Set of terms in Deeds for new build, can anyone help?

OldMusicGuy

davidmcn said:

Common repairs would be decided among the people affected. So if it's a shared fence between you and your neighbour, it's you and your neighbour who need to decide. If it's something shared by the whole development (like a private road) then it's everyone collectively. Unless there is some other mechanism described.

This is all normal stuff.

Yes, it's all "normal stuff" but you could be exposed to continually escalating management fees and overcharging (we were). If there is a third party management company, the residents have no say in what work is undertaken or how it is carried out. If the third party management company does things that the residents do not think are reasonable, their only recourse may be to take the management company to the Property Ombudsman. We had to do that twice to get the management company to correct billing errors and also to stop undertaking unnecessary work.

That's why you need to understand what your exposure to all of this is and decide before you move forward if you want to take it on. If your conveyancing solicitor is any good they will highlight all of this, but many will just say this is all kind of "normal stuff" without highlighting potential concerns.

daveyjp

Some shared 'areas' can include significant structures, especially flood and water management with holding tanks, ponds, drains, pumping stations etc, all of which will need maintenance at some point.  Local water company may take ownership, but in many cases they remain private.

You really do need a schedule of what shared facilities there are, who owns them, how they are managed and how much it will cost.  For 'freeholders' on new estates the system is currently largely unregulated and sharks swim in the waters.

buel10

Quick one - Thank you so much!! We pulled out of a previous purchase because they had a management company and the 'green area' was to be maintained and repaired by the estate - for me, a huge 'no no', hence me specifically asking these developers if there is a management company and they are adamant there is not?

OldMusicGuy

buel10 said:

Quick one - Thank you so much!! We pulled out of a previous purchase because they had a management company and the 'green area' was to be maintained and repaired by the estate - for me, a huge 'no no', hence me specifically asking these developers if there is a management company and they are adamant there is not?

You need to make sure you understand the difference between a residents management company and a third party management company. The developer may say there is not a "management company" when they mean there is not a residents management company. However, they might not include a third party management company in this definition, because they are simply appointed as an agent of the freeholder of the common areas. The developer will want to hide as much as possible about the situation before you get emotionally invested in the property.

You need to find out who owns the freehold of any common areas, and who is responsible for maintaining them. Can you answer those questions now? If not, you need to find out.

rachel230

The new build estate model of today is a very different beast. The model is set up to monetise your home for the benefit of investment companies and large corporations by way of onerous ground rent terms, estate charges, service charges, permission fees etc

OldMusicGuy

rachel230 said:

The new build estate model of today is a very different beast. The model is set up to monetise your home for the benefit of investment companies and large corporations by way of onerous ground rent terms, estate charges, service charges, permission fees etc

Not always. If there's a residents management company, this is not the case. And sometimes the charges are reasonable. But in many cases, the terms can be onerous and open to abuse. I think this is more common with the "volume" developers building large estates.

That's why anyone buying a new build needs to go in with their eyes open and properly understand what they are getting into. 

rachel230

@OldMusicGuy
It is notoriously difficult, time consuming and expensive to set up an RMC on these large, mixed use estates.
Furthermore developers are finding many ways/loopholes to block this right e.g. a certain % of commercial use, co-joined garage areas, linking units in different ways etc
Also some developers are now selling with managing agents actually embedded in the deeds.

OldMusicGuy

rachel230 said:

@OldMusicGuy
It is notoriously difficult, time consuming and expensive to set up an RMC on these large, mixed use estates.
Furthermore developers are finding many ways/loopholes to block this right e.g. a certain % of commercial use, co-joined garage areas, linking units in different ways etc
Also some developers are now selling with managing agents actually embedded in the deeds.

It's very  unlikely you could set up a residents management company on an existing estate, because you would have to get the freeholder to sell the land (which is unlikely, this is often sold to investment companies). Unlike leasehold flats, there is no statutory right for freehold residents to set up an RMC if they are unhappy with the way the common areas are being managed.

However, that was not the point I was making. Some new builds have a residents management company in place. I know, because we are buying one that does. Once the development is complete, the freehold of the common areas transfers to the residents management company, and all residents are shareholders. Therefore we will own the land and are in charge of maintaining the common areas (and thus control the costs). On this development there restrictive covenants are pretty minimal, there is a residents management company in place and all the roads and footpaths are being adopted by the LA.

This is one of the reasons I was prepared to accept moving to this house. It's a really good setup for a new build. That's why I keep saying it's important to understand what the specific arrangements are for any development you are considering rather than just make blanket assumptions that all new builds operate the same way. 

NeilCr

OldMusicGuy said:

rachel230 said:

@OldMusicGuy
It is notoriously difficult, time consuming and expensive to set up an RMC on these large, mixed use estates.
Furthermore developers are finding many ways/loopholes to block this right e.g. a certain % of commercial use, co-joined garage areas, linking units in different ways etc
Also some developers are now selling with managing agents actually embedded in the deeds.

It's very  unlikely you could set up a residents management company on an existing estate, because you would have to get the freeholder to sell the land (which is unlikely, this is often sold to investment companies). Unlike leasehold flats, there is no statutory right for freehold residents to set up an RMC if they are unhappy with the way the common areas are being managed.

However, that was not the point I was making. Some new builds have a residents management company in place. I know, because we are buying one that does. Once the development is complete, the freehold of the common areas transfers to the residents management company, and all residents are shareholders. Therefore we will own the land and are in charge of maintaining the common areas (and thus control the costs). On this development there restrictive covenants are pretty minimal, there is a residents management company in place and all the roads and footpaths are being adopted by the LA.

This is one of the reasons I was prepared to accept moving to this house. It's a really good setup for a new build. That's why I keep saying it's important to understand what the specific arrangements are for any development you are considering rather than just make blanket assumptions that all new builds operate the same way. 

This

On both new build estates I have bought on the builder has been more than happy to pass the freehold on to a RMC. One charged, one didn't

I think, as said upthread, that there is a difference between the big builders and the smaller local ones. As OldMusicGuy says it's about doing your research and not making sweeping statements about new build estates

princeofpounds

Personally I think it's pretty scandalous that councils have got away for so long with refusing to adopt roads and common areas that they themselves have approved. It creates a two-tier society, as it's effectively just a higher council tax for the new developments. That's on top of all the arbitrary Section 106 bungs they have doubtless received to give the go-ahead.