Freehold house with maintenance charge

alanfp

ONEONEONE said:

AdrianC said:

ONEONEONE said:

I'm feeling on edge about this property, I really love it and it is of excellent build quality but I don't like that I have no control over costs or of the company in charge ever.

Then don't buy this property.

This one has an estate management charge, because it's on an unadopted road on an estate with common areas. Somebody has to pay to maintain those.

If you don't want that, then buy one that's on an adopted road, and doesn't have estate common areas.

Thanks, I agree someone has to pay and am happy to do so, I'm just concerned that I am offered little to no legal protection in the terms of the contract 

I think this is genuinely a question for your solicitor, to enable you to understand what your options might be, if as you say, you really like the property. There are many situations where residents CAN change the management company, but if the other residents are 'chilled' , they won't be bothered about getting that change implemented. Another way to look at it is 'will I be worrying about this situation all the time I'm living there?".

ONEONEONE

alanfp said:

ONEONEONE said:

AdrianC said:

ONEONEONE said:

I'm feeling on edge about this property, I really love it and it is of excellent build quality but I don't like that I have no control over costs or of the company in charge ever.

Then don't buy this property.

This one has an estate management charge, because it's on an unadopted road on an estate with common areas. Somebody has to pay to maintain those.

If you don't want that, then buy one that's on an adopted road, and doesn't have estate common areas.

Thanks, I agree someone has to pay and am happy to do so, I'm just concerned that I am offered little to no legal protection in the terms of the contract 

I think this is genuinely a question for your solicitor, to enable you to understand what your options might be, if as you say, you really like the property. There are many situations where residents CAN change the management company, but if the other residents are 'chilled' , they won't be bothered about getting that change implemented. Another way to look at it is 'will I be worrying about this situation all the time I'm living there?".

I have asked this question and unfortunately residents don't have the right on this property - the land is owned by the developer and they are written into the deeds as being the only company to manage the common areas. It's more of a take it or leave it situation unfortunately - and an aspect where there is a big negative difference for the rights of leaseholders vs freeholders (solicitor confirmed).

I think I would probably be worried that it's something I could never 'fix' or 'change' and if I ever need to sell could be a real pain. 

NameUnavailable

A big chunk of that £550 will be going to pay the wages and overheads of the management company/developer. I'm guessing the rest is to cover cutting the grass and paying for street lighting. That's probably it. When the road needs repairs expect larger bills.

ONEONEONE

NameUnavailable said:

A big chunk of that £550 will be going to pay the wages and overheads of the management company/developer. I'm guessing the rest is to cover cutting the grass and paying for street lighting. That's probably it. When the road needs repairs expect larger bills.

Thanks think you are right there


Does anyone know whether Gvt will legislate on this in the near future? 

Titus_Wadd

Please please ask your solicitor to go through the management fee elements of the deeds with a fine tooth comb (if you go ahead).  We have paid £1500 a year for sweet FA, and been bullied by the family from hell at the same time, breaking numerous covenants and breaking into my house!  To put it into perspective if we pursue them through the courts; initially for an emergency injunction our solicitor and barrister have quoted a figure that represents 12.5% of the house's purchase price for the case.  It is complex case but if you faced a lengthy and stressful battle to get the simple life you envisaged in that house could you face this?

This year's maintenance bill estimated work costing us nearly £5k.  They're short of money and they are banking on us not challenging it.  But if we don't nip this in the bud they'll keep inflating the bill.  So we'll be seriously considering selling my car, no holidays for decade and no helping our kids get on to the property ladder!  

We're sick of people (MP and councillors included) telling us "they can't treat you like that" but doing nothing to help.  There'll be some legislation tackling Freeholders' being cash-cows for developers and their maintenance company friends, but we can't wait that long...it'll be piecemeal and take ages!

Buyer beware!

ONEONEONE

Titus_Wadd said:

Please please ask your solicitor to go through the management fee elements of the deeds with a fine tooth comb (if you go ahead).  We have paid £1500 a year for sweet FA, and been bullied by the family from hell at the same time, breaking numerous covenants and breaking into my house!  To put it into perspective if we pursue them through the courts; initially for an emergency injunction our solicitor and barrister have quoted a figure that represents 12.5% of the house's purchase price for the case.  It is complex case but if you faced a lengthy and stressful battle to get the simple life you envisaged in that house could you face this?

This year's maintenance bill estimated work costing us nearly £5k.  They're short of money and they are banking on us not challenging it.  But if we don't nip this in the bud they'll keep inflating the bill.  So we'll be seriously considering selling my car, no holidays for decade and no helping our kids get on to the property ladder!  

We're sick of people (MP and councillors included) telling us "they can't treat you like that" but doing nothing to help.  There'll be some legislation tackling Freeholders' being cash-cows for developers and their maintenance company friends, but we can't wait that long...it'll be piecemeal and take ages!

Buyer beware!

Thanks, some food for thought there and hope your situation resolves soon 

Weathergirl_76

I don’t know too much about these circumstances, but I thought companies were not allowed to increase fees without justification? One of the reasons why I don’t want to move to a flat or leasehold property is because of the service charges, but an agent told me they are not allowed to increase them to unrealistic amounts anymore....is this true and does this not cover the OP’s situation? I guess you have to decide whether £550 a year is acceptable to you,  and to know at least what protection you have should they increase their prices. 

OldMusicGuy

Titus_Wadd said:

This year's maintenance bill estimated work costing us nearly £5k.  They're short of money and they are banking on us not challenging it.  But if we don't nip this in the bud they'll keep inflating the bill.  So we'll be seriously considering selling my car, no holidays for decade and no helping our kids get on to the property ladder!  

I agree that you need to be very cautious when buying a property with a "fleecehold" situation. However, in your circumstance (and to anyone else thinking of doing this), form a residents' committee, challenge the work being carried out and don't be afraid to use the Property Ombudsman. It's time consuming but it can help keep the work done at a realistic level.

However, you must know what you are letting yourself in for when you buy. 

Weathergirl_76 said:

I don’t know too much about these circumstances, but I thought companies were not allowed to increase fees without justification? 

That's not quite true. They will be governed by the terms of the maintenance agreement that forms part of the contract of sale. There are no standard terms for this. The way many work is that the management company carries out the required work and can also charge a management fee which is calculated as a %age of the work done. So the more work they carry out, the higher the management fee. So the way it works is they do whatever they want on the estate, the residents have to pay, and you can then try to challenge it later. In some cases, if you refuse to pay, the estate rentcharge provisions have serious legal implications for the homeowner.

So if you think what they do isn't "reasonable", you will have to pay upfront and dispute it later. We did this in my last place which involved escalating things to the Ombudsman twice. It took a lot of time and effort. 

In my last place, for the first 10 years the management company did very litle. They were then acquired and all of a sudden we started getting bills for things like health and safety inspections (which we had never had before), which they then used as justification for filling in a hole for a basketball post that one of the residents had in their front garden because it was a "trip hazard".  Our charges started to go up every year whereas they had been pretty static before that. 

AdrianC

Weathergirl_76 said:

I don’t know too much about these circumstances, but I thought companies were not allowed to increase fees without justification? One of the reasons why I don’t want to move to a flat or leasehold property is because of the service charges, but an agent told me they are not allowed to increase them to unrealistic amounts anymore....is this true and does this not cover the OP’s situation? I guess you have to decide whether £550 a year is acceptable to you,  and to know at least what protection you have should they increase their prices. 

I think you're getting confused with ground rents and service charges.

Ground rents for leasehold properties have had increase rates capped, more by mortgage lenders than legislation (although gov't have said they might get round to doing something at some point in the future, if they've not got anything better to do).

Service charges are your portion of what's spent on maintenance - and vary accordingly. A sinking fund is a savings account to pay for small stuff. Section 20 consultations are required for big-ticket stuff that can't be covered from that savings account, more than £250 per property per item.

ONEONEONE

OldMusicGuy said:

Titus_Wadd said:

This year's maintenance bill estimated work costing us nearly £5k.  They're short of money and they are banking on us not challenging it.  But if we don't nip this in the bud they'll keep inflating the bill.  So we'll be seriously considering selling my car, no holidays for decade and no helping our kids get on to the property ladder!  

I agree that you need to be very cautious when buying a property with a "fleecehold" situation. However, in your circumstance (and to anyone else thinking of doing this), form a residents' committee, challenge the work being carried out and don't be afraid to use the Property Ombudsman. It's time consuming but it can help keep the work done at a realistic level.

However, you must know what you are letting yourself in for when you buy. 

Weathergirl_76 said:

I don’t know too much about these circumstances, but I thought companies were not allowed to increase fees without justification? 

That's not quite true. They will be governed by the terms of the maintenance agreement that forms part of the contract of sale. There are no standard terms for this. The way many work is that the management company carries out the required work and can also charge a management fee which is calculated as a %age of the work done. So the more work they carry out, the higher the management fee. So the way it works is they do whatever they want on the estate, the residents have to pay, and you can then try to challenge it later. In some cases, if you refuse to pay, the estate rentcharge provisions have serious legal implications for the homeowner.

So if you think what they do isn't "reasonable", you will have to pay upfront and dispute it later. We did this in my last place which involved escalating things to the Ombudsman twice. It took a lot of time and effort. 

In my last place, for the first 10 years the management company did very litle. They were then acquired and all of a sudden we started getting bills for things like health and safety inspections (which we had never had before), which they then used as justification for filling in a hole for a basketball post that one of the residents had in their front garden because it was a "trip hazard".  Our charges started to go up every year whereas they had been pretty static before that. 

Alot of 'fleecholds' will not allow a residents association to take over the service charge arrangements as deeds dictate the management company for now and forever - there are different arrangements for these private estates as per the TP1 when you buy the property. There is also often no ombudsman option available to fleechold properties (will depend if the management company has voluntarily signed up to it or not)