Buying New Build House - Management Company Worries

RichardCUK · 18 November 2019 at 3:17PM

RelievedSheff wrote: »

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.

Its not the fact there is a cost. Its the fact they didnt say your signed into a contract and they can do what the hell they want and theres nothing they can do about it. THats the issue I have

OldMusicGuy · 18 November 2019 at 3:30PM

Welcome to the world of fleecehold. You haven't been lied to, you have found out what's behind the annual management charge. You were naive to believe this was a simple fee-based arrangement.

This is very common. Even though you own the freehold to your land, you are locked in to a long-term agreement to pay maintenance charges to an externally appointed management company. I lived with this for 20 years and recently it became a nightmare and required us to form a residents' association to try to keep on top of the management company.

Your contract sounds similar to ours - the developer appoints the management company, you can't change it, the management company will have all kinds of covenants on your property and there will be the opportunity for them to keep increasing the management fee every year, so your costs will go up every year.

If your management company is anything like ours was, they will overcharge you and charge you for work that was never carried out. It will take a lot of time and effort to get this sorted out (for example in our case we had to take the management company to the Ombudsman twice to get incorrect billings corrected).

The way the law is right now, you have no right to take control of the common areas by forming a residents management company (unlike leasehold flats). So you either suck it up or you don't buy this property, or any other property with a similar arrangement.

We've just moved and there's no way I would buy a property again with this kind of arrangement.

RichardCUK · 18 November 2019 at 3:43PM

Yeah so far we havent signed anything. The only thing is that were in a moveplus scheme. So we would now foot the bill for the estate agents they got involved to sell our house and any legal fees the solisitors have already carried out.

I feel we shouldnt be charged as all this was hidden, they didnt make it clear and neither did the solisitors who are a recommended solisitors for the developer. If they said you pay a maintenance fee and enter a contract here is what it looks like have a read. Then we would have noped out. But they didnt they kept it from us until they sent the deeds etc for us to sign. To be its all a bit underhand and they have hidden it from us until now as they think we will carry on as we dont want to lose potentially thousands of pounds.

This is the first time I heard of fleecehold. Its utterly shocking that the government havent stepped in to at least put caps on the percentage they can up it each yeah

davidmcn · 18 November 2019 at 3:48PM

RichardCUK wrote: »

the solicitors who are a recommended solicitors for the developer

There's your first mistake. Why would you want to use a "tame" solicitor who's not going to ask any awkward questions?

In general if you want to know what you're letting yourself in for, best to do your research first before you start making reservations etc.

RichardCUK · 18 November 2019 at 3:49PM

OldMusicGuy wrote: »

Welcome to the world of fleecehold. You haven't been lied to, you have found out what's behind the annual management charge. You were naive to believe this was a simple fee-based arrangement.

This is very common. Even though you own the freehold to your land, you are locked in to a long-term agreement to pay maintenance charges to an externally appointed management company. I lived with this for 20 years and recently it became a nightmare and required us to form a residents' association to try to keep on top of the management company.

Your contract sounds similar to ours - the developer appoints the management company, you can't change it, the management company will have all kinds of covenants on your property and there will be the opportunity for them to keep increasing the management fee every year, so your costs will go up every year.

If your management company is anything like ours was, they will overcharge you and charge you for work that was never carried out. It will take a lot of time and effort to get this sorted out (for example in our case we had to take the management company to the Ombudsman twice to get incorrect billings corrected).

The way the law is right now, you have no right to take control of the common areas by forming a residents management company (unlike leasehold flats). So you either suck it up or you don't buy this property, or any other property with a similar arrangement.

We've just moved and there's no way I would buy a property again with this kind of arrangement.

I guess we were niave that this utter crap can be allowed to happen. Why would we think "oh look a maintenance charge. I bet its tied to a company thats run like the !!!!! who will fleece us for as much money as possible."

RichardCUK · 18 November 2019 at 3:52PM

davidmcn wrote: »

There's your first mistake. Why would you want to use a "tame" solicitor who's not going to ask any awkward questions?

In general if you want to know what you're letting yourself in for, best to do your research first before you start making reservations etc.

I guess we have learnt the hard way. It genuinely didnt cross our minds this sort of thing exists and by the sounds of it most people who buy new homes dont even realise it. I just told a guy at work and he said he has maintenance fees. I told him chances are they can hike the price up etc and his face dropped. Why? Because they never informed him thats how it works

OldMusicGuy · 18 November 2019 at 4:15PM

Like someone else said, at the end of the day they are going to charge you money every year for doing a bit of work and that money will go up. The first year we moved in the fees were around £250 per annum, 20 years later they were around £500 per annum.

Things got worse in recent years as the management company (FirstPort) had new management and they seemed to be trying to increase the fees whenever possible. This really put me off this kind of arrangement.

Your solicitor should have told you about the maintenance contract (it will be part of the transfer of land) and if they did not they would be at fault IMO. Your solicitor appears to have done this. The way buying a house works is that you are liable for costs up to exchange and this is all part of the legal discovery process.

However, it's up to you to decide if you want to accept the terms or not. I suspect as the solicitors are recommended by the developer, they think the developer's terms are quite reasonable. An independent solicitor might have taken a different view and highlighted the issues here. But you are very unlikely to be able to change these terms, they will be take it or leave it. So the solicitor's opinion isn't of much value - it's up to you to decide if you can live with the terms of the maintenance agreement or not.

Oh, and it cost us £350 to get the "management pack" to allow us to sell the house.

rachel230 · 18 November 2019 at 4:42PM

RichardCUK wrote: »

Yeah so far we havent signed anything. The only thing is that were in a moveplus scheme. So we would now foot the bill for the estate agents they got involved to sell our house and any legal fees the solisitors have already carried out.

I feel we shouldnt be charged as all this was hidden, they didnt make it clear and neither did the solisitors who are a recommended solisitors for the developer. If they said you pay a maintenance fee and enter a contract here is what it looks like have a read. Then we would have noped out. But they didnt they kept it from us until they sent the deeds etc for us to sign. To be its all a bit underhand and they have hidden it from us until now as they think we will carry on as we dont want to lose potentially thousands of pounds.

This is the first time I heard of fleecehold. Its utterly shocking that the government havent stepped in to at least put caps on the percentage they can up it each yeah

You should be refunded for any expenses you have incurred due to not being given the full facts. Many others have been refunded in full on the threat of taking developer to court. The law is on your side.

HanPop · 18 November 2019 at 4:58PM

We currently own a 6 year old house and we pay £10 a month for the grass cutting, it hasn’t gone up in that time and they do actually cut the grass. We are moving to another new build estate with the same set up and to be honest the majority of new houses have this so if you want new then you’ll probably have to accept that.
Saying that it obviously does bother some people as our buyer pulled out actually after we were due to exchange purely because of this in June which was obviously very stressful for us (considering she already knew about the service charge for weeks before). However our estate agent has sold many on our estate so it doesn’t mean you’ll never resell (as we have done).

davidmcn · 18 November 2019 at 5:00PM

rachel230 wrote: »

You should be refunded for any expenses you have incurred due to not being given the full facts. Many others have been refunded in full on the threat of taking developer to court. The law is on your side.

Does that apply even if "the full facts" are the market norm?

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Buying New Build House - Management Company Worries

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