New Build House - Driveway

pinkteapot

Freehold maintenance charges were on BBC Breakfast again this week. The Conveyancing Association (solicitors' professional body) is calling on the government to regulate these charges, as they've done with ground rent on leaseholds.

As it stands, these maintenance charges are completely unregulated and some people have seen theirs increase significantly after the first year or two.

Once a development is complete, builders typically sell off the maintenance company to an investment company who buy it for the steady income it yields.

newbridge

FallenStar wrote: »

South East (Just outside the border of London) The developers are charging the premium, for what we are buying, 2 years ago that price would have bee laughable, now it's the norm - but because they are saying its X amount, everyone around the area get the perception theirs is worth just as much (regardless of age of house) and the normal reason is 'well since they are building shiny new houses for, let's say, £300k, i will put mine up for sale at £295k' - and the 'saving' of what could be 5/10k will be eaten up by maintenance or upgrades within a the first year anyway so there's no point.

I hope that made sense haha!

Am seeing similar pattern too...and thats in Midlands!

daveyjp

FallenStar wrote: »

Yeah it's freehold The maintenance charge is what everyone on the estate will pay - i think it's about £350 a year to help maintain the roads, lighting, green spaces etc!

Re covenant - I explicitly asked them when we had out meeting 'Do you guys (the devs) have any covenants or anything like that on the plot' and they explicitly replied with 'No, nothing from us.'

I will wait for further conversations down the line to whether i actually believe that or not...I'm going with the latter... but if they say it again i'll get it in writing.

£350 a year is not an insignificant sum of money and it will be an estimate as the estate is not yet finished.

As a very minimum you need the full wording of the contract you are entering into which backs up their demands for £350 before going further.

I would not want any generic document written by the developers solicitor as you are wide open in a few years time should a decision be made to start charging £500, 800 or even £1,000 a year. There is no regulation as to how much can be charged.

SouthLondonUser

daveyjp wrote: »

I would not want any generic document written by the developers solicitor as you are wide open in a few years time should a decision be made to start charging £500, 800 or even £1,000 a year. There is no regulation as to how much can be charged.

And that’s precisely one of the key reasons why I wouldn’t touch this with a bargepole: not just the amount, but the uncertainty. If the ground rent is high, but certain, you can price for that, and offer x% less than you’d offer on a similar property with a lower ground rent. Here, for all you know, they can increase it by 10% every year, do a lousy job, and you’d still have to suck it up.

SouthLondonUser

FallenStar wrote: »

but the reality for me is that older houses around the areas we are looking at command the exact same price as the new build (I think the common the misconception is these people see what the new house prices are, and say 'well mine is also a 2 bedroom so i should charge the same' mindset and then they all follow suit.)

That seems extremely, extremely, extremely odd.

Are you sure you comparing like for like? The number of bedrooms may be the same, but how about the square feet? Newer properties tend to be smaller.

How about gardens, garages, external space, etc?

Are you talking about asking prices or actual sale prices, which can be checked on the land registry and on rightmove?

Do you have any idea how long old and new properties take to sell? In many parts of the country, domestic (non-foreign) buyers tend to prefer older properties to newbuilds, and it is often much quicker to sell an old property than, say, a property that was newly built just ten years ago.

Also, another problem is how much help to buy has "drugged" property prices. I have seen a few cases in London of HTB newbuilds selling for a good 20-25% more than "ex-newbuilds", ie flats builts just 10-12 years ago, and which it would cost very very little to bring to the same finishing standards. Methinks the main reason is help to buy: it may well be that quite a few buyers could not have afforded, say, to buy a £400k non-help-to-buy flat, but could afford a £480k help to buy one. Either that, or people are totally nuts (which may also be). The big question is: will you recover that premium after 10 years? I very much doubt that, but to each their own.

Yalpsmol

£350 a year is more than the service charges and ground rent added together for my leasehold property....as someone else said, this isnt insignificant!