Freehold property with service charge?

walk away - we have a management company and the service charges are so low that the estate is so run down that this reflects on the sale and rental values - the other freeholders do not want to pay and would rather live with weeds - poor lighting - broken gates etc.,, there is no sink fund - all the work s carried at as cheap as possible and poor workmanship. no outside communual lights for over 4 years directors just give you a load of spin and lies to avoid having to raise money. fences falling down

as the properties are freehold you cannot go to the first tier tribunal only to the county court which is money

what you consider necessary and essential is not to the company when there is money to be spent or if you have pride in your property. it is not financial hardship as they all have new cars and good employment. it is just not their priority

I'd walk away.

This sounds like a classic example of 'fleecehold', where new-build estate houses were sold as freehold, but the developer did not have the roads adopted by the council. This leaves the freeholders responsible for the upkeep of the roads and other spaces, which is costly, and invariably results in inadequate maintenance. This will impact your ability to sell in future.

We live in a freehold house on a private development. There are also leasehold apartments there which are maintained by the management company FirstPort. We pay about £600 per annum for maintenance of roads, street lighting. and communal garden areas. Both the houses and the flats are much sought after as we are on a main bus route and only a 5 minute walk to Sainsbury and 15 minute walk to the town centre. All properties have at least one parking space. I would say DYOR. If the properties look clean an tidy I would knock on a few doors and speak to people who live there.
See if service charge accounts are produced and look at previous years. Rental demand might be very good. Before we moved in to our house which we bought with a BTL mortgage within 2 weeks we had tenants prepared to pay £2,500 per month unfurnished.

Yes very common nowadays as councils do not want to adopt new estates and the developers get extra money so a win-win situation for everyone except the residents.

I live in a freehold house on a private estate and maintenance of communal areas is well managed. We have a residents association that meets 4 times a year with the management company. A bill was passed just before the election that will give freeholders the same rights as leaseholders when it comes to service charges being paid on freehold houses so you may want to look at this. An important point to consider is the basis on which the charge is made and what the consequences are if you default on payment. This should be set out in the freehold agreement. I would look very carefully to determine if the service charge is a 'rent charge'. If it is there are dire consequences if you default and consequently lenders do not like properties with rent charges and buying and selling may involve a bit more legal work. Houses are being bought and sold on my estate so it is not a drop dead issue but I would get on top of the implications of rent charges so there are no surprises later on.

This is 'Fleecehold' and another scam developers have started doing to exploit our homes.
The private estate model is a disaster. There is a lot about this in the National Leasehold Campaign and also it's on the political agenda.
Please do more reading around this.

The worst thing is you still have to pay your Council Tax. It’s a scam and I’d walk away on principle.

Some of the best developments are on private sites where there is a relatively small service charge.
Basically you pay your money and make you choice. In our case we wanted a modern house in close walking distance to shops and restaurants. There are lot of nice houses 2 miles out of town but that meant each of us using a car very often. So for £12 per week we live within walking distance of local shops and restaurants and are also on a bus route. We have sold one of our two cars as we can manage quite well with just the one. We couldn't run a second car for £12 per week if we were living 2 miles away.

Reply to the comment left by Dylan Morris at 06/09/2024 - 07:07
Hi Dylan
For the extra £624 we get very little extra compared with if the site was serviced by the Council. We would probably not get maintenance of the communal gardens but the street lighting and road maintenance/repairs would be done by the council. But I think you miss my point in that if you find a town in which you want to live has limited options for housing, then do you bite the bullet and pay extra to live in a nicer environment, closer to the centre, or on principle, do you move further out to a less convenient location. This assumes you have this choice and can afford the service charges. You could easily use the same kind of argument regards dining out. You could always eat at home. You could sometimes eat at Wetherspoons for £25 for two people with drinks or you could eat at at better restaurant with a nicer atmosphere and better food for £50. Have you wasted your money going to the better restaurant? This is something only you can decide. You have to avoid the trap of being the kind of person 'who knows the price of everything and the value of nothing'

Positive covenants don't run with the land. So this is a possible problem later on. Clearly its an advance measure to deal with leasehold reform.

Too many future pitfalls. Will you have any input on future service charges and who decides. Is there a formula for their increase. Is there an arbitration procedure.
Unless you have satisfactory answers walk away