Fleece hold To Buy Or Walk Away

masjntt1977

Hi, 

I put an offer in on a house last week 5k below asking price which was accepted, property ticks all of our boxes. (Freehold property)

I found out two days later that the property is subject to an estate service charge as the road is not adopted by the council. 

The agent apologised that this information was not included in the property listing 

The house is approx 20 years old and I would be purchasing as a cash buyer. 

I have been googling and trying get advice etc, current owner has been there since 2019 and said the service charge has never exceeded £300 per annum. This is a small road and since the properties were built there have probably been 4/5 house sales.

Everthing I have read to date concerns me - I had never heard of fleece hold before.

I love the property but I’m struggling to decide whether to proceed or walk away, clearly lots of other people must be or have been in similar situations so I would be interested to hear of their experiences / thoughts as maybe I am just over thinking/ worrying.

Any advice / opinions / experiences would be greatly appreciated 

Thank You 😊 

EssexHebridean

You might want to clarify - is this actually a leasehold house, or is the charge simply for maintenance of the road adjacent? Have you checked whether the road will eventually be adopted? It can sometimes take a  fair few years after construction is complete. 

What does your conveyancer/solicitor have to say about the situation?

masjntt1977

EssexHebridean said:

You might want to clarify - is this actually a leasehold house, or is the charge simply for maintenance of the road adjacent? Have you checked whether the road will eventually be adopted? It can sometimes take a  fair few years after construction is complete. 

What does your conveyancer/solicitor have to say about the situation?

Hi this is a freehold house with an estate service charge. I cannot find anything to say that the road will be adopted by the council, they were built in 2014 so I’m assuming not.

I am literally at the beginning of the buying process, ( offer accepted a week ago) no advice from solicitor other than it’s up to me to weigh up the situation- have tried to get in touch with a specialist solicitor but having difficulty with actually getting information from them as always busy when I call, emails not replied to. 

Tiglet2

I think the vast majority of new estate houses built within the last 25 years have a maintenance charge for the communal parts, i.e. lighting, road maintenance, grass cutting etc.  Councils are not keen to adopt newish estate roads.  The new estates should look cared for and well maintained, since all the residents are paying for it, whereas  council owned roads will only be maintained as and when the council see fit and have the funds for it.



 

masjntt1977

Thank you, it’s the rights that service management companies have over the freehold property and future resale which concerns me the most 

eddddy

masjntt1977 said:

it’s the rights that service management companies have over the freehold property 

Do you mean the rights if you don't pay your service charge? 

For example, if the freeholder has the right to repossess your home, or create a lease on your home if you don't pay.

You (or your solicitor) need to read the transfer deed for the property to see if that's the case. TBH, if that is the case your mortgage lender probably wouldn't offer you a mortgage.  (So most management companies agree to remove that clause.)


As a first step - you can ask the estate agent to ask the seller if they know the situation with this.  A reasonably competent estate agent should know what you're talking about. If nothing else, it's probably been an issue with sales they've done in the past.

masjntt1977 said:

I found out two days later that the property is subject to an estate service charge as the road is not adopted by the council. 

Perhaps the key thing here is to look at the condition of the road (and other communal areas) - to see if repairs are likely to be needed in the near future.

If the road surface is worn and full of potholes, there mighty be a big bill coming around soon for resurfacing it.

masjntt1977

eddddy said:

masjntt1977 said:

it’s the rights that service management companies have over the freehold property 

Do you mean the rights if you don't pay your service charge? 

For example, if the freeholder has the right to repossess your home, or create a lease on your home if you don't pay.

You (or your solicitor) need to read the transfer deed for the property to see if that's the case. TBH, if that is the case your mortgage lender probably wouldn't offer you a mortgage.  (So most management companies agree to remove that clause.)


As a first step - you can ask the estate agent to ask the seller if they know the situation with this.  A reasonably competent estate agent should know what you're talking about. If nothing else, it's probably been an issue with sales they've done in the past.

masjntt1977 said:

I found out two days later that the property is subject to an estate service charge as the road is not adopted by the council. 

Perhaps the key thing here is to look at the condition of the road (and other communal areas) - to see if repairs are likely to be needed in the near future.

If the road surface is worn and full of potholes, there mighty be a big bill coming around soon for resurfacing it.

Hi, yes my concerns are what happens if the payment is late or defaulted,if a lease is created on my home , if the annual increase can be capped in anyway and the impact it may have on future sales.

I am a cash buyer

How would I obtain the transfer deed?

I can ask the estate agent - the road looks in immaculate condition at the moment x

eddddy

masjntt1977 said: 

if the annual increase can be capped in anyway and the impact it may have on future sales.

The annual  increase in service charges cannot be capped - that would be impossible to achieve.

An example might help to explain why...

• If there were 25 houses on the estate, each house owner might have to pay 1/25th or 4% of the cost of maintaining and repairing the road and other common areas. (That payment is called the service charge.)

• If  the road got into bad condition and needed £25k worth of repairs - that would work out at £1k per property owner

• If the service charge was capped at £500 per property owner for a particular year - you're stuck. There isn't enough money to repair the road.

So it's not possible to cap it.

masjntt1977 said:

How would I obtain the transfer deed?

I can ask the estate agent - the road looks in immaculate condition at the moment x

You could ask the seller for a copy of the deed they signed.

If it's OK - then great. If it's not OK, the next thing would be to ask the management company if they will vary (change) the deed.

Normally, this all happens during the conveyancing process - and your solicitor deals with it.

But I guess you might say you don't want to spend money on searches etc, before you know one way or the other. So I guess you could ask your solicitor not to do any other work, until they've checked the deed. But that might slow the process down - by a lot!

MultiFuelBurner

If we were buying a property with unadopted roads/paths/lighting/green and play areas we would be inclined to put away more that what they ask for each year. Maybe double and keep it building up for when a big bill comes in.

If you want to live there for 10 years maybe knock £3k off your offer price as a cash purchaser and put that in an interest earning account.

Offer the same reduction to the purchaser's when you sell (inflation accruing)

BobT36

Personally I'd walk away. 
Fine with it for flats and obvious leasehold properties etc. But this whole fleecehold stuff with what should be normal, freehold houses just irks me. 

I HATE how you can't just "buy" and "own" anything nowadays, you have to keep paying and paying and paying so some private company can enjoy filling their pockets, OR (which is the main point) bundling up all the charges and selling them as an investment product. And that's on top of paying council tax! 


Some do have positive stories of it, when they drop on a place with a low charge, managed by a decent company and does get well maintained, however I'd still not accept it purely out of principle. It's getting to the point where it's expected you pay a "subscription" for literally everything, and that's on top of all the usual bills / admin! 

It concerns me that apparently nearly all new houses / estates are being built like this. 

[Deleted User]

You may find that you have limited options for broadband if it's a private road. You might get stuck with Virgin Media. No fibre. Even if it doesn't matter to you, it might be an issue when you want to sell.

Other than that, you can either risk it or not. Maybe fleecehold will be outlawed one day, maybe not.