Freehold property - Leasehold conditions

Swami_Trinel

Having got reasonably excited about the prospect of my new build freehold property I've just read through the TP1 from my solicitor and it contains a long and onerous list of restrictive covenants that prohibit some of the ideas I had; converting the garage to living space, erecting a summer house, building raised borders and even feeding the birds!! Even more concerning is the service charge that the management company reserve the right to adjust as they seem reasonable, and as often as necessary. 
This just strikes me as leasehold by the back door now that buyers have got wise to the conditions in leases, but I didn't expect to find all this with a freehold. Not only would I be concerned about an unlimited service charge, but I'm also concerned about the ability to sell the property in future.
I wonder what experiences other forum users have of this situation. I'm particularly upset by this as we'd set our heart on this property but these restrictive covenants seem too restrictive. 

greatcrested

Very common these days on new build developments. Basically a way for the builders to make extra £.

I wouldn't touch wih a bargepole unless no other option.

You might find developments with fewer, or less stringent, covenants, but if you want a no-strings-attached freehold, look at older properties.

davidmcn

If you're only ever going to set your heart on a newbuild (or even just a vaguely modern) property then it's going to be much the same story anywhere else.

NeilCr

They work for some of us

I've lived in a freehold house on an estate now for thirteen years. I love it - as do most of my neighbours. The covenants don't bother us (some of them have drifted quietly away) and we own the freehold of the estate so we set the service charges ourselves

It's horses for courses. Personally, I'd only buy on a new build estate if the residents owned/or will be owing the freehold. Only you can decide which factors are the most important to you. In my case this house was by far the best one for me in the best location in the town I was moving to

csgohan4

I live in a freehold with peppercorn rent and service charges around 180 a year tops but no limit. We are with first port although their reviews on line are not so good.

As above, if I had a choice I would go completely Freehold with no service charges, but personal preference and I have no regrets at this time, until I get a 20k bill for something

The house was built in 2004, so you would probably need to find a house older than that or check the leases carefully

eidand

If you can avoid .... run and don't look back

OldMusicGuy

If you want a new build, this will be a condition of having a new build (unless you buy a one-off build on its own plot). Even if the house itself is freehold, all developments have some common areas that need to be maintained (and thus will be subject to maintenance charges and possibly rentcharges).

The best option (and what you should look for) is where the freehold of shared areas is owned by a residents management company, which means the residents all share the freehold of the common areas and are responsible for how it is run. However, these arrangements are rare. In most cases, the development company keeps the freehold of the common areas and then uses a third party management company, who are often pretty awful. You are right to be concerned about escalating costs and management fees, the management company on our development was truly awful and overcharged us and even charged us for unnecessary work and work not carried out. It took quite a lot of time and effort getting all their errors corrected. So look carefully at how management fees are calculated and charged.

The restrictive covenants themselves can vary. For our previous house, we could not build conservatories or extensions for five years after the properties were built. There were a number of other restrictions as well. None were too onerous and most were designed to keep the estate looking "similar" to how it was built. Some people would be happy with the fact that the neighbours won't be painting their houses purple, whereas others might see it as an infringement of their human rights that they aren't supposed to paint their house purple.

The other thing to bear in mind is that most of these covenants will be hard to enforce. Once the development is complete and the developers are gone, they don't really care what the residents get up to despite all these covenants. We never had anyone from the freeholder visit the development after it was completed, and the management company were so rubbish they had no idea what covenants were in place. As long as the residents all get along ok, no-one will care too much about minor breaches. 

Also, one thing to look for is are the roads being adopted by the LA. If not, this will add to the annual costs.

We lived for 20 years on a development with many of these issues and although dealing with the management company was a right pain at times, it did not stop us enjoying living there. It didn't hinder the sale of the house, although the buyers were moving from a new build where they had a similar arrangement in place so it didn't bother them. 

I always said I would never move to another new build, but we are just waiting to move into another new build! However, there are very few covenants, there will be a residents management company and the LA is adopting all the roads and footpaths. So no problems with this one. 

OldMusicGuy

csgohan4 said:

I live in a freehold with peppercorn rent and service charges around 180 a year tops but no limit. We are with first port although their reviews on line are not so good.

You could be in for trouble with FirstPort. You need to check your bills very carefully. We found them overcharging us and also charging us for work they never carried out. We had many problems with them.  

AdrianC

Swami_Trinel said:

Having got reasonably excited about the prospect of my new build freehold property I've just read through the TP1 from my solicitor and it contains a long and onerous list of restrictive covenants that prohibit some of the ideas I had; converting the garage to living space, erecting a summer house, building raised borders and even feeding the birds!! Even more concerning is the service charge that the management company reserve the right to adjust as they seem reasonable, and as often as necessary.

Those types of covenants are mostly things that the developers put in there to keep the estate consistent in appearance while they finish selling. The last thing they want is potential buyers going "But I want one like that..." and pointing at a change that's been done since you moved in. Once they've sold and moved on, they won't care.

Feeding the birds is likely to be there merely as a backstop if somebody turns out to be a mad-pigeon-lady who becomes a H&S nightmare for their neighbours.

 The service charge is payment for the work they do to maintain the common areas - the roadways, the nice pretty grassed areas, etc. The council won't adopt them and maintain them from your council tax, like older roads are, so somebody's got to pay. You may not think the service charge accounts good value, of course, but that's a different question...

I'm particularly upset by this as we'd set our heart on this property but these restrictive covenants seem too restrictive.

Stop looking at estate identikit newbuilds, then. Seriously. This kind of thing comes with the territory.

princeofpounds

Yes this is really leasehold in disguise in many ways, thanks to your developers and your councils it's become very common for newbuilds to pile on onerous covenants and service charge arrangements.

It's true that a lot of these will be about preserving the marketability of the estate until all the phases are completed and sold, and that the developer won't care about enforcing many of these covenants beyond that. 

But there are some that spread beyond that. The two things you have to watch out for in particular are potential for abuse of service charges, and covenants without sunset clauses that restrict future development of your home; things like having to obtain permission to extend (guess what gets permission... £s). 

rachel230

 Sorry but you are on a hiding to nothing. New Build estates/shared Ownership homes are monetised by pension funds and faceless corporations. It is an uncapped and unregulated market. *Your * home is *their * investment. Be prepared to have your wallet wide open for them to take from as much as and whenever they like. Furthermore, leaseholders have very little redress and only through FTT which is a nightmare at best. Freeholders- or fleeceholders as they are otherwise known- do not even have this questionable safety net. You have no rights at all to challenge rapidly growing estate/service charges.  First Port are horrendous. But then the vast majority are too. If you want to relinquish financial control over your own home and be at someone else's financial mercy in an unregulated market, then go ahead. Me - I'd read up, research and run. https://nationalleaseholdcampaign.org https://m.facebook.com/groups/186999621645061/?ref=group_header&view=group