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Thread: New build homes - estate management charges!

  1. #1
    Craftsman enndriz's Avatar
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    New build homes - estate management charges!

    Morning all
    Looking for some opinions or first hand experiences here, good, bad and ugly:

    For the past couple of months we have been considering moving to a nice looking new build development which is pretty much exactly what we are looking for. Houses are lovely, development is in a great spot with some nice surrounds etc.

    So we are at the point where we are ready to reserve a plot when the sales lady mentions that there is a small charge to be paid to maintain the green areas, paths etc surrounding the development. Straight away this sets my teeth on edge, but she is very blasé and says is pretty standard these days and nothing to worry about.

    Obviously I decide I need to look into this, and do I not like what I see! The management company will be bound to the property on the title deeds, and can in fact evict you from your home in the case of any dispute over payment of these charges. The charges are not regulated in any way, and the homeowners have no means to challenge or dispute the charges which can be increased by any amount (there is no cap, altho it does vaguely mention potentially increasing in line with inflation)

    A quick bit of Googling of estate management fees on freehold new build homes throws up all sorts of horror stories of ever increasing fees, grounds not being maintained to any sort of standard, problems selling homes etc etc. Some lenders will even refuse mortgages where such an arrangement is in place, and it has also been discussed in parliament (altho no progress has been made in regulating)

    My initial instinct is to run for the hills and never look back - am I being overly dramatic? We are fairly emotionally invested in the house now, which makes it all the more difficult to walk away, but I will do it - this is going to be last time we move hopefully, and am not willing to risk it turning into a long term headache.
    Last edited by enndriz; 18th September 2021 at 11:12.

  2. #2
    Master Lammylee's Avatar
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    We maintain the grounds for management companies around the North West. Normally costs would be a lot higher for apartment blocks rather than houses where communal indoor areas and lifts shoot up prices. Maintenance of Electric gates into the development is costly and sometimes the local council don’t take over maintenance of drains/roads for a period of time which could fall on the homeowners if there’s a problem. I can’t see the price being too high although obviously best to get a firm price and projected increases. Cheapest house based development should be a few hundred per year, top end apartments are a few thousand.

  3. #3
    Craftsman enndriz's Avatar
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    The charge itself is next to nothing, about £250 per house per year. It’s quite a small development with around 50 houses in total, but lots of landscaped green areas surrounding. The current amount is not what worries me it’s the prospect of regular hikes and the whole legal aspect around the deeds (not that I would plan on not paying, but if they go up to £500, £600, £800, what then? )

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    Master Halitosis's Avatar
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    Is there not an option to form a residents association and take such on as a collective? My understanding is that such a management company is appointed initially but if the residents choose at some point in the future (not sure if majority or unanimous decision is required) then they can bin the estate manager as long as they maintain an association committee, have an AGM, collect annual residents fees, and appoint their own landscape gardener.
    Most new build estates have some communal areas (grass verges, a green or maybe play area). Ours is now 30 years old and when we moved in there was already a residents association. Annual fee is £70 towards the gardeners

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    Master blackal's Avatar
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    Quote Originally Posted by Halitosis View Post
    Is there not an option to form a residents association and take such on as a collective? My understanding is that such a management company is appointed initially but if the residents choose at some point in the future (not sure if majority or unanimous decision is required) then they can bin the estate manager as long as they maintain an association committee, have an AGM, collect annual residents fees, and appoint their own landscape gardener.
    Most new build estates have some communal areas (grass verges, a green or maybe play area). Ours is now 30 years old and when we moved in there was already a residents association. Annual fee is £70 towards the gardeners
    That is under Scots law- I don't think they are as fortunate south of the border.

    Majority decision will do it for any change of factors.

  6. #6
    Craftsman enndriz's Avatar
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    Quote Originally Posted by Halitosis View Post
    Is there not an option to form a residents association and take such on as a collective?
    I think there may be an option to do this altho all depends upon the legalities around how the agreement is specified for each development. there are some plots on the development which are classed as affordable housing, which will belong to a housing association and be leased out. Which makes me think it could be doubly difficult to form a residents collective in that scenario.

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    Grand Master oldoakknives's Avatar
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    Don't think I'd be wanting to sign up for that. What happened to the local council maintaining the grass areas and verges?
    Started out with nothing. Still have most of it left.

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    Master blackal's Avatar
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    Quote Originally Posted by enndriz View Post
    I think there may be an option to do this altho all depends upon the legalities around how the agreement is specified for each development. there are some plots on the development which are classed as affordable housing, which will belong to a housing association and be leased out. Which makes me think it could be doubly difficult to form a residents collective in that scenario.

    Just to be clear - it is a Proprietors' Association, and not a Residents' association.

    So - the Council would have a collective vote proportional to their holding. Residents/leasees should get no say.

  9. #9
    Craftsman enndriz's Avatar
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    Quote Originally Posted by oldoakknives View Post
    Don't think I'd be wanting to sign up for that. What happened to the local council maintaining the grass areas and verges?
    Think it’s a combination of the councils not really wanting to take on the extra work (purely my assumption), and the developers not wanting to spend on getting the spaces/roads up to the required standard for the council to agree to adopt them.

  10. #10
    Master blackal's Avatar
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    Quote Originally Posted by enndriz View Post
    Think it’s a combination of the councils not really wanting to take on the extra work (purely my assumption), and the developers not wanting to spend on getting the spaces/roads up to the required standard for the council to agree to adopt them.
    There was an extensive thread perhaps 6m ago - where someone was contemplating a move to a gated development and there were several tales of disproportionate landscaping/management costs

    Search gated development?

    Maybe not as extensive as I first thought: https://forum.tz-uk.com/showthread.p...ighlight=gated

  11. #11
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    Who owns the common area? If it's the residents then you have an element of control over everything you are worried about.

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    I could have sworn that council tax paid for hedges and verges to be cut. Sounds like another thing they want to charge for and not deliver.
    That said they cut the verges so seldom by me most residents do outside their own home anyway. I have been doing mine for many years. I wonder if I can claim the land 🤔

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    Grand Master mart broad's Avatar
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    I live in a small private road pay full Council Tax and the Council do not maintain our road ,verges or supply street lighting we do of course get waste collection and normal services.
    We the residents took over the management company from the developers in order that we can control any costs re gardening works etc or in the case of larger developments a residents association is IMO very important to challenge future ongoing costs.Just remember if unchecked today’s £250.00 could be tomorrow’s £1250.00
    I FEEL LIKE I'M DIAGONALLY PARKED IN A PARALLEL UNIVERSE

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    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by enndriz View Post
    Think it’s a combination of the councils not really wanting to take on the extra work (purely my assumption), and the developers not wanting to spend on getting the spaces/roads up to the required standard for the council to agree to adopt them.
    That would be enough for me to walk and look elsewhere to be honest.
    Started out with nothing. Still have most of it left.

  15. #15
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    If the Freehold properties bill becomes law it will address most of the issues you are worried about.

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    Craftsman RS404's Avatar
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    From my experience I think you'll be lucky to find any new build (or even fairly recently built) home without a similar arrangement.

    It's really infuriating as the local authority insist on the developer providing 'amenity space' but then expect the residents to pay to maintain it and don't give you anything off your council tax in return.

    Plus the companies that end up administrating it all have terrible reviews for customer service and won't even commit to telling you exactly how much they'll be charging!

    The house we were intending to buy fell through in the end so we stayed put, probably for the best.

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  17. #17
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    Quote Originally Posted by enndriz View Post
    The charge itself is next to nothing, about £250 per house per year. It’s quite a small development with around 50 houses in total, but lots of landscaped green areas surrounding. The current amount is not what worries me it’s the prospect of regular hikes and the whole legal aspect around the deeds (not that I would plan on not paying, but if they go up to £500, £600, £800, what then? )
    I lived in a flat which was a factored development. Suffice to say it would put me off buying 100%.

    - We discovered that the company was adding 20% to EVERY bill for work done on the property rather than being upfront about their fees.
    - Whilst fees would go up by modest amounts every year, we also discovered that each time a new owner moved in, the factor added a substantial chunk to that property's factoring charge. Thus some owners were paying hundreds more than others, simply because they hadn't been in the property as long.
    - Repairs done were often substandard. In one case this was found to be deliberate so that the factor would engage a second callout, including a hefty callout fee (electric gates). The factor was totally lacking in supervision or willingness to change repair company.

    I realise that this is possibly an extreme example, but it wouldn't surprise me if this is the next huge scandal brewing. I think that if you can get agreement from all the residents it;s possible to change company or take things over yourself, but the bar might be high and dependent on the law in your part of the country.

    I much prefer the Spanish system, the residents are responsible and run things themselves, with each resident taking a turn at holding presidency of the association for the year, mainly consisting of collecting monies and paying the communal bills. Communal changes are by majority vote - we've done things like agree to change the pool to saltwater, install a water softener for the whole building so that the residents' immerison water heaters dont give up every 6-7yrs etc.
    Last edited by Scepticalist; 19th September 2021 at 17:44.

  18. #18
    Master blackal's Avatar
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    Quote Originally Posted by Scepticalist View Post
    I lived in a flat which was a factored development. Suffice to say it would put me off buying 100%.

    - We discovered that the company was adding 20% to EVERY bill for work done on the property rather than being upfront about their fees.
    - Whilst fees would go up by modest amounts every year, we also discovered that each time a new owner moved in, the factor added a substantial chunk to that property's factoring charge. Thus some owners were paying hundreds more than others, simply because they hadn't been in the property as long.
    - Repairs done were often substandard. In one case this was found to be deliberate so that the factor would engage a second callout, including a hefty callout fee (electric gates). The factor was totally lacking in supervision or willingness to change repair company.

    I realise that this is possibly an extreme example, but it wouldn't surprise me if this is the next huge scandal brewing. I think that if you can get agreement from all the residents it;s possible to change company or take things over yourself, but the bar might be high and dependent on the law in your part of the country.

    I much prefer the Spanish system, the residents are responsible and run things themselves, with each resident taking a turn at holding presidency of the association for the year, mainly consisting of collecting monies and paying the communal bills. Communal changes are by majority vote - we've done things like agree to change the pool to saltwater, install a water softener for the whole building so that the residents' immerison water heaters dont give up every 6-7yrs etc.
    Yes, in Scotland you can be your own factors, and in extreme cases of factor dissatisfaction - some buildings have taken it on themselves, and for the most part - that works out well and in one case in Edinburgh, the Proprietors' Association took on the factors role, and then went on to become a factoring company for other developments (charging no mark-up on 3rd party invoices).

    You can have problem owners, and having a Factor to act as enforcement, rather than the committee of the proprietors' association - who live beside the problem owner - can be an advantage. In addition - they act as a conduit to complaints to the gardeners (if applicable) or other service companies, that can be onerous for the committee.

    We had one problem owner who owed the factors around £2,000 and then sold up leaving with the remainder of the development to foot the bill. We changed factors partly due their inaction in pursuing the debt, and the new factors took over the debt and pursued the prev owner in court. There are some good factors out there.

    Since the 2004 Abolition of the Feudal act - the system as a whole in Scotland is pretty good, I have to say.

  19. #19
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by Scepticalist View Post
    I lived in a flat which was a factored development. Suffice to say it would put me off buying 100%.

    - We discovered that the company was adding 20% to EVERY bill for work done on the property rather than being upfront about their fees.
    - Whilst fees would go up by modest amounts every year, we also discovered that each time a new owner moved in, the factor added a substantial chunk to that property's factoring charge. Thus some owners were paying hundreds more than others, simply because they hadn't been in the property as long.
    - Repairs done were often substandard. In one case this was found to be deliberate so that the factor would engage a second callout, including a hefty callout fee (electric gates). The factor was totally lacking in supervision or willingness to change repair company.

    I realise that this is possibly an extreme example, but it wouldn't surprise me if this is the next huge scandal brewing. I think that if you can get agreement from all the residents it;s possible to change company or take things over yourself, but the bar might be high and dependent on the law in your part of the country.

    I much prefer the Spanish system, the residents are responsible and run things themselves, with each resident taking a turn at holding presidency of the association for the year, mainly consisting of collecting monies and paying the communal bills. Communal changes are by majority vote - we've done things like agree to change the pool to saltwater, install a water softener for the whole building so that the residents' immerison water heaters dont give up every 6-7yrs etc.
    All sounds a bit like estate agents managing lets and sending out so called tradesmen to do jobs, which are invariably a bunch of bodgers doing third rate work.
    Started out with nothing. Still have most of it left.

  20. #20
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    Quote Originally Posted by oldoakknives View Post
    All sounds a bit like estate agents managing lets and sending out so called tradesmen to do jobs, which are invariably a bunch of bodgers doing third rate work.
    No, this was specifically a factoring company. Their whole business was based around managing common areas.

    It sounds like Soctland got its act together just after I sold that flat. As mentioned, unless you have a way of getting out of a factoring contract I'd be very wary of buying on a development run like that.
    Last edited by Scepticalist; 19th September 2021 at 19:24.

  21. #21
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by Scepticalist View Post
    No, this was specifically a factoring company. Their whole business was based around managing common areas.

    It sounds like Soctland got its act together just after I sold that flat. As mentioned, unless you have a way of getting out of a factoring contract I'd be very wary of buying on a development run like that.
    Can’t see any difference to be honest. You’re still paying someone else to get ‘tradesmen’ in to look after an area. I’d just buy somewhere else in an area the council manages the public areas. I presume you still pay the same amount of council tax as everyone else, just have to pay extra for what will probably end up being a bit of grass cutting and weeding if you’re lucky! I could be wrong.
    Started out with nothing. Still have most of it left.

  22. #22
    Grand Master JasonM's Avatar
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    I don't see a problem in having a maintenance contract per se, its preventing the out of control charges over the coming years thats the trick, as the new build project is new, you can't canvass the existing owners to see how their experience is, maybe you could look into the specific management company to see if they have decent history at other build projects? Im sure some have a better rep than others, mind you, theres nothing preventing them selling the maintenance package to another company down the line.
    Cheers..
    Jase

  23. #23
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by JasonM View Post
    I don't see a problem in having a maintenance contract per se, its preventing the out of control charges over the coming years thats the trick, as the new build project is new, you can't canvass the existing owners to see how their experience is, maybe you could look into the specific management company to see if they have decent history at other build projects? Im sure some have a better rep than others, mind you, theres nothing preventing them selling the maintenance package to another company down the line.
    Costs rarely go down in my experience.
    Started out with nothing. Still have most of it left.

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    Master blackal's Avatar
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    Quote Originally Posted by oldoakknives View Post
    Can’t see any difference to be honest. You’re still paying someone else to get ‘tradesmen’ in to look after an area. I’d just buy somewhere else in an area the council manages the public areas. I presume you still pay the same amount of council tax as everyone else, just have to pay extra for what will probably end up being a bit of grass cutting and weeding if you’re lucky! I could be wrong.
    True, but in Scotland - factors are generally used for tenement blocks and flatted developments, rather than houses on a new 'estate'. In general in Scotland, I think - a new development will stipulate a particular 'factor' for (say) 5 years, in order to maintain the looks while sales are ongoing. Then - lots of developments take it on themselves or engage a grounds-maintenance company for that aspect.

    It is difficult enough to get people to take on a Proprietors' Association committee position, without the added hassle of paying bills, collecting funds for that etc.

    We recently got quotes via the factors (who make nothing on the invoice) for around £25k for perimeter wall repairs. We found a contractor who normally did patios/conservatories, but who had a recent good record of wall repairs. He quoted (non-vat registered) £3,500 !!!

    The factors were happy to engage him on our behalf, he did a great job, paid via the factors who collected from us on next quarterly invoice, and have started to use this contractor for works on their other managed developments.

    One of the points of the above - is that you could as a group be liable for sig repairs along the way. Collecting those funds and getting them in time to pay a contractor (who may well want to deal with a factor/ltd co rather than a bunch of homeowners - can be a job in itself.

  25. #25
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    Don’t understand why people are saying this might be ok on a non-private development. Walk away and walk away.

  26. #26
    Quote Originally Posted by oldoakknives View Post
    Don't think I'd be wanting to sign up for that. What happened to the local council maintaining the grass areas and verges?
    Developers pass these areas on to management companies to avoid having to pay a commuted lump sump to the local authority. It far more profitable for the developer to pass the liability on to their customers.

    The frequency and quality of these works rarely meet the expectations of the residents who rightly feel the communal green spaces should be kept to a high standard, especially as they are paying extra over their council rates.

    Ross

  27. #27
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by blackal View Post
    True, but in Scotland - factors are generally used for tenement blocks and flatted developments, rather than houses on a new 'estate'. In general in Scotland, I think - a new development will stipulate a particular 'factor' for (say) 5 years, in order to maintain the looks while sales are ongoing. Then - lots of developments take it on themselves or engage a grounds-maintenance company for that aspect.

    It is difficult enough to get people to take on a Proprietors' Association committee position, without the added hassle of paying bills, collecting funds for that etc.

    We recently got quotes via the factors (who make nothing on the invoice) for around £25k for perimeter wall repairs. We found a contractor who normally did patios/conservatories, but who had a recent good record of wall repairs. He quoted (non-vat registered) £3,500 !!!

    The factors were happy to engage him on our behalf, he did a great job, paid via the factors who collected from us on next quarterly invoice, and have started to use this contractor for works on their other managed developments.

    One of the points of the above - is that you could as a group be liable for sig repairs along the way. Collecting those funds and getting them in time to pay a contractor (who may well want to deal with a factor/ltd co rather than a bunch of homeowners - can be a job in itself.
    I wonder how many people end up paying the thicker end of those!
    Started out with nothing. Still have most of it left.

  28. #28
    Master blackal's Avatar
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    Quote Originally Posted by oldoakknives View Post
    I wonder how many people end up paying the thicker end of those!

    The high quotes were valid, and no reflection on the Factors. BUT - you are correct, there is the facility for (say) the manager appointed to a development- to get a kickback from the vendor. Managers with factors tend to come and go often, and it can be very demanding for not a lot of salary - so kickbacks might be seen as part of their wages for some.

  29. #29
    Craftsman enndriz's Avatar
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    Since I raised my concerns with the builder about the management fees, and asked for clarification from their legal team on a couple of details, everything has gone strangely quiet.

    Haven’t heard a peep from them in 10 days now - considering we had filled out the paperwork and we’re all set to reserve the plot, i think it says a lot. Anyway, we’ve made our decision and are already looking elsewhere

  30. #30
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    It's a bit of a cheek these builders making massive profits from selling hard working people what a lot of the time is substandard crap and then they find an opportunity to milk them for even more

  31. #31
    Grand Master Neil.C's Avatar
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    Quote Originally Posted by enndriz View Post
    Since I raised my concerns with the builder about the management fees, and asked for clarification from their legal team on a couple of details, everything has gone strangely quiet.

    Haven’t heard a peep from them in 10 days now - considering we had filled out the paperwork and we’re all set to reserve the plot, i think it says a lot. Anyway, we’ve made our decision and are already looking elsewhere
    Very wise.

    The whole management charges thing is a con.

    Buy a "used" house with no added on eternal charging.
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  32. #32
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    We bought a new build 2 years ago and one of the first things I asked about was these service charges. Fortunately the developer didn't run this kind of scam so we ended up buying. I have numerous friends and acquaintances who are now paying nigh on 4 figures a year so their communal car park can be weed whacked yearly after not checking or thinking that a few hundred a year was OK.

    Our last place was a housing association, shared ownership and the rent component contained an element for maintenance of communal areas however this seemed to either be better regulated or run more ethically as the cost was under £10 a month and rose in 5 years from about £7 a month.

    I have heard of residents removing the maintenance contract from the designated company to some sort of residence association but have no idea about the mechanics of this. As for future potential changes in the law / legislation I'd personally only take this into account once it's 'on the books'

    In short, I personally, would try to get this stipulation waived and if not possible walk away from the deal, stressing that the reason is that you object to an unregulated, unending, limitless charge being written into your deeds with the power to take possession of your most valuable asset. F**K that for a game of soldiers.

  33. #33
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    Place local to me, new(ish) build estate of 100 houses.



    This has not shifted on re-sale. Price dropped twice. On looking monthly maintenance charge £287.00. Bonkers!

  34. #34
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    Quote Originally Posted by SNA View Post
    Place local to me, new(ish) build estate of 100 houses.



    This has not shifted on re-sale. Price dropped twice. On looking monthly maintenance charge £287.00. Bonkers!
    Oof…. What a wounder….

    This is key…. You’d never sell it…. Wouldn’t touch it

  35. #35
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    New build homes - estate management charges!

    Quote Originally Posted by SNA View Post
    Place local to me, new(ish) build estate of 100 houses.



    This has not shifted on re-sale. Price dropped twice. On looking monthly maintenance charge £287.00. Bonkers!
    I can see the agents details say it’s £287 per month but I wonder if that shoul pd be p.a.? Average maintenance fees seem to be £2-500 pa for new build ‘houses’ not flats etc. where things get worse due to the broader range of costs associated

    As noted practically every new build estate has management fees but equally as long as you confirm that the residents can form an RMC and are responsible for engaging the management company (we chose a local firm after evaluating 3-4 different local/national management companies) that will service the estate you are relatively safe from uncapped increases as it’s not in the interests of the residents who run the RMC to pay more either

    The issue is with some of the huge developments where the tie to the house builder with the management company means they are reaping the benefits long after the development is finished. Nothing but horrific reports about companies like RMG, Firstport etc.

    Where we moved to there are about 90 houses, we have the roads (unfortunately), street lighting and drains (storm) plus the green spaces to cover and pay just over £200 and that has not gone up in 4 years

    We also changed our providers for gardening service as service was crap from the developer installed one and saved money doing so. We also build a contingency fund each year to cover any ‘big’ costs so 5-10 years down the line there will be £60-70k put away - I do see all the negatives (paying full council tax plus the mgmt fee etc) but also some positives ie that we control the quality of the estate so management fees are definitely not great but not quite as bad as made out if you do your research and ensure you can control them.


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    Last edited by nictry; 25th September 2021 at 09:22.

  36. #36
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    We have just moved to a development of 50 houses/apartments and all pay a share proportionate to our floor area (apartments split the lifts etc)
    Our house is £600 a year but as soon as the estate is complete the residents automatically take over the the control of the common areas company and basically vote to spend whatever we like.
    So once we have accumulated the 30k or so to resurface all the roads in future, it will drop of drastically. A development up the road which is about 3 years old is now about 150 p/a.

    I'm not worried about cost rises as it's a bit like turkeys voting for Christmas and is better than being a weed strewn street of neglect like most new places are if the council adopt them.

    I'm intending to exercise my vote as well as possible and having a finance/procurement background am happy to put myself forward if we decide to manage the contracts ourselves.

  37. #37
    Craftsman
    Join Date
    Feb 2017
    Location
    Kent
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    This is pretty standard with most developments. We pay £180 PA and that pays towards the maintenance of the common areas etc. Gardeners attend regularly and the estate continues to look well kept.


    Sent from my iPhone using Tapatalk

  38. #38
    Master
    Join Date
    Dec 2006
    Location
    North East , England
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    1,258
    Sorry for the blast from the past on this thread but I wondered if anyone was aware whether or not the law in England had changed yet regarding Estate Management Company / maintenance changes and the ability for the the residents to sack / take over the role ?
    Thanks

  39. #39
    Master
    Join Date
    Oct 2012
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    Hertfordshire
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    Quote Originally Posted by markrichardsonno9 View Post
    Sorry for the blast from the past on this thread but I wondered if anyone was aware whether or not the law in England had changed yet regarding Estate Management Company / maintenance changes and the ability for the the residents to sack / take over the role ?
    Thanks
    Not as far as I know (I live on an estate with a TP1 that makes it very difficult for us to take over running the communal grounds - at least of r now - so if there were new powers I would hopefully have heard about it)

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