Freehold with Service Charge

Sibbers123

Should I be right in worrying about service charges for a freehold property on new build estate? They are currently just over £200 per annum, but there is only one way they are going to go I imagine... A management company will take over the service charge once the estate is complete (probably early next year). I have had a quick read online, and they call it 'fleecehold' and you have far fewer protections than if it were a leasehold.

NameUnavailable

Service charges on private estates are quite usual. Someone has to maintain common areas and unadopted roads after all.

Titus_Wadd

The question I wish I'd asked when we bought our house was what are we paying for when the "communal areas" haven't been created yet, not even the estate road has been laid  properly yet.  Talk it through with your solicitor.  If it's capped at £200 that doesn't sound too bad; ours is nearer £1700 for sweet FA!  Ours is the only house completed and sold since they started around 10 years ago, we're the second owners.  We bought it with our eyes open, for the same price as the original owners; mainly because of the service charge and the "living on a building site" issues.  But we're here for the long game and even with the annual charge we got an absolute bargain.  You need to go into this with your eyes open. 

Sibbers123

NameUnavailable said:

Service charges on private estates are quite usual. Someone has to maintain common areas and unadopted roads after all.

I get that, but I would still be paying full whack council tax... I am okay with £200 per annum, but it is uncapped. Once it is handed over to the management company, I can imagine the service charge being increased quite quickly, for the mowing of the grass one a week. I'd be quite happy to push my mower around for free!

Pretty much all the estate is complete and most houses lived in, so it doesn't seem to put people off.

davidmcn

Sibbers123 said:

NameUnavailable said:

Service charges on private estates are quite usual. Someone has to maintain common areas and unadopted roads after all.

I get that, but I would still be paying full whack council tax... 

Yeah, but that's not how council tax works. I don't get a discount for not having kids in the local schools, not bothering the social work department etc. It's just a tax, not a charge for services.

daveyjp

You have done research, you know the downsides, just because others have bought doesn't mean they are better advised.  You can now decide whether you are happy paying a bill which you have little control over and very few rights if it suddenly becomes £2,000 a year because the estate is new and the annual maintenance charge couldn't be assessed properly.

The chances are other buyers have done far less research than you and haven't a clue what they have signed up to as they will have used the developers solicitor whose job is to get the houses to completion.

OldMusicGuy

You need to read the terms of the management/maintenance agreement closely. This will tell you what you are letting yourself in for. For example, what is the basis of the management- is it a residents management company (a good thing) or a third party management company (potentially a bad thing). You need to look at how the management fees will escalate because that is the area where a third party management company will increase its charges each year, and you need to understand how this happens. You also need to understand what happens if you have issues with the management company, if/how they can be replaced and what happens if you don't pay the service charge.

Service charges are common on every new build estate but the terms and conditions of the management/maintenance agreements vary considerably. You must make sure (with the help of your solicitor) that you understand what you are signing up for before you commit.

Sibbers123

The management company being used will be chamonix estates. Looking at their reviews, they are dreadful.

OldMusicGuy

Sibbers123 said:

The management company being used will be chamonix estates. Looking at their reviews, they are dreadful.

Pretty much all of them are. The whole industry is reprehensible. On our last estate, the property managers were changed every 6 to 9 months, so nothing ever got done because each one promised to address our issues but moved on before they could sort the issues out and we had to then start over with a new property manager because there was no handover procedure. We had issues with incorrect charges, had to take them to the Ombudsman (twice) and overall the property management company was completely useless.

However, did it have a major impact on us during the 20 years we were there? Not really. It was annoying and frustrating at times but our agreement was such that the management fees could not escalate out of control. So it may be an annoyance but as long as you understand what you are letting yourself in for it may not be that bad. 

badger09

Apologies to OP for slight sidetrack.

We are in process of buying a 4 year old property on a small development of 26 houses. Management of the estate is already in the hands of Centrick and current year's charge is below £100. Solicitor is waiting for the Management Information Pack from vendors' solicitors. Can anyone advise on what this pack does, or should contain? 

PJBRFC

Sibbers123 said:

The management company being used will be chamonix estates. Looking at their reviews, they are dreadful.

I lived in a new build for 5 years that was managed by Chamonix, we finally sold up in April this year. 
They took over from the builders (Bovis) in Year 3, so I paid them for years 3, 4 & 5. We were a 3 bed semi 'freehold'. When looking at the estate map, the nearest bit of grass they cut (when the could be bothered which was no more than twice a year, it was regularly 3ft tall, and usually ended up being cut by residents) was two streets away from our house!

Charge in year 3 was £156, year 4 was £179, year 5 was £216. Also at the end of year 4 we had a bill for a further £232 as they had gone over budget. I fought this with them and they openly told me that some residents hadn't paid so we had to cover the shortfall. After telling them where they could stick that, they said my account was on hold being reviewed. Two months later I got a revised statement saying I owed £28 to cover the overspend. I paid this as I know that as a freeholder there is nothing you can actually do to get around it. The only thing they were actually quite quick to sort was the management pack for our sale, which was a shock. 

My experienced advice would be DO NOT purchase a house on an estate managed by Chamonix. You will be overcharged for almost no work, and you won't be able to fight it. Also it seems their accounts are done by a Year 1 class at a primary school.