Freehold house, resident management company

Mrsbrown21

Hi,

We are currently in the process of purchasing a 4 year old house, on a new build estate. The last apartment hasn't been sold, so the management company still run it- it will be turned over to the residents once that apartment is sold.

This is a freehold house, should we have any concerns that we will be paying 150-200 pound a year to a residents management company, apparently becoming directors? My understanding was this was to keep the road looking good, and the fences nice- the bits that nobody owns. I just want to make sure that we are not getting ourselves in a more complicated situation than that. My understanding is this is the norm for a new build estate?

Thank you for your help

Reginald74

It's pretty standard, yes. And that fee isn't particularly high but check the details.  What is good is that the management company are handing it over to residents. Many don't and continue to fleece the residents. The law around this has not caught up with leasehold law yet.

Mrsbrown21

Reginald74 said:

It's pretty standard, yes. And that fee isn't particularly high but check the details.  What is good is that the management company are handing it over to residents. Many don't and continue to fleece the residents. The law around this has not caught up with leasehold law yet.

Thank you!!

eddddy

You need to read the deed (or other type of agreement) to see what you're committing to.

For example, if it includes contributing to the cost of repairing and maintaining roads and parking areas - on a 4 year old estate, that might just mean sweeping the leaves a few times a year, and picking up litter.

But perhaps after 10 or 15 years major expensive road repairs might be required. Maybe take a look at the things you'll be contributing to the costs of (e.g. roads, pavements, street lighting, signage, green spaces, play areas), and judge what condition they're in and whether they're likely to need expensive maintenance.



Once it's taken over by residents, things could get better or worse, depending on the mindset of those making the decisions (and/or how tightly the rules are specified.)

They might want a pristine estate, with grass verges neatly trimmed, trees regularly pruned, pavements precisely re-levelled, cracked paving replaced etc - which would work out expensive for you.

Or they might be happy with overgrown verges, unpruned trees, undulating pavements etc - because it saves them (and you) money.

Sandtree

Just be aware you have less statutory rights than leaseholders do however given you'll have a seat at the table being directors (and should be shareholders)  of the management company there shouldn't be that much risk.

Mrsbrown21

eddddy said:

You need to read the deed (or other type of agreement) to see what you're committing to.

For example, if it includes contributing to the cost of repairing and maintaining roads and parking areas - on a 4 year old estate, that might just mean sweeping the leaves a few times a year, and picking up litter.

But perhaps after 10 or 15 years major expensive road repairs might be required. Maybe take a look at the things you'll be contributing to the costs of (e.g. roads, pavements, street lighting, signage, green spaces, play areas), and judge what condition they're in and whether they're likely to need expensive maintenance.



Once it's taken over by residents, things could get better or worse, depending on the mindset of those making the decisions (and/or how tightly the rules are specified.)

They might want a pristine estate, with grass verges neatly trimmed, trees regularly pruned, pavements precisely re-levelled, cracked paving replaced etc - which would work out expensive for you.

Or they might be happy with overgrown verges, unpruned trees, undulating pavements etc - because it saves them (and you) money.

Thank you for this, we do not have the deed that tells us what we are responsible for as it has not been handed to the residents yet, however it is a very small estate (12ish houses), with just the road and the fence- we understand the road could cost money in a few years. this comment has given us a better view of what we signing up for - so we appreciate it. 

ccbrowning

We had this issue with our home - took years to get it handled by the residents. However, in the end it’s just £30 a month here. 

Titus_Wadd

I'd query becoming a director.  Directors have responsibilities beyond those of a shareholder.  Our freehold set up only requires us to become shareholders in the management company with an annual estate rent charge towards the upkeep of the estate road.  Are all residents directors?

Your solicitors should have the TR1 from the first time the house was sold or any other document "copies filed" at the Land Registry; you could ask them to email a copy to peruse or order direct from the Land Reg.