House in Estate - Service charge

[SilverDoublet]

We are planning to move to a bigger house just before our children get into their teen years. We have seen a house in a small private estate which we can just about afford but will have no savings left after, but we expect to build up savings again quickly. We have just found out there is a grounds maintenance charge, covering lighting, gardening etc of €1000 per year. Is this normal in an estate? The house itself ticks all our boxes but I've never had to pay service charges before so it's making me somewhat sick thinking we'll be spending €20,000 minimum over the next 20 years.... Am I being stupid looking at it like that? Do most estates have service charges? I've always just lived on a busy main road and so has my husband.

It seems a bit high but hard to say without knowing how much maintenance is needed and what’s covered, ie repairing the road etc. Presume as it’s private someone has to do the maintenance as it would otherwise be the local council.

It would put me off completely as I presume, unless it's in the contract, you have no control over how much it may increase. If it increases a lot it may make your house difficult to sell. This happens in flats with service charges.

We have this and it goes toward maintenance of the area - streetlight bulbs replaced, railings painted etc so the area always looks well maintained. We have a cap on ours but think some estates don’t and the annual
cost increases so maybe check that it’s a fixed cost.

This is true of most new build estates. They are still run by the developer and the roads are unadopted by the council.

Can you afford another £100 a month. You do need to consider that you have no control over this cost, it could rise sharply if the developer is unscrupulous.

I would definitely find out what it covers. Many modern estates are required to provide management for any open space that is retained on the site - whilst often all the roads (and consequently street lighting) will be adopted by the Council. Not all roads are adopted though so this would be important to check on as that could result in high costs some years if lots of mending of the roads is required.

OP, look closely at what it includes, and how decision making is done.

Resurfacing the road is very expensive. Drainage too. Can they make ad hoc charges for 'necessary work'. Who decides when something needs doing? Can they increase the service charges by any % they wish?

It would put me off.

I would be wary. If they can include necessary works. A friend was in floods as their service charge went from a manageable 2k to 10k one year due to roads.

Any reputable management company would have a 'sinking fund' in place to cover any large expenditure.

I'd certainly want to know who controls this aspect and if house owners are part of the decision making process when work is necessary aside from basic maintenance.

It seems to be managed by one of the houses in the estate, the estate is from the 90s and very small, maybe 10 houses and only one stretch of road in front of the houses, less than 100 metres, so I would hope any road works wouldn't be too expensive.... Might still be expensive though...
It does have some big old trees which might need work done to them in the future...

Apparently there is a residents' meeting once a year regarding the spending of the service charge.

That would definitely put me off tbh, especially with your updates op.

Not sure if you are in the UK (guessing not) but you should find out who actually owns these common parts. For example, it is a company which all the homeowners are a member of and therefore they get to vote on services and spending? It is the original developer? Are there managing agents which run the services on behalf of the owner? If you have areas which are not adopted (ie not publicly owned) then someone needs to maintain them. You could see money by having a residents grass mowing rota, or gardening club, but some services will need to be provided externally and that costs money. £1000 doesn't actually sound too bad for a UK estate but might be considered expensive where you are. Ask the agent if you need more information before making an offer.

Where are you based?

I wouldn’t touch it with a barge pole. I purchased a house with a separate garage that was under a flat. I had to pay a service charge to a property management company for the ground lease of the garage and the so-called maintenance of the road and grass areas outside. They barely did any maintenance and it made it an absolute nightmare for us to sell the property when we moved. The sale nearly fell through because of it. Then there’s always the worry that the property management company may decide to increase their charges the following year, and each year after that.

A small estate which isn't adopted by the County Council may have big bills. I live on a big estate which 25 years on is still unadopted, but we pay €250 per house, costs are higher in the flats. That covers community gardens, tree services, road maintenance and communal multi sport pitch maintenance. If those costs are spit between only a few houses, it will be expensive.

You're right to question this, and it does seem expensive on the face of it. Perhaps the money is going into a savings fund for future repairs or perhaps there's one family who collect the money and are quite obscure about what it's used for.

I'd ask to see the accounts for the past couple of years. You'll see whether there's a healthy positive balance or whether "Bob at number 4" pays himself €500 for "inspections".

Hi following this post as we are in the same position 800 a year house freehold all looks in good condition now. Separate garage behind gates hedges cut and it all looks good. Asking solicitors how much has it increased over the last years 2 is there money in fund to cover and repairs!! There are flats there who will obviously pay more in charges. So at the moment waiting to hear back from solicitors we like that’s it kept in good order but worried too about future increases.

I'm just worrying about when I'm living on my meagre state pension, I'll have to rent out rooms to cover it if it keeps going up 🙈. But it's a big house so that should be possible. We are throwing all our money at it (which may be stupid) but we're not earning any interest on our savings and living very below our means at the moment.