Buying New Build House - Management Company Worries

RichardCUK · 18 November 2019 at 12:55PM

So we have just sold our house, exchange and completed after 16 months of hell. We thought it was easy going from then onwards. We had found our dream home on a new estate in a nice area. We viewed the house and reserved it, we were told there was a maintenance fee of £144 a year to maintain the park and green areas. This seemed like a fair price.

Cut to two days ago.

We finally get the legal documents from our solisitor and it has the coventant in regards to the maintannce company. The company is MeadFleet Ltd.

We read the whole legal document and upon reading it were were shocked that by aggreing the maintance covenentant they can:

1. up the price as much as they like as we cant contest it
2. they can flat out not do the work and we cant do anything about it
3. Charge for additonal services and we cant do anything about it
4. Cant take legal action or they will put their legal costs on us
5. Cant change the maintnace company if the whole community decides their service is not to standard

We feel like we have been lied to. At no time did they say we enter a contract with the company in order to buy the house, they just said it was a yearly fee, nothing about us having no rights at all in regards to this.

So far we havent signed anything but if we pull out we will lose a lot of money.

Upon reading all the low reviews online and nurmours stories I've found online MeadFleet are a shocking company and this kind of thing is happening with every new build development that has spaces that havent been adopted by the council.

That is also a slap in the face as it feels like its another council tax.

Are we over reacting or is it wise to stay away from signing into this. We just fear the prices will double once the development has completed and then they say oh yeah our estimates are way off please pay us double and then keep upping it every year just as they seem to do with every other development. It seems like a scamand basically racketeering.

pinkteapot · 18 November 2019 at 12:58PM

This is rapidly becoming standard for new-build freehold houses - and it has the potential to be a problem in the future.

The government has introduced limits on how much leasehold service charges can rise by. But freehold service charges aren't protected.

Standard now is for the builder to set up a separate Ltd company - the management company. The builder owns this company while the site is developed. Once finished, the management company is sold off - often to a pension or insurance company, who buy them up because they generate predictable, long-term income.

I know one local developer in this area who does it differently - their management companies are handed over to the residents when the site is finished - so all the residents own a share in it and appoint a group to manage it. The benefit is that price increases are more likely to be reasonable. The downside is you're reliant on a few residents stepping up to get involved.

As I said, this is pretty much normal on new-build houses now, so if you want a new-build you have to accept it. But be aware there have been stories of service charges doubling in the second year, so budget for future increases.

davidmcn · 18 November 2019 at 1:39PM

RichardCUK wrote: »

Are we over reacting

You are if your alternative options are other newbuild properties, or even just relatively modern properties, as this sort of set-up is pretty much the norm.

Yes, in theory they could charge you a billionty pounds for doing nothing, but in practice I expect you'll just have the mild grumble about the principle of being billed for overpriced grass cutting rather than anything causing you genuine hardship.

RichardCUK · 18 November 2019 at 1:42PM

Yeah so far from the looks of it the development started in 2017 and so far the charges havent gone up. My guess is because the development is still on going.

They have on last phase which shouyld last a year or two. By the end there will bw 200 which is the number they always said there would be.

My guess is the management company will hike the price once the developer has completed and packed up?

If we knew that the prices were just related the RPI then thhat would be OK but it can literally be anything.

I read somewhere that the governement was planning to have some statutory rights in place for freeholds by next year but I dont know if there is any truth to this.

We will have to ask out developer if the maintenance is being handed over the resdients or is soley being kept with MeadFleet.

RelievedSheff · 18 November 2019 at 2:03PM

You knew there was a maintenance charge when you reserved the property so I am not quite sure why you have now decided that it is such a bad thing. It certainly isn't uncommon on new build estates and estates dating from the last ten years or more.

£144 per year is £12 per month. If this gradually increased to £20 per month or even £25 per month would it really be such a big deal?

We have been lucky and bought on an estate with no service charges. The local authority took responsibility for the green spaces and they do an excellent job of keeping them looking well kept.

daveyjp · 18 November 2019 at 2:09PM

Until there is proper legal protection for new home buyers who feel they have no option to sign up to charges I wouldn't go near the standard contract document.

I would request a specific document, negotiated between me as buyer and the developer. If they refused a variation to standard I'd be suspicious and walk.

G_M · 18 November 2019 at 2:14PM

Personaly I would never sign up to an agreement like this.

But that pretty much means not buying a new build on a new estate.

eddddy · 18 November 2019 at 2:23PM

RichardCUK wrote: »

We will have to ask out developer if the maintenance is being handed over the resdients or is soley being kept with MeadFleet.

But you can't rely on their answer - so if they say "yes, we plan to hand it over", and then they don't, there'd be nothing you can do.

Unless... they agree to say "yes" and have it included in your purchase contract. (Which is probably unlikely.)

RelievedSheff · 18 November 2019 at 2:44PM

G_M wrote: »

Personaly I would never sign up to an agreement like this.

But that pretty much means not buying a new build on a new estate.

Not all there are estates with no management charges.

rachel230 · 18 November 2019 at 2:46PM

New Build Estates come with unregulated and uncapped ever rising service charge fees which in some cases end up higher than your actual mortgage!
Have a look at the Meadfleet Property Management Company issues Facebook group and also join the National Leasehold Campaign Facebook group for good advice. People, who pull out when the true facts come out, are now claiming back (successfully!) their full deposit, solicitor fees etc because the full facts were concealed until the eleventh hour and had the true facts been known earlier they would not have proceeded with buying the property.
https://nationalleaseholdcampaign.org

SallyAnneBooth · 18 November 2019 at 2:47PM

Yes I walked away from purchasing a new build due to exactly this reason (Google "Fleecehold").

Rather not had the headache and worry about what the Service Charge bill is going to be every year.

Also take into account if/when selling in the future which could put future buyers off as the service charge will most likely be higher than it is now and you will probably have to purchase a "Management Pack" as part of the conveyancing which can cost a few hundred quid.

Best of luck OP, let us know how you get on.

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Buying New Build House - Management Company Worries

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