Management companies

[GothicCola]

So we've viewed a few houses recently, mostly older houses but we're viewing a few newer builds this week. I know that newer houses often have management fees for green spaces/grass verges/playgrounds, etc. Obviously, we'll be asking the estate agents the specifics of the houses we are viewing, but are there any controls on the fees? Googling suggests they're largely uncapped and unregulated. So is there a maximum they can charge? What stops them raising it from a few hundred per year to a few thousand, etc? I am not totally against a newer build house but these potential fees are putting me off.

In general there is no regulation and no caps on these fees. In addition, as well as the monthly fees, you usually have to pay them hundreds of pounds when you buy or sell.

There is also more and more publicity around these "fleecehold" homes, which is putting people off. It put us off from buying a house which was otherwise perfect for us. We're not even looking at any house which has these management charges now.

Our thinking is that council tax is only ever going to go up and up, and so are these management fees, and it also means you are effectively paying twice, as your council tax should cover these services, but local councils are refusing to take on the responsibility for managing communal areas and/or roads on new estates. With the cost of living being what it is, we weren't prepared to take on a house with a fee that has no cap on it, and you have no choice but to pay.

Hi maybe I can help, we have recently moved from a freehold house with management fees.

You are right, there is no cap to the fees and these companies are largely unregulated. However legislation is going to change soon but how long that will take or what it will be I don’t know.

There will be people on here with good experiences that will tell you it’s fine, but from my experience I would never buy a freehold with management charges again. But my experience might be worse than most. It’s also worth noting that there was a mix of leasehold and freehold properties under the company I had and perhaps it would be better if it was all freehold.

My experience was that we had a management company that were responsible for a few bushes on our road, the annual fee did increase but not by huge amounts but was generally very over inflated for what was maintenance of a few bushes on a road. The company (and not all are like this) was very incompetent and a nightmare to deal with. One year they didn’t have enough for a project in the reserve funds so with two months warning asked for £400 from each property. As a freeholder I did not get a consultation or an opportunity to address my concerns about the project, I also had no ability for the property ombudsman to help me as I was a freeholder not a leaseholder.

It didn’t feel like any other bill I would pay, where I have a choice to change providers, or in cases of monopolies like water companies for example, their pricing would be heavily regulated by ofwat and there is a complaints procedure through ofwat if things need escalating. It felt like this unregulated third party could set a price, we all had to pay it and there was no opportunity to complain. This is so unlike any other household service provision. It’s a very lucrative business for those in estate management I must say!

This is also over a property forever, you would need to constantly pay money, it’s not like a streaming service you can turn off, an income tax you don’t pay when you retire or an energy bill that reduces when you decide to use less of it, it would be over you for the whole time you are in that property. Also it may be hard to sell on potentially.

Don’t let me cloud your judgement though as I’m sure there are many people with positive experiences.

Oh yes forgot about that but, when you sell you have to pay for a management pack at £250.

Thanks, all. This was everything I feared, tbh. The house I was most excited about seeing will (I am sure) have these management fees, as it was only built in 2020. It's absolutely perfect, perfect location, ticks all our boxes, etc. Oh well, nevermind. Back to the drawing board.

Personally I would never consider any house which is either freehold or has management fees. I may be in a minority but those were red lines when we bought our last house.

I want a freehold and wouldn't consider a leasehold, but I won't be paying management fees. It is a shame as that rules out quite a few nice, newer houses round these parts but I won't pay anything that is uncapped and unregulated.

Your right to avoid fleecehold. Its an absolute scandal. Have a look at this typical breakdown of costs. Actual maintainance spend of the money you give is typically around 15% to 20%. All the rest is syphoned off. This is why people feel so ripped off and the homes are difficult to sell second hand. Avoid like the plague. Wouldn't be so bad if they actually spent the money on maintenance but usually this is what happens. Robbery.

Can't seem to copy and paste in the breakdown but out of over £9000 paid only £1153 was actually spent on maintenance. This was for a small development in South Wigston - 2024 numbers. Its online here if you want to see why people feel fleeced.
https://www.bbc.co.uk/news/articles/c978jqvjzvlo