've not seen a council van down my current street in years but I'm not asking for a cheaper bill.