Freehold New Builds and their related Maintenance Charge Fees etc

Fufu3333

Can anyone give advice on buying a New Build Freehold and sensible steps to take to avoid issues with the Maintenance/Estate Charges and anything else that could possibly crop up?

Is it better for instance to take out a Deed of Variation before purchasing?  Any other tips? 

I have not yet exchanged.

eddddy

Fufu3333 said:

Is it better for instance to take out a Variation Deed before purchasing?

I think you've probably misunderstood something. What's behind your question about a Deed of Variation? Is the question based on something that you have read?



(In simple terms, a deed is a list of "terms and conditions".

A 'Deed of Variation' means a 'change to the deeds' - i.e. a change to the "terms and conditions".

So the question would be "What 'terms and conditions' does the deed specify at moment; what 'terms and conditions' do you want changed; what do you want them changed to; and why do you want them changed?")

NameUnavailable

If you are buying a new build on a new estate then it will probably be liable to an annual charge for maintaining the roads/grounds etc. You will need to ask the developers for details about that.

What would a deed of variation do?

eddddy

Fufu3333 said:

Can anyone give advice on buying a New Build Freehold and sensible steps to take to avoid issues with the Maintenance/Estate Charges and anything else that could possibly crop up?

In terms of the maintenance charge, as a starting point, find out what you have to contribute towards and what your share would be.

For example, if there are 20 houses on the estate - perhaps you'd have to contribute 1/20th of the maintenance costs.

And then look at the things you'd have to pay for maintenance costs on. For example, one estate might have...

• Parking areas (that will eventually need leaf sweeping, litter picking, pot hole repairs, resurfacing etc)
• Private roads (that will eventually need leaf sweeping, litter picking, pot hole repairs, resurfacing etc)
• Private drains (that will eventually need repairs, unblocking, etc)
• Street Lighting (that will eventually need repairing or replacing)
• Grass areas (that will need mowing, leaf sweeping, litter picking, etc)
• Play areas (that will eventually need leaf sweeping, litter picking, repairs, replacing etc)
• Water features, ponds, trees, flower beds, shrubs, etc, etc
  
  

Whereas another estate might just have a small area of grass. So your maintenance bill would be much lower.

peter3hg

An important consideration is who will own the land and/or management company?

Some estates the residents themselves all own equal shares in the management company and so collectively have control over who is appointed to manage the estate, how it is managed and the level of maintenance done.

In others it is sold to a third party so the residents have very little say. The law may change to grant additional rights but it is unclear when that will happen and what exactly those rights will be.

user1977

Your other thread suggests you're quite far advanced in the transaction. So presumably you've had advice from your solicitors already on this?

Postik

Deed of Variation - normally required on slightly older properties where the maintenance charge was enforced with a draconian "estate rent charge".  I don't think many/any new builds do it this way now and instead enforce it with a covenant.

peter3hg said:

An important consideration is who will own the land and/or management company?

Some estates the residents themselves all own equal shares in the management company and so collectively have control over who is appointed to manage the estate, how it is managed and the level of maintenance done.

In others it is sold to a third party so the residents have very little say. The law may change to grant additional rights but it is unclear when that will happen and what exactly those rights will be.

^ Explained better than I could.

If it's a smaller, independent building firm it might be that you have a share in the management company.

If it's one of the big national builders the management company will be owned by their mates and you'll have no say in anything, including how much the charge goes up by each year.

km1500

The common term for what you are buying is not freehold but fleecehold.

google it, but for example

https://www.leaseholdknowledge.com/property-rip-offs-whack-a-mole-now-its-your-chance-to-tell-cma-about-fleecehold/

https://www.google.com/amp/s/www.thesun.co.uk/money/24517079/freehold-estate-management-charges-leasehold-homes-fleecehold/amp/

Fufu3333

Thanks all for your comments.

I have probably jumped the gun on this, as my purchase hasn't got that far yet.  Discussions still ongoing between developer and the council. 

I haven't received any paperwork from solicitor yet so not seen any deeds yet but I had been reading about making sure a Deed of Variation was drawn up in relation to estate management charges (Section 121 of the Land & Property Act 1925) to avoid issues when it came to  remortgaging or selling. 

Depending on what the deeds and mortgage company say, I would definitely be wanting one in place. 

eddddy

Fufu3333 said:

I haven't received any paperwork from solicitor yet so not seen any deeds yet but I had been reading about making sure a Deed of Variation was drawn up in relation to estate management charges (Section 121 of the Land & Property Act 1925) to avoid issues when it came to  remortgaging or selling. 

You're kind-of misunderstanding. 

As I mentioned, a "Deed of Variation" changes a deed that already exists and has been signed (where the deed contains some kind of "problem").


You would be buying a new build. So no deed exists yet and it hasn't been signed yet. So there is nothing to vary/change.  So a "Deed of Variation" isn't relevant.


So what you probably mean is... When you are eventually given a the brand-new deed to sign, you need to make sure it doesn't give the freeholder rights under Section 121 of the Land & Property Act 1925, which would stop you getting a mortgage.

If the relevant clause isn't in the deed you are being asked to sign, your solicitor will insist that it is added by the developer, before you sign. Otherwise you won't get a mortgage.


(This will also address the issues with remortgaging and selling - but that's a bit academic, if you can't get a mortgage in the first place.)

user1977

Fufu3333 said:

I had been reading about making sure a Deed of Variation was drawn up in relation to estate management charges (Section 121 of the Land & Property Act 1925) to avoid issues when it came to  remortgaging or selling. 

It helps if you tell us where you had been reading, so we can clarify what you might have misunderstood (or why whatever you had been reading may be poor advice!).