Right to buy service charges

bandit_12

Hi.
I am thinking of purchasing my council house. This is a freehold property. I have just received my valuation, but am confused over maintenance charges. I do not pay any charges as a tenant, but apparently by buying I am supposed to pay £19 per year (reviewed annually) for grounds maintenance, £500 per year for estate maintenance, such as work to solid surfaces, pavements, paths, kerbs etc (also reviewed annually), and 10% management fees. I don't understand this at all. As far as I am aware this is what my council tax already pays for. Why all of a sudden to they expect me to pay extra for the upkeep of the whole council estate?

FtbDreaming

Is it a newish build house? Maybe what all the houses have to pay on the estate but you’re not currently as you’re in a council house 

davidmcn

Presumably because even if owned by the council those areas are considered "private" to that development rather than having been adopted by the council (for the benefit of the public as a whole). 

bandit_12

It's always been a council estate and there are no private areas as such. All houses are either council, or ex council. Mainly houses with a few flats/bungalows for the elderly. It's not a new estate either. At least 40 years old and consists of about 5 different roads. I just don't get what it is I am supposed to pay for.

FtbDreaming

Well there’s not much room for negotiation with rtb purchase so you either take it or leave it. 

I’m buying mine now and there’s no fees or anything for the estate but they do own a park / play area inbetween the houses so I suppose technically they could charge for the communal use of their facilities, lots of London areas and new build estates have these charges. 

AdrianC

bandit_12 said:

I am thinking of purchasing my council house. This is a freehold property. I have just received my valuation, but am confused over maintenance charges. I do not pay any charges as a tenant

Because your landlord pays it. It's the same for all leasehold properties, even privately rented.

but apparently by buying I am supposed to pay £19 per year (reviewed annually) for grounds maintenance, £500 per year for estate maintenance, such as work to solid surfaces, pavements, paths, kerbs etc (also reviewed annually), and 10% management fees. I don't understand this at all.

Yup. It's your share of maintenance costs for the common areas of the building/development.

As far as I am aware this is what my council tax already pays for.

No...

Think of you renting a house - the landlord fixes it.
But you buy the house - you pay to fix it...
You wouldn't expect the council tax to pay for that, would you? The only difference is that your flat is just a portion of that house.
The common areas - paths etc - are akin to the garden for that estate, they're not part of the general roads of the district.

Why all of a sudden to they expect me to pay extra for the upkeep of the whole council estate?

Think of "the council" as two separate entities here.
Your council tax goes to pay for all the publicly adopted roads in the district. So does mine as a home-owner.
Your rent goes to the freeholder of this housing development to maintain the estate. As a home-owner elsewhere in the district, why would my council tax pay for that?

 At the moment, they're the same organisation... but let's say the council sold the freehold of the development off to a housing association. Those costs would move with it, and your service charge would go to the HA, right...?

And, yes, if the council decide to spend millions on upgrading the estate or block, you will get given a bill for your share. Why wouldn't you? And, yes, you will have no choice but to pay it. Welcome to home ownership.

bandit_12

Adrian C...... Apologies if I come across as a bit thick, but I am new to all this. I get that flats are leasehold and have service charges to pay, but this is a freehold house. I understand that I will be responsible for all costs for the house. But why is it any different to buying a house that is privately owned? I wouldn't be expected to pay anything in service charges then.  As you say, council tax pays for the roads.It also pays for grass cutting. I pay council tax to the same council who own the houses so surely that would come from that?  So would I be right in thinking that this charge is for things like footpath upkeep. Or for things such as if they decide to replace the roofs, windows etc on other houses on the estate?

Slithery

bandit_12 said:

But why is it any different to buying a house that is privately owned? I wouldn't be expected to pay anything in service charges then.

Depending on the property, yes, you may well have service charges on a privately owned house. It's becoming more and more common as developers don't want to pay to bring the roads up to the standard where the council will adopt them, so the residents pay for the upkeep.

eddddy

bandit_12 said:

But why is it any different to buying a house that is privately owned? I wouldn't be expected to pay anything in service charges then.  

Yes - on many privately built/owned estates you would have to pay a service charge. 

Sometimes it is very high - people sometimes call it by the slang name of "fleecehold". You can google "fleecehold" for more info.

You need to be aware of what you will be responsible for contributing to maintenance/repair costs for, with your house. If there are big repairs done in the future, you may have big bills to pay.

You mention pavements, paths etc. If, for example, the pavements become cracked and uneven -  and the council have to dig-up and relay them all, your contribution to the cost of that might be quite high.


Edit to add...
TBH, it's worth looking at the condition of the pavements, paths, kerbs that you'll be responsible for contributing towards, to see what kind of condition they're in. And asking the council if they currently have plans to repair them. That might help you judge whether you might get an expensive bill in the next few years.

eidand

bandit_12 said:

Adrian C...... Apologies if I come across as a bit thick, but I am new to all this. I get that flats are leasehold and have service charges to pay, but this is a freehold house. I understand that I will be responsible for all costs for the house. But why is it any different to buying a house that is privately owned? I wouldn't be expected to pay anything in service charges then.  As you say, council tax pays for the roads.It also pays for grass cutting. I pay council tax to the same council who own the houses so surely that would come from that?  So would I be right in thinking that this charge is for things like footpath upkeep. Or for things such as if they decide to replace the roofs, windows etc on other houses on the estate?

it's a nice money making scheme for the builders basically. 
If some roads are not adopted that usually happens for a number of reasons, like they were not built to an acceptable standard or the council simply doesn't want to adopt them. Green spaces you're charged for, they are actually public, so you pay for their maintenance but anyone has the right to use them, even people who live nowhere near that estate.
I started considering buying my next house a few years ago and |i really wanted a new build. However, once  did my research and saw all these things ( and many others ) I decided to stay clear. I am now in the process of buying an older property, but it's mine, it's freehold, no estate charges, no hidden charges, no private roads.

I decided to let others deal with this hassle and extra expense, if people are happy to pay for this ... well, it's their money so have at it.

Missy79

I would query this with them as it does indeed sound very strange on a freehold house on an older council estate, those costs are also pretty high even for a private estate. I would also perhaps try to investigate separately whether any areas within the estate are indeed private (maybe highways could help). Given the age of it I'd be quite surprised to find out a private developer was involved.