PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

New build on estate of mixed Leasehold and Freehold houses

withaspritz
withaspritz Posts: 254 Forumite
Sixth Anniversary 100 Posts Name Dropper
edited 11 August 2020 at 1:17PM in House buying, renting & selling
Hi

We're in progress with purchasing (house not fully built yet, reservation down, chosen options etc, our current home is sold and we are in that long process waiting for exchange).

I've been researching the new build estate we are buying on (Taylor Wimpey) and noticed whilst checking the Rightmove price history for roads completed already that some houses are leasehold, in the oldest parts of the estate, but the majority are freehold including the one we are buying that's yet to be built.

So a bit of background this estate has been in development since 2016 and what I suspect is that the original plans were for all houses to be leasehold, until the scandal broke wind - and the developer then switched to selling the houses on a freehold basis at that point onwards, leaving the estate a game of two halves, some LH and some FH. 

I suppose it's better to be on the FH side of the estate rather than the LH side at this stage - but are there any warning flags I should be aware of?  Stupidly I am using the recommended solicitors for the purchase, so I can't really trust them to be honest about anything! 

Comments

  • In my mind, there might be a hidden benefit in that the service charge for the estate's common areas is under more scrutiny than if the estate was entirely freehold - given the mgmt co can be taken to tribunal by one of the LH home owners.  My worry is that the freehold house we are buying might in fact be the legal equivalent of a leasehold house where the previous owner (Taylor Wimpey) has "bought" the freehold and thus be still subject to freeholder permissions fees etc?
  • RelievedSheff
    RelievedSheff Posts: 12,612 Forumite
    10,000 Posts Sixth Anniversary Name Dropper Photogenic
    In my mind, there might be a hidden benefit in that the service charge for the estate's common areas is under more scrutiny than if the estate was entirely freehold - given the mgmt co can be taken to tribunal by one of the LH home owners.  My worry is that the freehold house we are buying might in fact be the legal equivalent of a leasehold house where the previous owner (Taylor Wimpey) has "bought" the freehold and thus be still subject to freeholder permissions fees etc?
    Leasehold and management estate charges are two completely different items.

    There is every possibility that even the Freehold properties on the OP's estate will still be liable for estate management charges. It is very rare for new build estates to not have estate management charges.

    The OP needs to check their legal pack very carefully to see exactly what are signing up for and check the covenants attached to the property as well.
  • cattie
    cattie Posts: 8,841 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    If Taylor Wimpey bought the freehold, as you imply, then the house would still be leasehold &  not freehold 

    If the house actually  is freehold, there can still be covenants laid down by the developer that you might have to adhere to. Something along the lines of no white vans/caravans to be parked on drives, or front gardens not to have fencing erected between properties is common. A solicitor acting on your behalf would usually advise you of any such convenants as part of the buying process.

    The bigger the bargain, the better I feel.

    I should mention that there's only one of me, don't confuse me with others of the same name.
  • withaspritz
    withaspritz Posts: 254 Forumite
    Sixth Anniversary 100 Posts Name Dropper
    edited 11 August 2020 at 2:40PM
    In my mind, there might be a hidden benefit in that the service charge for the estate's common areas is under more scrutiny than if the estate was entirely freehold - given the mgmt co can be taken to tribunal by one of the LH home owners.  My worry is that the freehold house we are buying might in fact be the legal equivalent of a leasehold house where the previous owner (Taylor Wimpey) has "bought" the freehold and thus be still subject to freeholder permissions fees etc?
    Leasehold and management estate charges are two completely different items.

    There is every possibility that even the Freehold properties on the OP's estate will still be liable for estate management charges. It is very rare for new build estates to not have estate management charges.

    The OP needs to check their legal pack very carefully to see exactly what are signing up for and check the covenants attached to the property as well.
    We're definitely freehold as it says on our res agreement in black and white.  Freehold basis. But will check with the solicitor when we get to that stage.
     
    There are service charges, £125 per annum for green space and communal areas.  That's payable by FH owners such as ourselves and the LH lessors.  I presume the LH lessors also pay ground rent, as we won't be (our sales exec says - not yet had the legal info to back that up) but will check carefully for any covenants.  

    My guess upon reading up is that there are estate rentcharges attached to the FH properties such as ours to cover the management fees, and the LH properties do not have ERCs but the more traditional under lease covenants to pay the service charge and ground rent.  That would mean that they have more legislative protection (as LH lessors) than we do as freeholders subject to estate rentcharges... Hmm! Lots to think about! 
  • princeofpounds
    princeofpounds Posts: 10,396 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker

    There are service charges, £125 per annum for green space and communal areas.  
    Sounds suspiciously low.
  • RelievedSheff
    RelievedSheff Posts: 12,612 Forumite
    10,000 Posts Sixth Anniversary Name Dropper Photogenic

    There are service charges, £125 per annum for green space and communal areas.  
    Sounds suspiciously low.
    Depends how many plots there are on the development and how many areas it has to maintain.
  • withaspritz
    withaspritz Posts: 254 Forumite
    Sixth Anniversary 100 Posts Name Dropper
    edited 11 August 2020 at 3:41PM
    Sorry re-read the reservation agreement, it's 125+VAT so £150 per annum?  Probably will rise, hopefully the LH homes will keep that rising in check as we FH ones have less power to do that!
  • BernieW
    BernieW Posts: 30 Forumite
    Seventh Anniversary 10 Posts Combo Breaker Photogenic
    There was a whole flurry of bad press about Taylor Wimpey and leasehold houses back in 2016. They were selling the freehold interest in those houses to third parties - who were bloodsuckers, to put it politely.  That has accelerated government proposals for leasehold reform - and Taylor Wimpey have spent millions digging themselves out of the hole.
    So they are now selling houses freehold wherever possible - but those freehold houses will have a "rentcharge" to cover the expenses incurred on communal land; e.g. the spine roads of the estate, the play areas on the estate, etc.
    The £150 per annum will be a conveniently low "finger in the air". The true cost could be £5 or £5000. Therefore ask to see the budget for that expenditure - and a definitive list of the expenses to be incurred. The sales peeps won't know - so ask the solicitor for documentation - and read it thoroughly before signing on the dotted line.
    I'd also advise getting an independent solicitor to review the documentation before you exchange.
  • princeofpounds
    princeofpounds Posts: 10,396 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Sorry re-read the reservation agreement, it's 125+VAT so £150 per annum?  Probably will rise, hopefully the LH homes will keep that rising in check as we FH ones have less power to do that!
    Don't bet on the leaseholders keeping it in check - whilst they can prevent gross abuses, in time, it costs what it costs.

    I suppose £125 is possible if you have a lot of houses and little communal space to maintain. But it's lower than most numbers you see, especially if it includes the roads, a planting scheme or playground facilities.

    The risk here is similar to being a shown a new boat, and being told it's very cheap to maintain*. Currently all the amenities are new, the developer is probably still maintaining them, long-term maintenance contracts may not have been signed etc. The developer can claim with a straight face that this is the charge right now, but that doesn't necessarily mean that it bears any relation to what the charge ends up being on a sustainable basis. Of course maybe it's not that bad, and ultimately it may not be something that changes your decision, but you might want to look into that figure a bit.

     (*in year one)
  • RelievedSheff
    RelievedSheff Posts: 12,612 Forumite
    10,000 Posts Sixth Anniversary Name Dropper Photogenic
    We were lucky and the estate we bought on has no management charges but one of the lads at work bought at the same time as us and his management charges are £120 per year on a large development so I don't think it is that unheard of for them to be so low.

    Of course you then have to watch them for increasing that price as time goes by.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.2K Banking & Borrowing
  • 252.8K Reduce Debt & Boost Income
  • 453.2K Spending & Discounts
  • 243.1K Work, Benefits & Business
  • 597.5K Mortgages, Homes & Bills
  • 176.5K Life & Family
  • 256.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.