New build first time buyer issues with service charge and warranty - FREEHOLD

FirstTimeBuyer_

Hi all, I’m a first time buyer and I have taken time to research everything properly, as well as asked my solicitor million questions and keep chase the developer's contracts manager for any queries that are outstanding. 

The issues I have found that made me question if I should proceed with the exchange are:

1. I am buying a freehold property, but the service charge is not confirmed except of the T1 mention that it will be “fair and reasonable” and I must pay it. On my contract it does state the service charge will be really high (£540 p/a), but my solicitor received details from the developer’s solicitor it might be around (£750 p/a). When I asked the developer how is it spread between the leasehold/shared ownership/freehold properties he responded with: 

“ The flats are not part of the service charges as you do not benefit from these, only shared services are covered in the service charge. Every property pays the same charge as they all share the services, we do not charge more for larger homes and less for smaller homes as this would not be fair to any owners. The service charges will be introduced when the services are completed, most of the landscaping will not be completed until near the end of the site, at the moment we are looking to finish the whole site ate the end of 2023, it depends on whether as to when the site will be build complete as this will have an impact on build progress. The attached is the agent we will be using for the site.” as well as “ All properties pay an equal amount as per the attached, shared owners and rented properties are still residents regardless of their properties being leasehold or freehold, everyone pays the same fee. The service charges are not capped forever, they will be reviewed on the 1st of April every year, you will be notified of the charges once the review has taken place and any increase will have to be justified by the management company, they do not have free reign to just charge what they like, all costs must be justified to everyone that pays them and itemised on the yearly accounts to all residents.”

My question is, has anyone bought a property from Signature Homes and how expensive the service charge is for you? I read on this forum multiple people saying they pay no more than £200-£240 per year for the service charge, so my estimate of £540 or £750 for a freehold property seems excessive and unreasonable. 

2. There is issue with developer not providing the warranty details. They only provided confirmation that warranty will be issued, but the property was completed on 3rd February and handed over officially, so I am unsure how come the warranty was not issued and they are not showing me the details. They said to me and my solicitor: 

“ I understand the attached documents have been already been provided and your solicitor has been told the warranty document will follow once completion has taken place.”

My question to you guys is, is it normal for new build property to provide the warranty after the completion has taken place, or is it another strange item? 

3. Finally, the issue with the developer using the same T1 for both, shared ownership properties and the freehold, so I have the following covenant: 

“Second schedule 1. The rights for the Transferor or the people authorised by the Transferor to: “d) to enter upon the Property at all reasonable times (and at any time in an emergency) with or without workman equipment and materials so far as may be necessary for the purposes of constructing inspecting maintaining repairing renewing rectifying cleansing decorating relaying replacing altering enlarging and removing any part of the Estate the Buildings comprised in the Property the Estate sewers Estate Roads or any part thereof (together with the right to erect temporary scaffolding on the Property).” - I understand this was put in place due to this being more shared ownership transfer than a freehold property transfer, but as a freehold property owner I cannot agree to anyone to have the right to access as and when they are pleased under any excuse they can make up. This is invading my rights to the land and feels like I will be renting a property from you, not paying full price for a freehold rights. I can agree to this if manuscript includes mentioning that I will receive 24hrs notice minimum and if I will be away, unless in emergency, I can refuse the access to my property. I want to be present if anyone enters my property.”

The above is what I raised with developer and the below is their response to it:

” I’m told this is consistent with contracts for this site, whether leasehold or freehold so cannot be changed, but can confirm that no person will access your property without your consent.”

So my question is.. is this normal that on freehold property the service management company can have the right to enter your house under any excuse they have? Or is my developer again really cheeky? 

My apologies if anyone had the same issues and questions before, but I looked through a lot of forums and could not find the definitive answers, and I can still not exchange due to the above. 

Thank you all for your help. I am a first time buyer and buying on my own, so high service charge is a burden to a single person for a 2 bed semi-detached property. 

eddddy

It seems you've written to the developer, and the developer has replied to you.

So very importantly, nothing they've said is binding - it's not included in the contract, so you can't rely on it.

If you want anything that the developer has said to you to form part of the contract, tell your solicitor which things.


I don't have answers to your questions, but here are a few thoughts...


Service Charges
The service charge is your share of the bills for maintaining the communal spaces / facilities. If there is lots of landscaped green areas, lots of communal parking, communal roads, lots of lighting, lots of play areas, ornamental ponds, water features, residents gym, residents swimming pool etc - the service charge is going to be high.

If there is very little communal spaces / facilities, the service charges will be lower.


Warranty
Presumably the developer has told you who will be providing the warranty, and you've had a chance to read the specimen policy. So it shouldn't really matter that you only get the final 'signed' policy docs after completion.  (But ask your solicitor if they are happy with that.)


Rights of Access
It seems reasonable to me - but the best person to ask is your solicitor.

FirstTimeBuyer_ said:

So my question is.. is this normal that on freehold property the service management company can have the right to enter your house under any excuse they have? Or is my developer again really cheeky? 

They say "your property" which is more likely to be your garden (if you have one).

e.g. a shared drain has broken under your garden, or their fence has fallen down and the workmen need to stand in your garden to put it back up, or they want to prune their tree from a ladder in your garden.

It's harder to think of examples where they'd need to go into your house.

user1977

On the last point it is pretty standard that if you buy in the middle of an ongoing development, the developer will want to retain some rights to come in if they have to in order to finish off other parts of the development. Up to you if you want to insist on being there in order to stare at their scaffolding or whatever, but you can't expect them to work their build programme around your diary.

FirstTimeBuyer_

eddddy said:

It seems you've written to the developer, and the developer has replied to you.

So very importantly, nothing they've said is binding - it's not included in the contract, so you can't rely on it.

If you want anything that the developer has said to you to form part of the contract, tell your solicitor which things.


I don't have answers to your questions, but here are a few thoughts...


Service Charges
The service charge is your share of the bills for maintaining the communal spaces / facilities. If there is lots of landscaped green areas, lots of communal parking, communal roads, lots of lighting, lots of play areas, ornamental ponds, water features, residents gym, residents swimming pool etc - the service charge is going to be high.

If there is very little communal spaces / facilities, the service charges will be lower.


Warranty
Presumably the developer has told you who will be providing the warranty, and you've had a chance to read the specimen policy. So it shouldn't really matter that you only get the final 'signed' policy docs after completion.  (But ask your solicitor if they are happy with that.)


Rights of Access
It seems reasonable to me - but the best person to ask is your solicitor.

FirstTimeBuyer_ said:

So my question is.. is this normal that on freehold property the service management company can have the right to enter your house under any excuse they have? Or is my developer again really cheeky? 

They say "your property" which is more likely to be your garden (if you have one).

e.g. a shared drain has broken under your garden, or their fence has fallen down and the workmen need to stand in your garden to put it back up, or they want to prune their tree from a ladder in your garden.

It's harder to think of examples where they'd need to go into your house.

Thank you for the answers. 

“ So very importantly, nothing they've said is binding - it's not included in the contract, so you can't rely on it.

If you want anything that the developer has said to you to form part of the contract, tell your solicitor which things.” - I already asked, but the developer and their solicitor are really unhelpful since day one and said it won’t be added… and that I have the confirmation in email… 

There is not much of the shared areas and this is why I am shocked. We only have a little bit or grass and few trees that are part of the preservation area. Other than that they will create a little pond. The roads are going to be given to the council to care for after all estate is finished. There is no other facilities. 

I wonder if anyone else bought from this developer and what are their charges? 

Or perhaps given we don’t have many facilities, what are you guys paying with similar estates? 

Thank you. 

eddddy

FirstTimeBuyer_ said:

... but the developer and their solicitor are really unhelpful since day one and said it won’t be added… and that I have the confirmation in email… 

Your letter and the developer's reply wouldn't be added to the contract. You need to pull out any specific points that you want included in the contract.

For example, the developer has written:

The service charges will be introduced when the services are completed, most of the landscaping will not be completed until near the end of the site, at the moment we are looking to finish the whole site ate the end of 2023, it depends on whether as to when the site will be build complete as this will have an impact on build progress.

So the developer seems to be saying you won't be charged any service charges until then end of 2023.  But that letter/email isn't binding. You might buy the house, and then the developer changes their mind and charges service charges from a year earlier.

If you want it to be binding, you and/or your solicitor has to make sure that's all in the contract. (It may or may not be in the contract already, but if it's important to you, you need to check.)

If the developer refuses to have that included in the contract, you can't force them. You just have to accept that it's not binding, and you might be charged service charges sooner.