Estate Management on new-build estates

Richard436

I’m hoping to hear from homeowners who live on estates with estate management fees, as I’m currently considering buying a property with this type of arrangement. I haven’t exchanged contracts yet, and having not moved house in over a decade, I wasn’t aware of how these newer systems work.

After reviewing the contract and deed of covenant, I was taken aback by how one-sided the obligations appear. From what I can see, the management company seems to have considerable discretion to decide the scope of work, carry it out, and then charge residents. When I looked at the most recent accounts available, it appeared that a significant proportion of the spending went on professional fees, which raised further questions for me.

On the particular estate I’m looking at, the developer told me verbally that the roads would be adopted, but when I checked with the local authority, I was told that no Section 38 agreement is currently in place. I understand that adoption is usually agreed at the planning stage, subject to the infrastructure meeting required standards. Without that agreement in place, there’s no obligation for the local authority to adopt the roads in future - which could mean higher estate fees down the line.

Reading various forums, it seems some homeowners have found these arrangements challenging, and a few have reported difficulties and additional costs when selling. I’m wondering what impact this might have on property values.

How does this affect people mentally?  Are people happy or worried about this?

If anyone has recent, first-hand experience—positive or negative—I’d really appreciate hearing your thoughts. It would help me make a more informed decision.

SarahB16

What is it that you will need to pay for (leaving aside the management company's charges), e.g. upkeep of the unadopted road. Is there anything else?  Sometimes there may be a communal piece of land (e.g. cutting of the grass), etc.  

Is it a new build?  The reason I say this as you are speaking to the developer (implies new build) yet you are looking at the management company's accounts (but surely not yet prepared if a new build)?  

How many homes are there?  Could you form your own resident management company but again I'm not sure if this is just for the maintenance of the roads?  The developer may very well be happy for you to do this and I think if enough residents agree you can do this anyway.  

Chief_of_Staffy

I withdrew an offer on a house a few years back. I'd been told there wasn't an estate charge and then found out there was. Estate charges are basically unregulated. The developers can charge what they want. You have no right to challenge the fees and if you fail to pay, they can evict you from your own house or levy a lease against it, which remains even after you've paid the bill.

Richard436

Thank you, SarahB16.
This is a new-build property on a recently completed estate; it’s one of the last houses to be finished, and some residents moved in around two years ago.

You asked what I would be expected to pay for. That’s exactly what I’m trying to clarify with the builder. The Deed of Covenant includes a clause allowing the estate management company to provide—or arrange—additional services or works both within the estate and beyond it, whenever it considers them “reasonable” and “desirable” for the benefit of the property or wider estate. In practice, this seems very open-ended, with no fee cap, no obligation to consult residents, and no transparency around how decisions are made.

Resale also appears to involve several event-related charges, currently around £400 + VAT, and the seller must ensure the buyer accepts the same obligations.

Because of the way the arrangements are set up, residents don’t have the option of forming their own management company or taking on any legal control. I’ve seen the accounts for 2023–24, and a sizeable proportion—about 40%—relates to inspections, insurance, management fees, and similar overheads. I requested the 2024–25 accounts and any forward planning information, but haven’t received a reply. That lack of responsiveness seems to match comments I’ve seen from homeowners on other developments managed by the same company.

Richard436

Thank you, Chief of Staffy.
I’m leaning towards the same view. It’s disappointing, as the property itself has a lot of positives. What I find difficult to understand is why these Deeds of Covenant are often structured with such wide-ranging financial obligations for homeowners.

Beyond the uncertainty around ongoing annual charges, I’m also thinking about how this might affect future resale and mortgageability. There has been plenty of discussion in recent years about how rising service-type fees can influence the value of certain properties, and I can’t help wondering whether similar questions may eventually arise with some estate-management arrangements.

Richard436

And after reading further, I’ve learned that the Estate Management Company is permitted to take out loans, with repayment costs potentially added to the estate fee. I find this concerning, as it could result in unforeseen financial pressures for homeowners if not managed carefully. It brings to mind general news stories from over the years where complex financial arrangements turned out to be less clear or well-explained than people expected.

mlz1413

I moved to an estate managed by Orbit Homes last year. 

The annual fee is approx £230 and from what I saw has been that for the full 10 years the estate has been built.

I have just had a bill for £2.50 due to an overspend last year... yes £2.50.  I was a bit surprised it was an additional charge rather than just added to the annual fee, but there you go.

I was told by the solicitor the roads are ready for adoption by the council,  but as councils have no money it is unlikely to happen soon.

I think in the past it was just a matter of finishing the housing estate and then the council took on the responsibilities of the roads.  If that will happen again is likely to depend on the council.

Also my estates roads have a lot of block paving which I doubt any council would want the expense of repairing and I certainly wouldn't want cheap tarmac repairs dotted around, so at least with Orbit being accountable the standards are kept up.

We have people on the estate complain about the cost / repairs / lack of interest from Orbit etc etc.  But I doubt they would be happy with the council either.

On the whole I have been happy with the standard over the last year.
They weedkiller all the edges of the roads.  Tidy the play areas, cut back the communal areas and do repairs needed.

I can't imagine the council would do a better or quicker job and yes it costs over £200 a year, but it is a pretty estate and I am happy to pay the cost to maintain that.

Maybe you could look at some older estates by the same builder and see how they have been maintained?

Richard436

Hi mlz1413
Thank you for the information.  As your roads are still not adopted, will it be you, via increased fees, who will pay for road maintenance, or are there any developer funds still available?  One of the concerns with the development I am considering is that the estate management is authorised to take out bank loans for whatever it needs, with capital and interest paid via increased fees.

mlz1413

Hi.  I couldn't find anything specifically about loans, but I would think that could be a standard clause.  IE if substantial work is needed and the reserve fund doesn't meet the cost then a loan would need to be considered. I bet no company want to ask permission just before needing work done.

But its your home so best to buy something that doesn't worry you.

mta999

I would not buy a house with estate management fees (so-called fleecehold)  but that's just me (and probably a lot of other people)