House buying (freehold), with estate management charge and right to reenter the property - Red flag?

SouthLondonUser

Some years ago, the freehold of an almost-newbuild was sold to an investor. The insurance cost went up some 220% immediately after that. Coincidence? Methinks not. In the end a two-bed flat in that development was paying some £250 per year in ground rent, and about £1900 per year in service charge. There was no concierge, no lift, no garden, no communal areas, nothing. For reference, building insurance for a 3-level terraced housed in the area costs between £600 and £900. Luckily I have nothing to do with that flat any more. Again, the problem is not the cost itself: if the cost were known you could budget for it and take that into account when buying. The problem is the total lack of control over future increases.

In the rest of the civilised world, when you by a flat you have a say in who manages the building.
Leasehold is a feudal heritage which doesn't exist in the rest of the world. Even Scotland got rid of it - and the sky didn't fall.

ciderboy2009

This doesn't sound like a fleecehold to me - I'm assuming it's on an older property and therefore a proper rentcharge.

It might be worth looking at this page on the gov.uk site which gives information about rentcharges and how to redeem them:



https://www.gov.uk/guidance/rentcharges

Sachs

People rightly get concerned as soon as rent charge/ service charge/ estate management charge is mentioned but context is everything. I live in a freehold house and pay £90 a month toward an estate management charge.

I know exactly what I am paying for, I know why I am paying for it and I know who controls it (the residents). If I didn't know all those things I would never have bought it but these charges, particularly on estates over 10 years old, often perform an important function.

However that clause you mentioned is completely unreasonable (and probably unenforceable) and nothing like that appears anywhere in my deeds. If someone doesn't pay their charge on my estate they become a debtor and that debt is enforced through the courts - the residents association doesn't bust in your door after 3 weeks and kick you out!! xD

SouthLondonUser

Sachs wrote: »

I know exactly what I am paying for, I know why I am paying for it and I know who controls it (the residents).

This makes all the difference, though, doesn't it?

The company managing that space is controlled by the residents. Residents may appoint a third party, but if this third party starts doubling the charge every year, resident can tell it to get lost, fire it and appoint another one. That's the crux of the argument.

I know people who have bought in new developments in London, pay reasonable charges, are happy and think I am a bit paranoid. To each their own. Maybe charges will remain reasonable. But, if they don't, know you have very little recourse.