Estate management charge/service charge in new build

Machara

We are purchasing a new build. Valuation has been carried out but property came back as "unsuitable security" because it has something called an "estate management charge" attached to it which means that once we purchase the property, we will be paying fees to the site ongoing. The mortgage lender are not happy with this as they say if we were not to pay the service charge in future, it could allow the service company to take possession of the property. They have said there is a form/letter that can be filled out with our solicitor that is binding and covers them and us from this estate management charge that may arise in future (Notification clause). This then needs to be sent to the valuer to enable them amend their report. Is this something anyone here has come across or encountered? This is basically what is holding up our mortgage offer. Any comments/advise/suggestions are welcomed.

Confused789

I have no advice I'm afraid. The new build we are buying has its valuation tomorrow for the mortgage company so if the same happens I will let you know. Who are the builders?

jamielutz1987

@machara Unfortunately, this is known issue. https://www.mortgagestrategy.co.uk/news/mortgage-prisoner-risk-over-freehold-charges/?nocache=true&login_errors[0]=invalidcombo&_lsnonce=f785592fd4&rememberme=1

Are you using a broker?

upthegarry

we have a new build with an estate charge (something like £300 a year) but have had no issues with anything like you have mentioned 

[Deleted User]

Ive never come across this although i only do maybe 10 new build cases a year.   Most sites have estate charges.   Maybe there is something specific in the wording that the lender doesnt like.  If its a smaller specialist lender then they are less likely to take risks on non vanilla properties

Machara

Many thanks @ jamielutz1987 It was good to see some info on this. Yes we are using the services of a broker. The builders are David Wilson Homes.

gwynlas

Most new developments have communal areas, roads pavements etc covered by a service charge as local councils cannot afford to adopt them..It is up to the purchaser and their lender to decide if the service charges are reasonable.

[Deleted User]

Ive got a feeling this is a rent charge, which does indeed allow the company to take possession. Ive heard this before with David Wilson homes. There was a long thread about it. I’ll try and find it 

[Deleted User]

Here it is 
Also a few posts down in this thread there is another reference to rent charge on a David Wilson home 

https://forums.moneysavingexpert.com/discussion/6157991/estate-rent-charge-is-this-something-we-should-walk-away-from-buying-because-of

Nymbus

gwynlas said:

Most new developments have communal areas, roads pavements etc covered by a service charge as local councils cannot afford to adopt them..It is up to the purchaser and their lender to decide if the service charges are reasonable.

Is this ever reasonable? Should legislation not be passed to force councils to treat ALL homeowners the same and adopt?

csgohan4

Nymbus said:

gwynlas said:

Most new developments have communal areas, roads pavements etc covered by a service charge as local councils cannot afford to adopt them..It is up to the purchaser and their lender to decide if the service charges are reasonable.

Is this ever reasonable? Should legislation not be passed to force councils to treat ALL homeowners the same and adopt?

firstly necroposing

secondly who do you think pays in the end? Expect your council tax to sky rocket