Reply With QuoteA leasehold house?? Nah, I’m out.
Does anyone have some experience or advice they could share on this one...
We are in the early stages of buying a 2 year old freehold house on a David Wilson Homes development. The development comprises just over 100 properties. There is an amenity space (small park) at the centre of the development. I've been told that there is a management company that looks after the maintenance of this called Chamonix Estates and the cost to the current owner over the last 12 months was £244.
I've Googled Chamonix Estates and they have apalling reviews. It appears that if I want to proceed with this purchase I need to sign a deed of covenant to say that I will pay the fees, despite the fact that they have not commited to stating what these fees will be over the next few years, just that they are expected not to rise substantially.
The sellers have just had to pay £120 to get their 'management pack' which has been sent on to me. There's a whole load of documents to say what the charges were over the last year and that the current owner has paid up to date, insurance details etc.
I have reservations, especially having read the reviews, about signing up to this. I like the house and would be very happy to go ahead otherwise. My partner, who has all the patience of a wasp, feels that I should just get on with it. What I 'd really like to know is, am I really obliged to have to sign up to this if I want to but the house.
Does anyone else live in a recently built house with a management company? Is it Chamonix? How is it going for you?
A leasehold house?? Nah, I’m out.
No it's a freehold house.
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I wouldn't do it,my mother ended up with massive fees.
Then it was hard to sell the house.
In the words of Slade "run run away"
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The lease is for estate management. Green areas, roads , play areas etc.
I have a let flat managed by Chamonix and they are not good to deal with and often come up with surprise costs.
Bought a house on estate managed by them in 2011, still live in it. fees go up every year, communication with them is quite good, but you end up paying higher fees as there costs rise and you have to pay for stuff the other residents might do. Like one who was fly tipping everywhere, but he has now gone. Estate was nice when it was new, now it is the very opposite of that.
I think most estates are now managed by someone for a fee to do grounds, as councils will not take them over. Like they used to where I used to live. Just a extra cost to be factored in.
So yes, I have experience of them. Expensive but not value for money.
Thanks for the reply, would you mind letting me know roughly what you're paying per year currently and how much that's changed since you've lived there?Originally Posted by pastrana72
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What right does Chamonix and other service companies have - to provide the service exclusively for x years?
Does their ‘tenure’ end in a few years and you an appoint a different company on the proprietors’ terms?
How does that work in England?
I don't know, it seems to be a standard thing on new developments now. The planners demand 'amenity space' but the local authority don't want to pay to maintain it, but are happy to take the same amount of council tax from the extra few hundred homes. The other depressing thing is that the developers will find the worst possible companies they can to administrate it.
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We live in a freehold house in an estate with a similar arrangement. Fees have gone up since we bought (at that point the house was new and the estate was half completed) - initially they were an optimistic assessment by the developer, four years on fees are around 50% higher. We have a residents' association that tries to keep the management company to account with little real power but a degree of success. Houses have been sold on since we moved in without apparent difficulty. The sellers' pack charge is a minor irritation, the management fees are more of a concern but people generally appreciate the environment we live in so stump up (not stumping up is not an option, legally).
There are moves to introduce better protections for freeholders in these circumstances (as far as challenging the fees charges, leaseholders actually have better protections) - these will be welcome but are likely to be a while off, at best.
Would we prefer it to be adopted by the council - of course. But we love the house, the development and living here, so we just factor the charge into our budgeting and get on with it.
Isn't it the residents association that appoints the management company? If not then who does?
The 'new town' we live on is a mish mash of different developers all with their own parcels of land. We have friends who are paying out thousands in 'communal area' management fees for what effectively is a bit of gardening twice a year and the promise that if their shared car park gets some cracks it'll be fixed sometime in the future. It's the second biggest house buying scam (although I think the leasehold house thing has been knobbled by law so may actually be the biggest). The usual SOB is that you get a low rate when you move in maybe a few hundred but the management company has a clause allowing them to ramp the cost however they like. I believe it is possible for a residents group to set up their own management company and oust the scammy one but it's not easy.
When we bought our current house (on the same estate as the first one) we made damn sure that we owned everything and leased nothing. We are at the end of the cul-de-sac we live on and so actually own the road outside of our garage up to a small fence line, even our space in the bin corral is owned not leased, everything is marked on the registered deeds.
If you do not have this level of ownership over your property then I'd say walk away, I class this as similar to public rights of way, restrictive covenants and listed buildings. Personally none of these things will ever be a feature of any property I own, although I can understand the attraction of a listed building if that's your thing.
Not in our case - they were appointed by the developer and it is very difficult for us to get rid of them (and even if we did, the new appointee would be in the developer's gift - all written into the TP1/transfer document - the developer has chosen to retain the freehold of the communal grounds). Our recourse in the event of a dispute is an RICS arbitrator. But although the management company don't have a good reputation as far as online reviews are concerned, they have, by and large, been OK/charges are not cheap but not extortionate.
Go ahead but expect fees to rise exponentially once you’re on the hook
Up to you, personally can’t understand why anybody would buy something that they don’t know the cost of.
As has been said the developers in my case we got lucky as the developers signed the management company of our eight property development to us owners and we are now the directors but my advice is never to trust any of these management companies as their fees only ever go one way and that is up seemingly without control from the residents.
I FEEL LIKE I'M DIAGONALLY PARKED IN A PARALLEL UNIVERSE
I agree,some of them in London fees where so high people could not sell the house and got trapped.
why ever even take the risk.
My Mother couldn't even open the veranda door on her new build and had far less comeback/rights than if you bought a £500 banger from a backstreet garage.
I would never buy a new build as the first owner.
That is pretty much what happens in Scotland with flatted developments. The developer appointed the first factors, but that is normally for a short period and thereafter the Proprietors' Association can nominate their own factors, or can even form their own factoring company (albeit this can be more onerous with the tougher laws applying to Factors in recent years.)
As an aside, I notice that a lot of people refer to Residents. The important entity is the Proprietor, i.e the person who owns the flat/house.
This year it is 190, it seems to go up slightly every year. I think it started at 110. So it has gone up 80 in 9 years.
OP, if you are asking questions/having reservations about them and the situation, so will the next buyer when/if you come to sell. The level of fees are out of your control by the sounds of it, so it is clearly a risk.
The answers are generally already in the thread, so key bits being;
- generally the developer is obliged to provide amenity space and will either enter into an agreement with the Local Authority to maintain it (for which they would be expected to pay the LA a lump sum up front) or generally use the Deed of Covenant approach which costs the developer nothing
- a scheme that is fairly set up will see the running of the management company passed to the house owners when the last house has been sold. From that point onwards there is no reason for the developer to still be in control
- if that is not the case, you can assume it's because the developer wants to try to make more money, not unlike the scam of selling properties leasehold when freehold is appropriate
- the deed of covenant structure will be written into the title. You can't have a system where some owners choose not to perpetuate the structure, the maintenance has to be funded, so a purchaser will be unable to register title unless they have entered into a deed of covenant
My £0.02 is that if the control of the manco passes to the owners when the last house is sold them I'd have no problem with it. If control does not pass and rests with the developer or heaven forbid can be sold by them to a third party, I'd be wary, as the only motive for control not passing is further profit = spiralling and disproportionate costs
Run away and buy a proper freehold house. This scam is widespread and the fact that this situation has been allowed to develop is scandalous.
What upsets me most is that people think this is an acceptable way to behave.
Hang on...............
A house that he really likes, and an annual management fee that isn't a stretch?
If there was the ability for the management company to charge what they wanted- they'd be charging each proprietor £5,000 p.a right now, with no recourse from the proprietors.
So - there is clearly some form of regulation, preventing this? (unless I am totally missing the point).
I think the proprietors' rights can only improve, not get worse.
You've heard about the best way to boil a frog? You turn the heat up slowly so it doesn't jump out of the pan. This is the way capitalism works, you slowly up the price until profit is maximized. I suspect that the increase rate is limited in the contract but there is no upper total limit, I also suspect that given the captive customer this maximum rate is applied each increase interval, as, once the charge becomes greater than even £1000 p.a. the house would have a limited resale audience and would only get worse. Under no circumstance can I see this as a good idea.
On the bright side the other thing about capitalism is that if people don't buy something it stops being produced, so on principal and for the sake of my wallet I chose not to participate in the scam.
This pretty much. It might all work out OK, but it might not and you are not in control.
How did you ensure this?
We are about to buy and I'd love to have that certainty.
It's a freehold house but who did the due diligence on this for you? The solicitor?
Interested to know how I'd be "damn sure!"
Cheers
Yes your solicitor should be your first and last line of defence in this regard. We made absolutely certain that he understood that we did not want any ongoing payments, covenants or rights of way and that this would be a dealbreaker for us.
As we were buying a new build we developed a relationship with the on site team, were very up front with them about our views on leasehold anything, covenants, etc. and viewed the plans multiple times - luckily the team we dealt with were fantastic in this regard, bending over backwards to ensure that all our questions were answered and to get the deal done. One of my first questions to them was about this and they categorically stated, you own what you've bought and once it's yours you can do whatever you want with it - naturally this was also confirmed by our solicitor.
If I was not buying a new build I'd certainly want the sellers assurance in writing that there were no charges, covenants or rights of way and if I could get it assumption of financial liability from the seller if it emerged there was such. Doubtful I'd get that last bit though, but refusal to give the first part would be a deal breaker for me as it would raise a red flag that I might be paying for something that wasn't actually mine.
The main thing to remember is to ask all the questions of the seller or his agent first, preferably in writing or with some other method of verifying the conversation. Then, if you go ahead make sure your solicitor is on the same page as you down to the last detail, then check they have dotted every i and crossed every t (as much as you can). That's all you can do really.
As an aside, the new estate we live on is still being built and there are now comments on the areas facebook group that there may be a covenant banning satellite dishes in place for properties being sold now. So even historically 'safe' estates may change their policies etc.
You can negotiate just about anything with a house/flat bought off-plan, as long as it is a buyer's market at the time (or that particular developer is in serious financial problems - which is just about every one, towards the end of the development, it seems)
Something to watch out for if you are an early purchaser, is that your deeds entitlements are maintained in respect to common amenity (like where a certain number of un-allocated parking spaces are available) - not unheard of developers including a private parking space in a subsequent sale which takes away that amenity from existing deed-holders.
This may have an effect on what you have agreed with the developer (no payments etc) if the costs were on a percentage/fractional basis of the total. i.e- if you were originally due to pay 2% of general costs, the other's deeds may prevent that from being shifted to become their burden.
If you are buying an existing property - then other than ransom strips, not yet disclosed, I would expect all other 'items' to be disclosed by the seller's solicitor or discovered by your own.
Last edited by blackal; 8th December 2020 at 10:27.
I think the main issue is to make sure you aren't paying ground rent as that's the common issue that catches out people buying new properties as the deeds often state rent will double every x number of years.
I live on a new build estate and pay an annual charge to a management company which is circa £250 a year for maintenance of the greens (they do also clean our front windows and mow front gardens periodically). The residents could take over the role of the management company but its more hassle than its worth as you will need everyone to agree on what work needs doing and how much it should cost etc. But if the management company do start increasing costs without good reason that option is always there.
But would you still feel the same if the cost increased substantially year after year after year and you had no option but to pay.
That seems to be the issue here.
We don't know if that is the case. As usual, there is a lot of well meaning advice yet thin on facts, mere conjecture. As I posted previously, the OP needs to ascertain whether the freeholders do have the ability to control the manco (as per the example in the post you replied to) or do not and could be at the mercy of others.
Until there are some more facts here there really is nothing further to say on whether it is a problem or not.
Thank you. I shall get on to this tomorrow (later today, as it is now)!
We aren't buying a new build so that's either better or worse! We'll find out in due course!
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