Estate Management Charge

Tancred · 31 July 2013 at 10:08AM

Yesterday I found out from my solicitor that the house I intend to buy has a series of restrictive covenants, most of which are pretty routine stuff, however there is also a yearly management charge (currently around £100) that is payable to a company
responsible for 'managing' the common areas of the estate.
This was an unpleasant surprise! :mad:

The estate is newly built one, with the first houses erected in 2007 and completion due to take place in 2015. It's not a particularly exclusive one - the properties are a very wide mix, ranging from flats to executive five bedroom detached houses and everything in between. There is also an area dedicated to 'affordable housing' for local residents. The house I'm buying is a three bedroom detached and definitely freehold.
What I'm unhappy (to put it mildly) about is being forced by a legal covenant to participate in something that I believe should be covered by council tax. After all, it's not as if residents will get a rebate from their council tax, will they?

The other question I have is what mechanism is in place to control this yearly 'rent charge'? What is to stop the management company taking as much money as they can from residents without any justification?

Is a management charge the norm now on new estates? I don't see the logic, because the roads and local infrastructure will be adopted by the local council once all the houses have been built and whilst there may be justification for a charge beforehand, there will be no justification once the council takes 'ownership' of the estate.

Tancred · 31 July 2013 at 11:29AM

Bump, bump......

puregeordie · 31 July 2013 at 11:39AM

Hello, Yes. As we will be getting charged (covenant)the same thing your on about, see here, thanks.
http://forums.moneysavingexpert.com/showthread.php?t=4673173&highlight=

vivatifosi · 31 July 2013 at 12:04PM

£100 per year is pretty low. It is £230 here. It covers the maintenance of unadopted common areas (such as car parking), communal fences, insurances, gardening and planting, handling of queries, etc. It also allows for the collection of a sinking fund so that there are no unpleasant surprises. These are not covered by council tax as the council has not adopted those areas.

It is definitely worth the residents running this company themselves (possibly with paid help if a big estate) as it really helps keep the costs down.

bylromarha · 31 July 2013 at 12:17PM

Tancred wrote: »

The other question I have is what mechanism is in place to control this yearly 'rent charge'? What is to stop the management company taking as much money as they can from residents without any justification?

NONE - you accept it or don't buy the house. We questioned the fact it was so much in the management companies favour when we bought our house and everything our solicitor did to try to tighten it up got rebuffed - we were told in the end buy the house with the contract as it is or walk away. We were verbally assured, repeatedly, it would only go up in line with inflation, should it ever go up at all. Our charge has since gone from £80pa in 2006 to £420pa in 2013.

Is a management charge the norm now on new estates? Yes I don't see the logic, because the roads and local infrastructure will be adopted by the local council once all the houses have been built and whilst there may be justification for a charge beforehand, there will be no justification once the council takes 'ownership' of the estate.But this takes years - our estate was completed in 2012 and council still haven't got it on the list to adopt. Took 2 years for me on a personal campaign to get our "new" road included on the bin round - despite the fact the bin lorries drove past our house about 5 times on bin day.

It is a massive bugbear round here, especially as we pay the management company and they do nothing. I investigated the estate taking over the management for the estate, but those who could be bothered to contribute to the debate preferred to stick with an official company and whinge about the high charges than take control themselves.

If it's Solitaire/Peveral - whatever they want to call themselves these days, get out now.

hazyjo · 31 July 2013 at 12:29PM

Yes, it is common on new(ish) estates. I moved from a 10 year old house in April and that had a yearly charge of, I think, around £100-200, some of which covered insurance for our two garages (separate from house, under a flat).

Jx

Tancred · 31 July 2013 at 12:49PM

vivatifosi wrote: »

£100 per year is pretty low. It is £230 here. It covers the maintenance of unadopted common areas (such as car parking), communal fences, insurances, gardening and planting, handling of queries, etc. It also allows for the collection of a sinking fund so that there are no unpleasant surprises. These are not covered by council tax as the council has not adopted those areas.

It is definitely worth the residents running this company themselves (possibly with paid help if a big estate) as it really helps keep the costs down.

Ahem! £1,700 a year of band E council tax is most definitely not low and anything extra - even £100 - is not welcome! In any case, my real concern is what controls are in place to ensure that this amount doesn't keep going up 'ad infinitum'? Moreover the covenant states that the rent charge is payable forever, and therefore not dependent on the local council's adoption.

Tancred · 31 July 2013 at 12:53PM

bylromarha wrote: »

It is a massive bugbear round here, especially as we pay the management company and they do nothing. I investigated the estate taking over the management for the estate, but those who could be bothered to contribute to the debate preferred to stick with an official company and whinge about the high charges than take control themselves.

If it's Solitaire/Peveral - whatever they want to call themselves these days, get out now.

Hmmm. And I assume you also get no council tax rebate to boot! :mad: Have you raised this with your local councillor or even MP? It seems absolutely outrageous and yet you don't hear a word about it in the press or on TV. If I lived on an estate with gates, security guards etc I could understand paying the charge, but otherwise no way.

The company managing the estate where my intended house is located is called HML Andertons.

ging84 · 31 July 2013 at 12:56PM

I am currently looking at a new build, which has such a covenant attached, not all the houses have to pay a service charge, only the ones who have use of the communal parking facilities, the rear of my property there is a parking area which only has 2 parking spaces, which are both mine, yet they have designated it a managed facility and expect me to pay 100% of the management costs for that area, i am currently in a dispute with them as to the need for a management agency for that area.

I have 2 major problems with the use of a management agency, 1 the majority of the costs are their admin fees, for my area it would be over 60% admin, but even for some of the other areas where there are more people paying in the fees are close to half what they actually are paying.
The other major problem i have is that there is no limit on the costs, and other services can be added in as long as they are "reasonable". So if they decide they need daily security patrols because someone got intimidated by a 12 year old, they can add them, if they do a health and safety assessment which says they need more lighting, they can install them etc. This is the sort of thing i am more worried about with my property

Tancred · 31 July 2013 at 12:59PM

hazyjo wrote: »

Yes, it is common on new(ish) estates. I moved from a 10 year old house in April and that had a yearly charge of, I think, around £100-200, some of which covered insurance for our two garages (separate from house, under a flat).

Jx

In my case there is an extra charge for leasing the car port - not clear what this is but it's a percentage of the insurance of the overall building where the car port is.

Tancred · 31 July 2013 at 1:02PM

ging84 wrote: »

I am currently looking at a new build, which has such a covenant attached, not all the houses have to pay a service charge, only the ones who have use of the communal parking facilities, the rear of my property there is a parking area which only has 2 parking spaces, which are both mine, yet they have designated it a managed facility and expect me to pay 100% of the management costs for that area, i am currently in a dispute with them as to the need for a management agency for that area.

I have 2 major problems with the use of a management agency, 1 the majority of the costs are their admin fees, for my area it would be over 60% admin, but even for some of the other areas where there are more people paying in the fees are close to half what they actually are paying.
The other major problem i have is that there is no limit on the costs, and other services can be added in as long as they are "reasonable". So if they decide they need daily security patrols because someone got intimidated by a 12 year old, they can add them, if they do a health and safety assessment which says they need more lighting, they can install them etc. This is the sort of thing i am more worried about with my property

This is precisely my concern. As an individual resident you are deprived of your rights. It seems to be a legalised form of communism, where a 'higher authority', accountable to noone, makes decisions arbitrarily and then imposes them on to the residents. At the very least the directors should be elected by estate residents.

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Estate Management Charge

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