How common is fleecehold?

RelievedSheff

Postik said:

MultiFuelBurner said:

To be honest fleecehold when we see service charges mentioned on Rightmove we skim past.

I've never seen a property where they advertise the fact that it's fleecehold on Rightmove.  I've even looked at properties where the estate agent has said there is no estate management charge, just for me to go away and investigate and find out that there is.

Around here there are very few new build estates that don't have these charges.  I managed to buy a house on one that doesn't but it's very rare now.  I was instantly suspicious when the previous owner said there was no estate charge but I looked into it and sure enough there wasn't.

We also managed to buy a new build with no management company charges. We were fully expecting an estate charge when we reserved the plot so it was a welcome surprise to find that there wasn't one.

Our local council is very proactive at adopting green spaces and credit where it is due they do keep them very well presented and maintained and there is a lot of green space around here for them to up keep.

eddddy

Postik said:

I've casually researched the topic and there is multiple finger pointing as to who is to blame for this system: 

... the developer who won't put down 5 year's worth of money to maintain the area prior to adoption.  

But like any business, developers do what (they believe) buyers want them to do.

• Will buyers pay an extra £10k, £20k or £30k for a house in order to live on a road that will be adopted by the council?  

• Or do buyers prefer to pay £10k, £20k or £30k less for a house on a road that isn't suitable for adoption?

If one developer decides to build roads to a higher adoptable standard, and pays the maintenance money to the council - so has to charge more for their houses - will buyers just go to other developers who don't do that, so their houses are cheaper?


Maybe the buyers are being shortsighted... but that's the way business works.

BobT36

Postik said:

BobT36 said:

Postik said:

MultiFuelBurner said:

To be honest fleecehold when we see service charges mentioned on Rightmove we skim past.

I've never seen a property where they advertise the fact that it's fleecehold on Rightmove.  I've even looked at properties where the estate agent has said there is no estate management charge, just for me to go away and investigate and find out that there is.

Around here there are very few new build estates that don't have these charges.  I managed to buy a house on one that doesn't but it's very rare now.  I was instantly suspicious when the previous owner said there was no estate charge but I looked into it and sure enough there wasn't.

Where do you look to find that out? 

It's crazy having to pay the council full price, AND this extra service charge too. Everything in this country wants to rip you off.. 

The other option is to pay £3 on the government land registry website and download the title deed for the property, and this will usually mention it too.

Great! Thankyou. 
For everyone else I'm not saying there should be x% discount, I'm just sick of literally everything you do in this country involves paying what you think is full price for something, then a load of extra hands come reaching into your pockets to take even more.. 

Postik

RelievedSheff said:

We also managed to buy a new build with no management company charges. We were fully expecting an estate charge when we reserved the plot so it was a welcome surprise to find that there wasn't one.

Our local council is very proactive at adopting green spaces and credit where it is due they do keep them very well presented and maintained and there is a lot of green space around here for them to up keep.

Yes, I think it is the parish council who look after the green space here and they do a very good job of keeping it nice.  They cut the grass frequently and often have litter pickers out.  The parish council only get £60 a year from our £2,500 council tax bill !

BobT36 said:

Great! Thankyou. 
For everyone else I'm not saying there should be x% discount, I'm just sick of literally everything you do in this country involves paying what you think is full price for something, then a load of extra hands come reaching into your pockets to take even more.. 

Yep I know this feeling.  As someone who is as tight fisted as they come I don't like spending money and I certainly don't like to not be in control of what I spend.  It's bad enough that council tax has been going up by 3% every single year (even when inflation was low for all these years), but these estate management charges are uncapped and unregulated.  Casually, they say they go up each year by inflation, but in reality they can increase them to whatever they like and as a freeholder there is absolutely nothing you can do about it.  Take them to court, and if they lose they can put all of their court costs through the management business as an expense and just claim it all back via the estate's service charge!  So you really cannot win no matter what.  It is a completely perverse system and I suspect many people are just lucky if their charge isn't yet going up massively, and as such they let sleeping dogs lie.

RelievedSheff said:

The fault lies squarely with the councils on this one!

The planning departments insist on green spaces and public open space and then refuse to adopt them.

You can not blame the developers for this situation.

Yep, I am guessing the developer would sooner not have the green space and build more houses instead!

[Deleted User]

eddddy said:

Postik said:

I've casually researched the topic and there is multiple finger pointing as to who is to blame for this system: 

... the developer who won't put down 5 year's worth of money to maintain the area prior to adoption.  

But like any business, developers do what (they believe) buyers want them to do.

• Will buyers pay an extra £10k, £20k or £30k for a house in order to live on a road that will be adopted by the council?  

• Or do buyers prefer to pay £10k, £20k or £30k less for a house on a road that isn't suitable for adoption?

If one developer decides to build roads to a higher adoptable standard, and pays the maintenance money to the council - so has to charge more for their houses - will buyers just go to other developers who don't do that, so their houses are cheaper?


Maybe the buyers are being shortsighted... but that's the way business works.

You give them far too much credit. They charge the maximum they can get away with, where people are desperate because of a housing crisis. The fleecehold is just gravy on top. Nobody wants to pay it, but if you want a new house you pretty much have no choice.

eddddy

[Deleted User] said:

You give them far too much credit. They charge the maximum they can get away with, where people are desperate because of a housing crisis. The fleecehold is just gravy on top. Nobody wants to pay it, but if you want a new house you pretty much have no choice.

I'm not sure that I'm giving anyone credit for anything. I'm just highlighting how competition and a free market works.

• I assume that maybe one housebuilder found that they could cut development costs by building cheap estate roads which weren't good enough quality to be adopted by the council.

• So in order to compete, other developers started to do the same.

It's similar to the Ryanair model - they cut their costs by not providing meals on flights, and not including baggage.

In order to compete, other airlines did the same.


Perhaps you're complaining that competition and the free market isn't working. So maybe lobby the government to intervene (e.g. make it illegal to build unadopted estate roads on new developments). Like the government did with ground rents.

The result might be that new houses become a bit more expensive.

RelievedSheff

eddddy said:

[Deleted User] said:

You give them far too much credit. They charge the maximum they can get away with, where people are desperate because of a housing crisis. The fleecehold is just gravy on top. Nobody wants to pay it, but if you want a new house you pretty much have no choice.

I'm not sure that I'm giving anyone credit for anything. I'm just highlighting how competition and a free market works.

• I assume that maybe one housebuilder found that they could cut development costs by building cheap estate roads which weren't good enough quality to be adopted by the council.

• So in order to compete, other developers started to do the same.

It's similar to the Ryanair model - they cut their costs by not providing meals on flights, and not including baggage.

In order to compete, other airlines did the same.


Perhaps you're complaining that competition and the free market isn't working. So maybe lobby the government to intervene (e.g. make it illegal to build unadopted estate roads on new developments). Like the government did with ground rents.

The result might be that new houses become a bit more expensive.

Most new developments do have the highways adopted. It is the green spaces around the development that the management companies are liable to maintain. Most councils will not adopt these as they are a maintenance liability for them. Some however are proactive and will adopt them.

Postik

RelievedSheff said:

Most new developments do have the highways adopted. It is the green spaces around the development that the management companies are liable to maintain. Most councils will not adopt these as they are a maintenance liability for them. Some however are proactive and will adopt them.

^ This.  As pointed out usually the roads are adopted, it's the green space that isn't.  And whilst the council won't adopt the green space they insist on it as part of the planning.  I am sure the developer would sooner build another half dozen houses on the green space instead if they could.

A lof of new developments where I live have 4 bedroom houses.  That vast majority of older houses are 3 bed semis.  Older 4 bed houses also tend to be much more expensive than newer 4 bed houses, and then need a lot more work doing on them which drives the cost up further.  If you have 2 or 3 kids and/or work from home and need a larger property a newer house can make much more sense.  Until recently it was also very competitive with houses selling the day they were put on the market.  So unfortunately it's not quite as simple as saying, "If you don't like the service charge then don't buy the house."  It's like saying if you don't like potholes then don't go out in your car or find a different route.  The real solution is to fix the problem, not avoid it.

The council should be adopting the green space.  Or not stipulating it as part of the planning.  Or as part of the planning conditions make the developer pay for the up-keep over say the next 5 or 10 years and then adopt it.  But why make a big business pay when they can just punish the homeowner instead?

A lot of homeowners won't even really consider that the fee is uncapped and can go up to any amount.  Some will be led to believe it's capped to inflation, when it isn't. Perhaps a decent solicitor would have pointed this out to them, but most likely not if they used the developer's "recommended" solicitor because "it's easier and quicker" or because "we'll give you free flooring if you do."  Which is yet another scam, but perhaps we can discuss that another day :-)

john798

is there a campaign to end fleecehold or have restrictions on it at least. i'd sign in a heartbeat. 
it must be the biggest scam going. 'management companies' can surely not believe their luck as they sit back and take peoples money forever for doing very little. and the government thinks this is fine...?

eddddy

john798 said:

is there a campaign to end fleecehold or have restrictions on it at least. i'd sign in a heartbeat. 
it must be the biggest scam going. 'management companies' can surely not believe their luck as they sit back and take peoples money forever for doing very little. and the government thinks this is fine...?

The Leasehold and Freehold Reform Act 2024 will give freeholders paying estate management charges the same rights to redress as leaseholders, once it's implemented, which should help.


But I guess there's also the argument that... if you don't like estate management charges, you should avoid buying a property with estate management charges. 

And if enough people refused to buy new homes with estate management charges, the developers would start rethinking their strategy to make their homes more acceptable to buyers.


But I guess part of the issue is that many buyers don't understand the potential issues with estate management charges until after they've bought - and they receive bills.