Buying a Freehold Property with a Management Company

woodpecker

Hi, I am quite far along in the purchase of a house which is freehold, but where a Management Company maintains the communal areas.

I was informed from the beginning that there is a monthly fee of £25 to pay for grounds maintenance, which I was happy with, but as we get further into the process, more and more costs are coming out.

£100 each for transfer of ownership, signing a deed of covenant and certificate of compliance; and now £200 for the FME1 pack and a £120 admin fee charged by the management company! (Just been told this latter cost will be for the vendor).

This is in addition to restrictions and covenants regarding pet ownership, what kind of vehicle I can park outside and sub-letting the property.

None of the restrictions will affect me, but they could make it harder for me to sell, along with the costs that any future buyer will have to meet.

I guess my question is should I push back on the costs, on the basis that they were not made clear earlier in the process? I can see why the vendor wouldn't advertise this up front, as it would put many people off, but it's still annoying.

gwynlas

These costs are typical of a management company on purchase and you will not be able to avoid them.

What matters is whether yearly charges are fair for the works undertaken as often grounds maintenance can be scaled back

Are you able to tell from neighbours whether covenants are enforced?

They are often set up by developers to avoid the appearance of works vans or caravans spoiling the visuals of a development for sale but rarely enforrced later.

eddddy

woodpecker said

I guess my question is should I push back on the costs, on the basis that they were not made clear earlier in the process?

I guess it's up to you.

You are free to reduce your offer on the house by £420 (or whatever), because you weren't told about these fees at the outset. Or ask the seller to cover the fees.

Also, your solicitor will probably charge you extra fees for dealing with these things.

But maybe consider what you would do if the seller says "no". (And/or would this sour your relationship with the seller?)

Some people argue that these types of unavoidable fees relating to purchasing a property should be mentioned in the estate agent's listing. But I guess others might feel that these fees are relatively trivial in the scheme of things.

eddddy

woodpecker said

This is in addition to restrictions and covenants regarding pet ownership, what kind of vehicle I can park outside and sub-letting the property.

None of the restrictions will affect me, but they could make it harder for me to sell…

Generally, developers use covenants to make properties easier to sell, not harder.

Obviously, when the properties are first built, the developer wants to sell them as easily as possible for the most money possible - so they put those covenants in place to help achieve that. So those covenants should help you sell in future.

Foe example, presumably the developer has found that the majority of buyers are put off if an estate has lots of works vans parked on it - especially if some are tatty and rusty.

FWIW, often the more exclusive/expensive the estate is, the more covenants (or rules) about what you can and can't do. It helps to keep the values of the properties high.

MyRealNameToo

Its likely the seller wasnt aware at the time, especially if they bought it from new.

Typically sellers will talk of the ongoing costs of ownership not the one off cost of the purchase. The fees are out of their control in the same what your lender charges for transferring the funds are etc. You can try and renegotiate the price for the property to fact this in but they may just close the transaction on you.

What to me would be much more important is how that £25 may change over time… is it going to stay that for as long as the properties stand or is it going to increase over time?

Chief_of_Staffy

Basically you work out the cost you're willing to put up with for being ripped off and controlled in your own home, and compare it with the actuals.

woodpecker

https://forums.moneysavingexpert.com/discussion/comment/82115468#Comment_82115468

The house is about 30 years old and the seller has lived there 5 years, so they would definitely be aware.

As you say, the £25 a month could increase, and that's one of the queries I have made (in fact it was the first thing I asked about).

Apparently the FME1 pack will include info about this.

As another poster has mentioned, the controls on vans/pets etc. could be seen positively, as both can be a nuisance.

jaybeetoo

Personally, I would never buy a leasehold property or a property with management fees. They are a rip-off and will just increase over time and make the property harder to sell in the future. Developers are looking to make more money now the government has indicated it will cap ground rent (although we’ve yet to see when).

RelievedSheff

Earlier this year we bought a 7 year old freehold property with management fees.

I think all in it cost us £320 for the management company fees involved with the sale, unfortunately there is no way around these unless you can get the vendor to agree to pay them. The fees will all be listed in the paperwork you receive from the management company. Worth also noting that there is usually a small fee for registering a remortgage as well later down the line.

Our annual management fee has gone down this year, we have just paid it. Last year which the vendor paid was £167 we have just paid £156 for this year.

The management company will have no interest in enforcing the covenants. They just come in do their jobs they are paid for and then go away again. That said ours do a really good job of maintaining the grounds around the estate, they are far more proactive than the local authority were on the previous estate we lived on just up the road.

The covenants on our estate are really not enforced at all. We are not supposed to have commercial vehicles, caravans or motorhomes on the drive. Every other property has one or another, including us. It was almost a deal breaker for us that we couldn't have the motorhome on the drive until we spoke to some of the neighbours and they confirmed nothing was enforced.

Lots of other covenants are breached as well including garden out building sizes, converting integral garages into additional accommodation, satellite dishes and TV aerials, removing planting, the list is seemingly endless. The developers have no interest in enforcing the covenants now that they are off site and built out and the costs involved with an individual bringing a case to enforce them and the very low likelihood of success mean that in practice they are not really worth the paper they are written on.

We would have preferred not to have a management company involved but realistically if you are buying a house built in the last 20 years or so then you are very lucky to find one without.