New build on estate of mixed Leasehold and Freehold houses

withaspritz

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! 

withaspritz

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

withaspritz said:

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

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.

withaspritz

RelievedSheff said:

withaspritz said:

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

withaspritz said:

There are service charges, £125 per annum for green space and communal areas.  

Sounds suspiciously low.

RelievedSheff

princeofpounds said:

withaspritz said:

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

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

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

withaspritz said:

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

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.