WWYD new build property purchase

[Ginjanotaninja]

I'm in the throws of buying a new build property and I need independent perspectives, as I've just had the contracts through and I'm not happy, (in fact if I am going to be any of the seven dwarves then it's probably grumpy) but I wonder of I'm blowing it out of proportion. Firstly let me say the house is great, good build quality, massive garden, not overlooked and I got a fantastic deal.

There is an estate charge at present £80 per year and the site people were re-assuring about it. However I've read the contract in full and there are lots of covenants to do with the charge, and basically it boils down to an almost open cheque book approach, with no cap on the charges or indeed any sight of contract with this maintenance company. It not only covers grounds maintenance, but also potential fly-tipping clearance, wall rebuilding etc. The company in question get slated by seemingly everyone, they do what they want or more often don't, overcharge and they have been investigated and continue to be so. I've scared/educated myself on them and they come across more cowboy than Buffalo Bill.

I've heard this described and a new form of fleecehold, and rather than be a cash cow, have a terribly restrictive covenants, and potentially issues selling etc down the line do I walk away or do I continue to what is actually a decent home?
Thanks
Ginja

Walk away. Join Hornet on Facebook.

Step away.

Yeah that doesn't sound good. step away.

I wouldn’t buy it.

FWIW this is standard on new build estates now and since around 2010. It’s awful but you’re unlikely to find a new build without these charges nowadays.

Have your lawyer look at it. What are the covenants? How have the other buyers dealt with them? £80/year sounds like nothing, and there should be some sort of explanation his it’s calculated.

I cannot see how it affects the freehold nature of the property. It hasn’t changed it to leasehold has it? It’s a maintenance agreement. Most new builds have restrictive covenants. Keeping caravans, boats, not having fences, colour of front door etc etc etc.

The problem with maintenance is that it is an open ended cost. Rebuilding a wall is thousands £. Who is going to maintain communal areas? Who will clear up fly tipping? The Council should do the latter but lots of people like their estates nicely maintained for minimum effort. £80 a year isn’t much but I accept your concern about possible escalation of costs.

Of course, if you are not happy, walk away. However decent new builds do often have this. We have a management committee of feeeholders on our small estate and we manage grounds maintenance etc. Is there a possibility of the freeholders estsblishing their own management company and terminating the agreement set up by the developer? That’s what we did.

It sounds pretty standard for a new build. If the management company is any good they'll have a sinking fund for major works. It wouldn't worry me.

@bubblesbuddy

That isn’t possible unless the TP1 actually allows it. I cannot escape the maintenance company on my estate.

Join Hornet on Facebook for lots of info!

See also www.helengoodman.org.uk/latest-news/2018/11/02/estatefees/

We got lucky then!

Make sure the estate charge is not a rent charge. If it's a rent charge, they can raise the price to anything and if you don't pay they can attach a lease to your house.

Whilst an estate rentcharge will often only require landowners to make nominal or fairly insignificant payments, the automatic statutory remedies available to Rent Receivers on default (coupled with any express provisions within the rentcharge itself) can be severe and can have significant unforeseen consequences not only for the Rent Payer, but also for the lender because of their potential to prejudice a lender’s security.

Remedies on default include an action for debt against the Rent Payer. In addition, if the payment remains unpaid for 40 days, there is a statutory right for the Rent Receiver to grant a lease to trustees over the Burdened Property for the purpose of raising monies to clear the arrears, interest and costs. There is no requirement to tell the lender that a lease is being granted and the lease will continue for its full term of years, even if the rentcharge arrears are paid or the rentcharge redeemed in full.[2]

The registered rentcharge lease will be binding on any future purchasers and against a lender in possession. This could significantly inhibit the value of the lender’s security because at any time the Rent Receiver could place tenants in the property , sell the lease to a third party or create a legal mortgage over it. Whilst title insurance might cover any quantifiable losses, it cannot force a Rent Receiver to cancel any lease it has granted. Some Rent Receivers will likely insist upon payment of a significant fee in order to surrender the lease.

Another remedy which can jeopardise the security of a lender is a statutory right of entry into possession of the Burdened Property until the arrears, interest and costs are paid. As stated, there is no mechanism to challenge the amounts due other than to bring court proceedings and therefore whilst any dispute is unresolved, the right of entry subsists which will have a detrimental effect on the security.

In addition to this statutory right, it is also common in many rentcharges for there to be an express right of entry or re-entry for non- payment of the rentcharge or other breach of covenant which if exercised could lead to the Rent Payer’s interest in the Burdened Land (and therefore the security) being forfeited.

www.eversheds-sutherland.com/global/en/what/articles/index.page?ArticleID=en/Litigation_Support/rentcharges

Basically if the estate rentcharge isn't paid, you could risk losing your house

^^ what @CedarTreeLeaf said!