Estate Service Charge

holmc

Hello!
We are in the process of buying a new build on a new estate. We were told from the very beginning that we would be responsible for paying an Estate charge to support the maintenance of grounds, lighting and streets etc. This is managed by a third party. Despite being a small annoyance, we accept this and move on. I am interested in hearing other people's experience of paying the Estate charge and whether the fee increases astronomically after a few year? Also, are there are policies in place to stop these third party companies hiking the charge up to unmanageable prices? 
Any help greatly appreciated! 

moneysavinghero

The fee is a rip off basically - mine charged more in admin costs than they did for the actual work performed. Yes it will increase every year (not astronomically, but above inflation).

rachel230

"despite being a small annoyance"
Trust me - you won't be saying that going forward a couple of years...
Uncapped and unregulated market....
Check out https://nationalleaseholdcampaign.org

daveyjp

If as you mention the charges extend to future repairs to highways, footpaths, street lighting it may also include costs for ducting, surface water drains, flood alleviation infrastructure.

That moves it from small annoyance to potential for very expensive bills, especially if the property is freehold (the website above is only for leasehold which is regulated) you have very few legal rights to argue against the amount being demanded.

greatcrested

I wouldn't touch one of these properties with a bargepole - though I accept I have the luxury of options.

[Deleted User]

Very common with new build estates when the council decides not to adopt the area. You are essentially paying for the maintenance of all the roads and communal areas as it is privately owned.

The problems start when the fees start going up to cover anything unexpected e.g. the local play area gets damaged. You will have no control over how much they charge you for it. 

I'd suggest you do a search of the forum for other service charge related threads. From memory there has been a few.

avawat20

It's always going to depend on your situation, I have lived in leasehold and not had my service charge go up. I know people who bought new 10+ years ago, management company have residents as directors and price has been the same the whole time. See what they say. But there is likely to be a charge for you buying to transfer and you selling as a seller if you do in the future. Try to find all of this out. Your solicitor should also be looking to see if there is a section 106 agreement and what's in it.

avawat20

daveyjp said:

If as you mention the charges extend to future repairs to highways, footpaths, street lighting it may also include costs for ducting, surface water drains, flood alleviation infrastructure.

That moves it from small annoyance to potential for very expensive bills, especially if the property is freehold (the website above is only for leasehold which is regulated) you have very few legal rights to argue against the amount being demanded.

This is most likely if the roads are unadopted so that should be a question your solicitors have asked.

comeandgo

We pay maintenance charges and have had no problem.  The costs are very similar to what they were 10 years ago.  All the residents are members of the residents association and they vote in committee members who liase with the management company to advise them what the residents want doing, the management company can not charge us for anything we have not agreed to.  Our housing estate is well kept, a lot better than if it had been left to the council.

Mickey666

Deleted_User said:

Very common with new build estates when the council decides not to adopt the area. You are essentially paying for the maintenance of all the roads and communal areas as it is privately owned.

The problems start when the fees start going up to cover anything unexpected e.g. the local play area gets damaged. You will have no control over how much they charge you for it. 

I'd suggest you do a search of the forum for other service charge related threads. From memory there has been a few.

I've lived on a private estate where the residents were all responsible for paying to maintain the roads through a management company.  However the ownership of the management company was divided among the residents, one share per house, so there was no third party trying to profit from the management requirements.  I paid about £70 per year and I think it only increased by £10 in the 20 years I lived there.  The directors were all residents and as a shareholder all residents had their say on maintenance matters and voted on the annual management fee.  No directors were paid and the only overhead was the annual filing of accounts for which an independent firm of accountants charged a fairly nominal sum.  The roads were resurfaced a few times while I lived there and the drains were cleared more often than the local adopted roads.  In fact the private roads were in far better condition than the surrounding adopted roads (no doubt lower traffic played its part, but still).  it all worked very well.

So I wouldn't automatically panic if there is a management company involved but I would investigate it carefully to find out who owns it, what their vested interests might be, what influence would the residents have over management decisions, could they join the management team, etc.  If I found that the management company was totally divorced from the residents and was a profit-making vehicle then I wouldn't just walk away . . . . I'd run away.  Fast.

homersimpson246

Does it have a rent charge against the house to ensure it get paid?  If so then as mentioned above don't walk away run!.

The big problem with these systems where the management company is a seperate entitiy is you have no control over what they charge you for and while its ok at the start when everything is in theory new, what happens when the roads are 40 years old and need resurfacing after numerous utility companies, cable providers etc. have dug them up?  The bill for this will be split across all the houses and you have no choice but to pay whatever it costs plust the management companies costs.

I have a feeling that this arrangement will be a big scandal in 20 years time when the large bills start rolling in, note also that although you have to pay to fix your road, kerbs etc. you don;t get a discount on your council tax.

I looked at a house with this arrangement and it was so dubious and open ended only a complete chump would sign up for it, fortuately for the developer they managed to find 600 of them!