New Build Estate - Management Company Fees (First Port)

wardy_mk

Hello. I live in a freehold house on a housing estate that is still being built. We have been here 3.5 years now. Because the roads etc have not been adopted by the local council (so we're told) we have to pay a management company for the upkeep of the estate. Looking through the itemised bill, the largest - by far - cost incurred is the cost of the 'management fee'. From what I can see, we get the communal grass mowed every couple of months or so but that's about it. This is costing me over £300 a year. Obviously, this isn't too bad but the people in flats and similar shared places have seen their costs rise exponentially to over £1500 a year. This, in my opinion and that of everyone else on the estate, seems outrageous.

Lots of people on the estate are beginning to contest the fees and are being threatened with fines etc for not paying promptly.

I personally asked them to show me a copy of the document I signed that enables them to charge pretty much anything they want and was sent my transfer document. In amongst the 53 page document there are the words 'reasonable' for how much they can charge. They can charge a 'reasonable' about. Seeing as my total bill is about £307, how can a 'reasonable' amount for 'admin' be over half of that? More than half of the total cost is sending me the letter to tell me how much I owe them?

Anyway, I'm not specifically writing for myself, I'm more trying to help out everyone else in the group as there are a lot of people who are worried about how they're going to keep their houses and pay this ridiculously expensive bill.

Does anyone have experience in fighting this? Or does anyone know the legal standpoint? Any advice gladly received. Thanks.

GenieBoy

Management fees are scams. I would never buy a property on an estate that has this management fee scam taking place on. 

daveyjp

As a freeholder your rights are far different to the flat leaseholder.

Leaseholders have plenty of rights around contesting service charge fees, you have little more than what is available under contract and common law.

With unadopted highways in the future you may see bills for thousands, for repairs to roads, pavements, drainage, streetlights etc.

TELLIT01

This situation seems to be more and more common. My nephew owns a house in a similar situation. They have been in the house 3 years, the estate still isn't complete and roads are unfinished.

Jonboy_1984

For the flats with leasehold service charge enquiries the advice is normally to pay under protest (make a payment and send an email or letter stating it is paid under protest) and then dispute (via FTT if it cannot be resolved informally). This prevents the freeholder from forfeiting the lease or getting it added to the residents mortgage, both of which are remedies they can potentially take to unpaid service charges with extortionate other fees in the process.

In my last flat the management charge was about £12+VAT per flat per month, so £170 per year of the total charges of around £900 (for cleaning, energy costs, maintainence, statutory surveys as required, buildings insurance and a contribution to sinking fund). This was just before the energy prices took off.

Postik

As someone pointed out above, leaseholders do have some protection against this. Unfortunately, freeholders don't. I suspect when the law was drafted, it was before estate management charges were introduced for freehold and nobody would have expected it to become a thing.

It is a scam (in my opinion) and there isn't much you can do about it. My understanding is that even if you went to court and won, they can then put all of their court costs through as an expense and claim it back from the residents via the management fee!

flashg67

Once the roads are adopted, costs should be fairly minimal, but you'll need a sinking fund for future/ongoing maintenance. If you can, get the residents together to take over the management of the estate - I ran ours for a few years - wouldn't recommend doing it alone though, but with 2 or 3 others it's do-able. We did get a management company to quote - they wanted 3k a year as a minimum (shared between 21 houses).

Your solicitor should have highlighted what you'd be in for - mine did!

daveyjp

The roads may never be adopted, it is not always a requirement on new developments.

An independent solicitor would have advised, a solicitor 'recommended' by the developer may not do.

[Deleted User]

There is a national campaign group. 

https://www.homeownersrights.net/welcome-to-hornet/

Msunderark124

It is a scam. The councils are in on it as it forces residents to effectively pay twice, mine covers the roads behind my house and those roads are used by the public.

 Yet we have to pay for them £15,000 a year to mow a patch of grass about twice the size of my garden that no one is allowed to play on.

 How can freehold houses be sold like this with estate fees and no protection at all it’s a scam or a racket.  The fraud is that the freeholder is not free at all.

The really sneaky part is that they include flats onto the estate so that they can mix hidden fees into the bills they charge freeholders.

To do anything requires collective action which they know is hard for most people their hope is to make it the standard.

The effect is these fees can legally be increased as much as they like so in the future the fees make actually grow close to your council tax bill.

There is no choice it was sign up to it or not be able to purchase the house the fee doubled after less then 2 years.

My council tax bill is around £3000 and my estate fee is around £450 it is just a racket nothing more nothing less.

silvercar

I'll move this to the housing board.