New housing estates (freehold)

Cit6

Why do nearly all new build estates have management charges?
I asumme it has something to do with the council not adopting the roads but they still have the council tax?

daveyjp

Cit6 said:

Why do nearly all new build estates have management charges?
I asumme it has something to do with the council not adopting the roads but they still have the council tax?

The decision on whether roads are built to adoptable standards is down to local policies and the developer.  It is cheaper on smaller developments not to build to adoptable design and construction standards (especially if the developer is to charge a management fee as residents will have to pay for repairs in future years when the initial poor construction fails).

Management charges are more often for maintenance of common areas, play areas, sustainable drainage systems etc.

Cit6

So its all down to profit for the developer?

LightFlare

Cit6 said:

So it’s all down to profit for the developer?

What isn’t nowadays 

Solution appears to be that if you think a company is making huge profits for their shareholders - go buy some shares yourself

Section62

Cit6 said:

So its all down to profit for the developer?

Not quite - by building the roads and other public realm to non-adoption standards the developer is able to sell the properties on the development a bit cheaper and still make the level of profit they need to keep their shareholders happy.  If the public realm is to be adopted then the higher standards (plus dowry) push the cost of the development up, meaning the sale prices need to be higher to maintain the return to shareholders.

Homebuyers could consider it a form of 'buy now pay later'.... with convenient installments paid forever.

Council tax covers much more than roads and grass cutting. Adult social care, Childrens services, and Education typically swallow up most of the budget.

sammyjammy

Its the fault of the Government not putting legislation in place so that they have to build to adoptable standards!

Cit6

I pity the people who buy them.
I know many who complain about the charges going up ever year.

Section62

sammyjammy said:

Its the fault of the Government not putting legislation in place so that they have to build to adoptable standards!

It is the opposite.  Successive governments have changed planning guidance (in effect the legislation) to effectively block councils from requiring developers to build to adoptable standards.  One of the key driverd for this is non-adoptable roads take up less space than adoptable ones, therefore the 'government' and developers get more new homes built per hectare if adoptable roads aren't provided.  The councils are happy to go along with this as they can offload future maintenance liabilites directly onto the residents.

In the past councils wanted to adopt new roads on developments because total highway length was a factor which fed into the complex formulae that worked out 1) how much revenue funding the council got from the government and 2) how much capital spending they were allowed to make.  Because an adoptable road should last about 20 years before any major work is needed, the incremental growth in total highway length meant councils got more money in the 'now', without having to incur that much additional spending in the near-term.

The kind of roads that developers now want to build (encouraged by planning guidance) cost more to maintain and don't last as long... but do look pretty in the AI generated sales brochure and website content.  If councils are forced (by government and developers) to now adopt poor quality roads, they will either need more cash, or else have to cut spending on something else.

GDB2222

Section62 said:

sammyjammy said:

Its the fault of the Government not putting legislation in place so that they have to build to adoptable standards!

It is the opposite.  Successive governments have changed planning guidance (in effect the legislation) to effectively block councils from requiring developers to build to adoptable standards.  One of the key driverd for this is non-adoptable roads take up less space than adoptable ones, therefore the 'government' and developers get more new homes built per hectare if adoptable roads aren't provided.  The councils are happy to go along with this as they can offload future maintenance liabilites directly onto the residents.

In the past councils wanted to adopt new roads on developments because total highway length was a factor which fed into the complex formulae that worked out 1) how much revenue funding the council got from the government and 2) how much capital spending they were allowed to make.  Because an adoptable road should last about 20 years before any major work is needed, the incremental growth in total highway length meant councils got more money in the 'now', without having to incur that much additional spending in the near-term.

The kind of roads that developers now want to build (encouraged by planning guidance) cost more to maintain and don't last as long... but do look pretty in the AI generated sales brochure and website content.  If councils are forced (by government and developers) to now adopt poor quality roads, they will either need more cash, or else have to cut spending on something else.

Some token reduction in council tax could be given to people living on unadopted roads, but that’s a slippery slope. For example, I don’t have children in school at the moment, so should I pay less council tax? Schools are a far bigger burden for councils than roads.

 Many people moving into new build estates are younger than me (well, most people are!), with school age children, so a sort of personalised council tax would lead to most people on unadopted roads paying more council tax, not less! 

poseidon1

Section62 said:

sammyjammy said:

Its the fault of the Government not putting legislation in place so that they have to build to adoptable standards!

It is the opposite.  Successive governments have changed planning guidance (in effect the legislation) to effectively block councils from requiring developers to build to adoptable standards.  One of the key driverd for this is non-adoptable roads take up less space than adoptable ones, therefore the 'government' and developers get more new homes built per hectare if adoptable roads aren't provided.  The councils are happy to go along with this as they can offload future maintenance liabilites directly onto the residents.

In the past councils wanted to adopt new roads on developments because total highway length was a factor which fed into the complex formulae that worked out 1) how much revenue funding the council got from the government and 2) how much capital spending they were allowed to make.  Because an adoptable road should last about 20 years before any major work is needed, the incremental growth in total highway length meant councils got more money in the 'now', without having to incur that much additional spending in the near-term.

The kind of roads that developers now want to build (encouraged by planning guidance) cost more to maintain and don't last as long... but do look pretty in the AI generated sales brochure and website content.  If councils are forced (by government and developers) to now adopt poor quality roads, they will either need more cash, or else have to cut spending on something else.

Very pleasing to read an analysis from someone who knows what they are talking about.  I certainly learnt something of value in this instance.

grumpy_codger

LightFlare said:

Cit6 said:

So it’s all down to profit for the developer?

What isn’t nowadays 

Solution appears to be that if you think a company is making huge profits for their shareholders - go buy some shares yourself

Really? They can spend all this extra revenue on their salaries and pay nothing extra to their shareholders, can't they?