Signing a deed of covenant on freehold property

amandacat

Hi, my sister is buying a freehold house. It is about 10 years old and she has been told by her solicitor that there is a management company involved and they require her to sign a deed of covenant to be able to buy the property. The deed explains there is no service or maintenance charge but the management company reserve the right to charge this in the future if necessary for the upkeep of communal areas (although not sure what the communal areas are as it is just the path and estate road next to the house). It also includes things like not being able to keep rubbish on your property, not being able to have an extension without permission etc. 
The solicitor has confirmed that the seller is covering the cost of this deed of covenant. 
It seems unusual to have one on a freehold property but I have heard this can be common on newer estates. 
Is this something that would put you off buying? She loves the property but this has thrown her. 

princeofpounds

Yes, it is relatively common with newer estates. The problem is that councils approve the planning permission but refuse to take on the burden of communal area maintenance as they do with almost everyone else's property (a bit of a two-tier have-cake-and-eat-it approach, but that's reality).

If the developer wants to build and sell freehold property, then they have to have a legal arrangement like this in place to ensure the communal area maintenance actually happens.

It's a personal choice. I wouldn't be too bothered by the service charge - given that they don't seem to be charging it unnecessarily, they are probably not trying to exploit it. But you have to understand it could be charged if repairs are needed.

The covenants are another matter. I would not be happy having to ask permission to build an extension on a freehold property. You can take the view that these covenants are rarely enforced, but it's one thing if the estate is 30 years old, the developers are long-gone and there are more properties in breach than not, it's another if you're the first on considering breaching it on a younger development.

greatcrested

I like many really hate the way new developments are set up and believe freehold should be without restrictions or costs (other than planning law etc), councils should take responsibility for roads and public areas, and new leases should only cover flats (not houses) and be for significant Terms (999 years etc).

So I would not buy.

But the reality is that many people have little choice in what they can afford, and many people prefer the idea of a brand new build, so they have no choice but to accept the conditions demanded by developers.