Anyone else now avoiding freehold houses with estate management charges?

[ScaredSceptic]

We're looking to move and the only house we've seen so far that ticked all our boxes in our search area was a newish build (8 yrs old). The estate agent's details briefly mentioned a charge of £20 per month for "grass cutting". The estate looked neat and tidy and well managed, so £20 a month seemed reasonable, albeit annoying on top of the Band E council tax.

However when we made further enquiries it turned out the charge was in fact more like £35 a month, having gone up considerably since the property was built. A copy of the management company accounts showed that of the total bill split between all the houses on the estate, half of it was "management fees". Thousands of pounds just going to this company to do very little (the roads have been adopted, the management company is responsible for only some communal grassed areas).

I then did more research and found that there is no cap on how much these charges can be increased by each year and no recourse for residents to challenge it. We decided we weren't prepared to take this on so walked away.

I'm glad we did as there now appears to be more and more publicity around these "fleecehold" schemes - articles in the press, and government consultations on reducing the prevalence of these arrangements and on increasing the rights of homeowners already subject to them. This will hopefully yield positive benefits eventually, but my concern is that anyone owning one of these homes (and I know there are a lot, as it's virtually all new build estates now), may find it affects saleability and or value. If measures are put in place to stop this practice, why would anyone want to take on a property which is already tied in to such additional fees on top of council tax?

It is very limiting though, as it rules out a lot of properties, as the area we are looking has a lot of new estates.

I just wonder if we are being unusually cautious, or whether others are also now wary of these schemes?

I'd avoid, sorry.

Our old house had this. The company were awful to deal with. Fortunately for us we sold ok but they nearly cost our neighbours the sale as they just didn't complete the necessary paperwork. The house was in Manchester the management company in Glasgow!

You couldn't predict how much the fees would be. One year it was £20 a month. The next £50. It didn't matter how long you lived there you paid that years fees. I dread to think how much it's going to be the year they decide the road needs redoing. One neighbour had a proper bee in her bonnet about it and would look up the costs - changing the light bulbs on the lamp posts was something crazy like £150 for each one. It also took them forever to actually repair anything. So the lights might be out for weeks.

You couldn't change anything in terms of planting. So we couldn't remove the holly bushes planted right next to our visitors parking so you had to squeeze out of your car to avoid getting clothing caught or getting scratched.

So you did right to avoid. I wouldn't consider it again.

When we moved last year we instantly discounted any house with these kind of charges, and didn’t even view them.

As well as the fact you have no control over these charges, it grated on me that you still had to pay full council tax as well. Basically paying twice.

We naively got into one of these but luckily managed to sell! We were told £20 a pint and that didn't seem too bad but once we lived there and realised each year they would put the fees up and there was nothing we could do about it, it was a deciding factor in selling up after two years. We had to pay over £400 to sell to the management company! I can't understand them - the council tax is the same as the estate we've moved to now and we get everything included - in the new estate they pay the same then pay again on top! The council and the management company are the only winners! You've definitely done the right thing!

We pulled out of a new build purchase and lost our deposit when we read the contract and the small print said there was no upper limit to what the maintenance company could charge. A quick Google confirmed our concern. Our solicitor was useless and we couldn't get out money back even though we'd never have agreed to this had we known earlier in the process. We just considered it a lucky escape.

A friend of mine was selling her to to move to Aus, and she had problems with this when selling. I wouldn’t buy one .

I am. There's a new estate being build near me. Nice houses but I refuse to do this service charge thing. I was subject to that when I lived in a flat. My question is also there is social housing mixed in with this estate so does that mean they also get charged this fee? I don't know how it works.

This we are managed for 2 years and then residents take out and decide what they want. It’s a way for council to get out of emptying bins etc

I think it depends. I live on an estate where the residents form the management company. We have about 30 acres of private land which needs maintenance plus a private road so we all contribute to this. Since I have lived there 20 years the annual management fee has gone up from £400 to £500 a year. The company has also built up a pot of £80k in case of major road repairs in the future. Directors are paid a nominal sum of £500 pa for their work and we all are consulted/notified of major spend. Everyone gets on well and we have had zero issues. I appreciate this might not be the norm though.

If the residents own the management company and operate it as not for profit, though they do need to build up a contingency reserve, it maybe ok. If the roads haven't been adopted by the council, no way, you have to pay for repairs, gully clearing and street lights. Adopted roads also have to be built to the correct standard.

I've recently bought a freehold property with maintenance charges (2007 build) and it doesn't worry me - there is quite a lot of landscaped grounds around the properties, including planting, paths, benches etc and I've really noticed since I've been here how regularly the teams are in to garden and tidy and how well-kept the area is compared to where I used to live where the council came round and trimmed verges a couple of times a year. It seems perfectly reasonable to me that the residents pay for that service and it costs me less than I pay to have my windows cleaned regularly so I don't consider it excessive.

ours is lower and includes extra off road parking so a fair deal. Every development in my county built after 2004 has them because the council won’t adopt green spaces

I live in an estate with management fees, but the residents formed a company and it’s not unreasonable.
I would avoid them in the future though.
There’s always one resident who seems to think he can waiver paying the fees/ cause trouble.
In our case, the first residents were told the council would take over the road. They refused to. They are happy to take our council tax payments though!

As long as the roads, services and communal areas have been formally adopted in that estate then all will be fine.

If they haven’t, then as soon as a problem arises it’s going to be a nightmare to get anyone to pay anything to sort it out.

Been there and it’s a nightmare - we knew the road hadn't been adopted when we bought but later found out that the communal land, whilst maintained by the council under a deal with the developer, hadn't been formally adopted - twenty years and one large land slip later and there were high court writs flying around to force homeowners to pay for repairs.

Doesn't bother me in the slightest, small price to pay for a well-kept estate - nit the run down scruffiness in nearby neighborhoods that don't have residents service charges.

Residents forming a management company can go horridly wrong.

imagine, you are now the ones collecting the money from your neighbours. What happens when they won’t pay?

I am aware of 2 blocks of flats about to be uninsured because residents can’t pay the buildings insurance. Either everyone will have to pay more to cover them, or the block will be uninsured and the council/ fire service will have to take enforcement action.

I think another solution is heavy relegation of the management companies- services at cost and a 15% management fee. Illegal to charge any more.

they have to be able to increase them contractually because obviously they can’t predict how much grass cutting will cost in 100 years but profiteering should be illegal and enforced.

i hope it’s outlawed but the other potential is it becomes common place, like HMOs in the US.

those living in social housing and on a part buy/part rent basis also pay the fee.

For the number of people paying it, the total funds in comparison to work done almost never adds up. We recently sold ours and our buyers solicitor insisted it was removed from the deeds, as a seller it cost us an extra £700 legal fees but it can be done - as long as the management co agrees to it, we were lucky ours did.

Everyone pays the fee, but in some rented tenures it’ll be included in the rent. A block with social housing in it is the safest place to be because the service charges and increases are heavily regulated and benefit from economies of scale (and practically, the housing association know their customers can’t pay big increases)

Was a cr breaker for my OP when we were looking to move five years ago. We worked out quite quickly that any new build had an extra charge attached to them and it was a flat no.

I think the point is that this is an unregulated charge and if the management company put the monthly fee up by 400% you’d suddenly not think it was a fair and just payment but legally you may not be able to stop paying it.

wow that sounds very well managed , just goes to show that companies charging £60.00 to change a lightbulb/£900.00 to paint a door etc are putting Money making ahead of doing their actual job.

No management companies should be changing lightbulbs for homeowners that sounds more like a rental?

painting a door is part of external maintenance and should increase the life of the door, but also isn’t commonly included in. The service charges for a freehold property.

I think they are going to become harder and harder to avoid as all new build estates seem to operate this model. It’s win for the council as they get full council tax but don’t have to pay to maintain any play parks, green space etc.

It's common in blocks of flats for communal areas to be managed by companies, £60 to change a light bulb and high costs to paint doors are unfortunately the norm.

Its why management is sold off to other companies because they make a fortune by charging these kind of costs.