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

(We are in England)

There is a new estate near us that was built in 2012 and it still empty. The 12, £400,000 houses are all leasehold and the initial fees are described as £2,000 a year for maintenance and £1,500 a year for "estate maintenance".

They probably remain empty because of the lease and the unrestricted fees.

OP we pay £150 a year to our management company and I'm actually struggling to see what the money is going towards. They mow the lawn once every few months and do minimal landscaping at the entrance to the close. (I'm talking a 6ft x 2ft area) I can't see how this totals 40 houses paying £150 a year to them.

So if the house is ten years old, how much has the fee been for the past ten years? I know that's no guarantee that the fee will stay the same, but it might provide some reassurance?

origamiunicorn Just write them a letter and ask for a breakdown with invoices showing what you’re paying for. You’re more than within your rights to do that.

Our estate has this and us residents have formed our own management company, subcontracting the gardening etc. Houses here are bought and sold so presumably lenders don't have an issue with it.

These fees have totally put me off any new build now. I couldn`t find one positive thing and I dug!!

I couldnt live in a house wondering what next years bill would be , knowing that because its all legally tied up in the deeds, I would have to pay it! Its only regulated if you are leasehold. Zero protection if youre free hold. The problem is these fees on freehold properties are a relatively new thing. The law hasnt caught up yet, so the maintenance companies (often related in some way to the developer) have free rein. And youll still be paying council tax as usual.

It was a shame as we loved the house we saw. But the fact the sales team didnt want to talk about the fees just made me feel I couldnt trust them at all. On any newish house we view, my first question will be is there a service charge?

origamiunicorn

We get a summary of costs each year, and a income/outgoings summary too, and a note on the current balance.

We have quite a lot of communal areas, so a lot of grass cutting and trimming of hedges, trees, etc. as well as park/playground maintenance. The snow clearing varies each year - sometimes high when its a bad winter,rand sometimes not - but we still pay 'just in case' for the snow cleaning as its a nightmare if its a bad winter.

We are freehold - its gone up by approx £5-10 over 14 years so far. I dont' think that's bad tbh.

I couldn`t find one positive thing and I dug!!

Plenty of positives here. Bear in mind, very few people take to the internet to post their dull “it’s all ok” stories unless it’s specifically asked.

Millions of people live in properties with maintenance charges, whether it be new build estate charges or leasehold charges. The vast majority of them go along with few problems.

I lived in a flat here the freehold was owned between all the flat owners and that was still a nightmare and increased regularly without much being done to maintain the communal spaces as the people in charge of the accounts wanted to build up a big enough pot in case the roof ever needed replacing.

It was rediculous.

So no I would never buy a freehold house that had fees tied to it like this

“I lived in a flat here the freehold was owned between all the flat owners and that was still a nightmare”

That’s really odd because if you had a share of the freehold and the flat owners owned the freehold of the building it was you guys who increased it regularly?

Yes in theory it was. We would all go to shareholders meetings but it would still be increased because of the concern that something really expensive might need doing one day in the future.

I was one of the newer owners and the others had owned theirs since the block was built int he 80’s so just went along with whatever the rest said and my voice didn’t really count for anything

Well there you go then. It wasn’t some
Evil twatty company, it was you lot

Seriously though it’s not easy, especially as you describe with some dominant personalities

The devil's in the detail here and your solicitor should be going through them with a fine tooth comb.its not what the fees are now that matters as much as how they can increase in the future.

Wouldn't touch it with bargepole. ...we're looking and our lawyer just said 'avoid avoid avoid...'

You can end up with unaffordable fees that have been rapidly increased, and then makes your home unsaleable. ...

Dig and dig some more........

The legislation just isn't there yet

Last year we pulled out of the purchase of a new build when I googled the management company that the site would be using. We lost over £2500 but there was no way I would buy a house under the conditions required.

When it was first presented to us, the developer told us that the management fee was £140 per year (approx). We thought this seemed fine and went ahead with paying the deposit and ordering carpets etc for the house. However when the contract eventually came though, it said (paraphrasing here) that we were required to pay the management company any sum that they asked for in any given year. If they then spent more than that we were required to pay any extra. And that only in the first year the amount would be the £140 stated by the developers.

So the contract effectively forced us to sign a blank cheque every year to the management company. When I spoke to my solicitor about what would happen if we were unhappy with the management company, or what they were charging, they said that because the devloper sells the land to the company, they are the owners as well as the managers. This meant that there was nothing we could do if were were unhappy apart from taking them to court to try and demonstrate their charges were unreasonable.

I then googled the company to see if I could find anything out about them, thinking that if they seemed reasonable we would still go ahead. Unfortunately what I found were horror stories of them doing almost no work whilst the fees went up hugely. I found articles in the Times and Guardian highlighting several case studies where the fees had skyrocketed. And many angry householders posting their own issues with the company. There is a facebook group for affected homeowners and a 1* trustpilot score where people were posing their own (bad) experiences.

I would be very careful. Google the company involved and see what you can find.

We did move house anyway only a few months later, to a better location, to a house with no management fee and £70k cheaper. So it was a happy ending for us. Hope yours will be too, whatever you decide.

Stylish mummy I think you are talking about people buying leasehold houses on new build estates, many people have been sold property on this basis which they did not understand. They used the builder’s lawyer so have effectively been mis-sold. A future mis-selling scandal.

We had a management company, they recently received raised their fees, so the residents association promptly fired the company and replaced with a company that charges the previous lesser rate.

Our is a bit less than £20 per year.

Per month

@StylishMummy I've only heard of this being a problem for these dodgy leasehold new builds, where the ground rent can be sold on and quickly become extortionate. Your company must be missing out on a lot of business!

Our first house was on one of those estates. No problem getting a mortgage (I've never heard of management fees as a reason not to offer a mortgage?!!) but the management people were somewhat twatty and for the c.£140 each family paid per year we received virtually nothing. They didn't mow the lawns properly or trim the hedges or anything they were contractually obliged to do, and whenever this was raised at management meetings they'd go "oh, well if you want us to do

I've lived in a new build for 5 years. It's about £120 a year, has never risen and houses sell without issue!

I should add that ours does include individual house lawns and gardens, only communal areas.