To buy a new build with an "estate management fee"

[SapphireBattersea]

I am nearing completion on buying a new house, its a new build but about ten years old

Only just found out there's an estate management fee, not a problem really it's about £20 a month for grass cutting upkeep of the roads and communal areas

However I've now Done a bit of googling and seen some horror stories, seems to be a licence to print money for some unscrupulous twats, there's been incidents where the management company has sold the contract on and they've massively increased the costs to piss taking levels, then of course you're stuck with the house cos no one wants to buy it with those sort of charges

Can I ask for posters experiences paying these fees? Has anyone had this actually happen?

Other than this it's my dream house

I think this is pretty standard for new build properties. £20pm is actually pretty cheap too.

It was usually agreed as part do planning permission with the council so that they do not have to bear the cost of grounds maintenance after the builders have left.

Yeah I'm fine paying it as that seems a fair amount

I'm just worried it will shoot up over the coming years 🤦🏻‍♀️

@SapphireBattersea I'm a mortgage adviser and we have a blanket ban on lending to freehold properties with management fees, as the contracts are absolutely ludicrous and basically the company can increase them year on year with no cap. I work for a large high street lender and it was recently announced as so many people have been stung by this. I would absolutely not agree and the fact it's been hidden/not mentioned until this point it's testament to this.

I've lived in several new builds, and £20 a month is reasonable.
Have you googled the management company?
We never had a problem with rising costs, but some companies were more proactive than others!
I could be talking nonsense here, but I think you may be able to ditch the company if all residents agree. Worth looking into anyway - read that small print!
Good luck in your new home

The management company is employed by the residents, the residents can sack the company as far as I am aware

@stylishnummy really? The developments live on is freehold (scotland) but we have a management company. There are over 4000 houses going up. You’re company is banning 4000 clients in one swoop...as more developments get built they will be banning a lot of potential customers and the management fee has nothing to do with the mortgage?

That’s weird StylishMummy as most new builds will have a management fee associated with them these days. Local authorities don’t seem to take on this maintenance work any more so it’s passed to management companies. I seem to recall that there has been some government legislation which will limit the fee rises.

Our estate has this. Aside from the odd rise to match inflation, it's the same now as ten years ago. They only cut grass and maintain play parks really so there isn't much scope for big rises.

It's very common here, pretty much every estate built in last 15 years has a management fee.

Our estate has this. Anything costing over a certain amount has to be voted on or signatures collected. We can also sack the management company at the AGM, which would almost certainly happen if the costs went up extortionately.

I'd investigate the company first. Ours are useless and they might as well go out and chop the bushes with knives and forks. We have to keep complaining that we are paying for poor service.

we looked at a house on a similar estate. Id done a bit of googling prior and when we visited the sales office I asked. Now if Id never brought it up they would never have mentioned it!

We walked away. Its a massive no. No regulation , nothing on this for freeholders(as you`ve read I assume). Even been discussed in parliament.

Leave well alone. Until its regulated I wont be touching anything like this. I mean in a few years we may have wanted to move? Wholl buy the house with a management fee of goodness knows what???????

as the estate agent for us selling our house says (management fees arn`t a thing around here), that makes it unsellable!!!

Our estate has this, legal action being threatened to everyone who wont pay because they're not doing their job.

Except for parking management, which has lead to many of the residents being ticketed in their own private bays repeatedly.

I would avoid. I love this house, quite like the area, but I'm considering moving because of problems with the management companies.

What does your solicitor advise?
I would investigate this further before I just relegated it to the ‘just 20 quid a month’ pile ..

The new estate near me has this. The cost has trebled in 3 years to £720 a year. That’s on top of council tax.

As others have said it’s fairly standard and who would cut your grass otherwise? Don’t think that makes them “twats”. I Also
Find @stylishmummys post strange as I work for a developer with management fees on the developments that need them and I know where people get their mortgages and the management fees have never been a problem maybe you’re thinking of something else?

Check the company but we've had no problems with ours in five years. The fees haven't increased either, and there's no issue selling the houses.

This has been on Panorama recently. A large portion of these management companies start out with reasonable fees then increase them rapidly making the houses unsellable. Yes, a lot of these companies are run by greedy twats.

Our estate has this we can sack them and appoint someone new.
Check out if yours is the same.

www.theguardian.com/money/2017/dec/02/homeowner-freehold-management-fees-unadopted

www.bbc.co.uk/news/uk-england-46279048

Debate in Parliament: www.theyworkforyou.com/whall/?id=2019-01-22a.119.0

Not a new concern: hoa.org.uk/2016/11/problems-facing-freeholders-new-developments/

Ours is reviewed annually based on costs for work that has been done. This year we got a refund. Sometimes we pay a small excess. No problems so far. I wouldn't let it put you off if you love the house.

We pay around £175 a year for maintenance - includes grass cutting and maintaining flowers and ashes in all communal areas, upkeep of a playground, snow clearing in winter, etc.

We've lived here for almost 14 years now and its gone up by sound £5-10 in all that time.

The management company are residents and they were elected when the houses were first built. We get newsletters around 2-3 times a year, and a summary of the accounts, etc. Once a year there is a meeting annually when the board members, the accountant, solicitors, etc are re-elected. This is usually just a formality and it stays the same, unless someone wants out or there are any objections. Ive not actually been to the meetings as I am happy with the way it is run.

The management fee we paid i an apartment complex prior to here was much much dearer - 4 figures a year, and that did keep going up. That was run by a company, set up before the apartments were sold, and we had little input at all.

@Passthecherrycoke no- they have banned mortgages on freehold houses with management fees in England and Wales (different for Scotland). I worked for a Building society who have a huge market share until 3 months ago and their policy had just been updated to reflect the number of people struggling to sell on their properties due to these fees. They go from £20 to £200 a month within a few years and make the property almost unsellable, so not safe for a mortgage lender to use as security.

Every development can sack them and appoint someone new, it’s a basic precedence of the agreement.

I’ve worked in the area for a long time and tbh the only high ones I have seen are in luxury situations where they’re doing a lot (landscaping, tennis courts, indoor pools etc) obviously if that’s the lifestyle you want you have to pay for it.

They can’t just charge you for nothing, it has to be a service (ie lawn mowing) and they can charge a maximum, legislated admin fee for arranging this. There are varying degrees of quality with management companies but it’s more about delivery of service than charging you for nothing (I have never heard of anyone trying this, in over 20 years. It’s just not possible)

@StylishMummy Not sure which company you work for but none round here have any issues. None of the mortgage companies not the IFAs we have used, or have contact with - dh is a solicitor and deals with these people daily - have any issues whatsoever.

Which building society is that? We’re selling them every day and we generally know which lenders would avoid our developments (maybe because they’re too close to industrial units etc) but I have never ever come across a lender refuse a property with management fees. As above, most have them because developments are generally private land so who maintains the communal areas of road and grass if no management company?