Should we buy a property that has an annual management charge?

AyJaydee

For several years now, my wife and I have been talking about moving someday; I am soon to retire and my wife is already retired.
There is a development of high-spec newbuilds in a location that we like and we are going to look at a property in a few days time.
Our concern is that the site write-up says that there is an annual management charge, I believe somewhere close to £500 pa.

When I spoke on the telephone with the agents about this, I was told that this charge is to pay for the upkeep of the roads and communal grounds on the estate. Also that the charge is fixed for several years, after which it can then be reviewed.

We have no experience of this and it is a big red flag for us. Are we right to feel concerned? Is this something that we should walk away from?
We would welcome your thoughts on this.  Thank you.

anselld

Very common on new build estates, it will be difficult to avoid if that is what you want to buy.

It is basically down to the local Council who decline to accept any new maintenance responsibilities despite receiving additional income from the developers and residents.

comeandgo

To be honest I’d rather go to a development where you have proper grass cutting and maintenance and pay for it rather than the council who are cutting back and you would be lucky to see any grass cutting.  The development looks nicer and so could help keep the property price a bit higher rather than an unkempt mess.

km1500

Just be aware these charges can escalate more than you would think. £500 sounds like a bit of a loss leader. Budget for nearer £1500 in a few years.

comeandgo

km1500 said:

Just be aware these charges can escalate more than you would think. £500 sounds like a bit of a loss leader. Budget for nearer £1500 in a few years.

We’ve had  maintenance charges for 16 years, the residents control what’s done and our costs have only increased 10% in all that time.

user1977

Although you get fearmongering about these costs being unlimited, in practice how high can they get if the services provided are limited? They’re not going to be charging you for a new diamond-encrusted lawnmower every year.

daveyjp

If road maintenance is responsibility of residents this will also stretech to any streetlighting.  You also need to know the adoption status of any drainage network under the highway.

diystarter7

user1977 said:

Although you get fearmongering about these costs being unlimited, in practice how high can they get if the services provided are limited? They’re not going to be charging you for a new diamond-encrusted lawnmower every year.

Hi

"fearmongering" as those that are stuck with apartments, the larger they are the bigger the increases. We have a friend lives edge of river in London, there charges are massive

I'm not sure what the agreements are but OP, read the T&C's and see what it states about increases. However, charges will increase but consider how many properties there are and what they are charging for. If its just picking up the rubbish, cutting grass, then not a big deal IMHO but it it means resurafcing the road, looking after the street lights and that all expensive massive eltrocic gate that may often be vandalised etc, I'd think hard.

Even if you bought a slightler older place with management charges and looked at the history of price rises, this is no gurantee of how future rices may rise

Personally, I'd avoid but only chose as if it was 101% and nothing came close to it in your budget/etc.

Thnaks

[Deleted User]

comeandgo said:

km1500 said:

Just be aware these charges can escalate more than you would think. £500 sounds like a bit of a loss leader. Budget for nearer £1500 in a few years.

We’ve had  maintenance charges for 16 years, the residents control what’s done and our costs have only increased 10% in all that time.

Yeah the developers aren't going to offer that now. These charges are a profit centre for them.

It's most likely a scam, I'd avoid it. In a decade these will be the next big property scandal.

Noneforit999

comeandgo said:

km1500 said:

Just be aware these charges can escalate more than you would think. £500 sounds like a bit of a loss leader. Budget for nearer £1500 in a few years.

We’ve had  maintenance charges for 16 years, the residents control what’s done and our costs have only increased 10% in all that time.

Doesn't always work as well as that though. We bought in 2015 and the 'Management company' was actually owned by the directors of the developer.

Started off at £175pa and within 4 years was £380pa. Granted, its hardly millions but where would it be in 10 years time?

We moved about 6 months ago so have no idea what this years fees are but I bet my life they are not £380 considering how much things are going up.

60% of the fees were for admin/staff/postage costs and they just sent us a breakdown each year. Are those costs fair? Did they get multiple quotes to cut the grass or was it the boss' mate?

km1500

Google 'fleecehold houses' but for example...

https://hoa.org.uk/2016/11/problems-facing-freeholders-new-developments/