House purchase question

Can't really find a forum where this question fits so excuse me for posting here

No 2 Son reaching the near end of a Freehold house purchase, has just been presented with a covenant that says a yearly fee is payable to a Land Managment Company for the maintenance and up keep of common areas, paths ,grass cutting and childrens park play equipment on this estate he's buying into.

What is this all about? is it the councils passing on or avoiding extra costs when granting planning consent for new housing estates, what are the owners paying council tax for ? do they pay a lower rate because they also pay the "Land Managment Company"
How does it work ? is it the way things are going now? is it the norm
He doesnt like it and is thinking of pulling out even though he will loose a bundle in solicitors fees
should this info not be disclosed up front in the advertising bumpf, not at the end when contracts are to be signed and money spent with solicitors
where not talking huge amounts here currently they say £150 this year, but the legal jargon as i read it places no upper limits on what they can charge, if they feel new equipment and paths are needed they simply divide the costs between the number of home owners on the estate
Anyone out there with experiance of such schemes as I have none I cant advise other than to point out the obvious the cash he will loose calling it all off would pay these fees for aprox 7 to 8 years if they dont rise, its theIF they dont bit he cant seem to live with
G
PS if this was a Private gated community I, and I think he could live with this, but its not its an ordinary open to all bog standard new housing estate built on old mining property

 

This sort of thing crops up regularly on consumer type programmes !!! They pay the money but nothing gets done !!!

Then they go out of business !!!
I would walk away from that one !

 

I was always under the assumption that all this had to be disclosed at point of sale. If not, then the buyer can scream foul, and recover any out of pocket expenses from the vendor. Your lad needs to consult his brief poste-haste.
Once adopted, the local authority, (following an acceptance inspection), takes on the responsibility of street lighting, and also street cleaning, however, private freehold land is just that. This sounds like a con.

 

I doubt it is a con.

Provided it was disclosed pre exchange of contracts I don't see the Seller at fault either.

I suspect it was one of the planning conditions that the developer had to erect and forever maintain this playground and the common parts of the Estate.

Developer then sets up a Company (possibly run by residents) to maintain it.

You would normally expect to see something about this on the Land Registry documents which your solicitor would have seen early on.

I believe it is quite common on residential developments as you cant expect the local council to fund grass cutting etc for amenities on a private estate.

 

I always thought that if you owned a house Chris, that came with boundaries, and then you cut your own grass.....???

 

I believe that it is part of the council's planning conditions. The cost of the communal areas may be reduced in the future if the council adopts the roads, parks etc. but I would suggest that it would be unlikely in the short-term. Effectively, councils have said, yes, you can build here. No, we will not do your estate management so you will have to look after any verges, parks etc. that you provide. It is not uncommon. Find out who the management company is and look at their feedback and reviews.

 

I think you will find this is quite common on private estates where the local council do not adopt the green area,s it can get expensive but as you get nothing usually for your money they tend not to go up slowly .Personally if its not mine i don't want it and i stay clear.

 

We had this on a house we bought in the 1980s. We paid the money but nothing was ever done. In the end a residents association was formed and bought out the maintenance company.

The house was in an ex-mining community in Durham if that's any help.

 

Yes , but this has communal areas I think.

Thus you cut your own grass in your own garden, but contribute to the cost of grass being cut in playground areas, grass verges etc.

 

Isn't that where the Pink Panther was born??

Durham, Durham,.......Durham, Durham, Durham,......etc.

 

It sounds quite reasonable to me if there are common areas on the estate which have to be maintained. Your son should find out the details of the management company, as already said, it is probably run by the residents, or if not it may be in the future as I doubt the company which built the estate will want to be involved with it forever.

 

This seems to be happening a lot now as a few new estates up here now have it. I think its a way to save the council money, I think there will be a contract with the maintenance and after that runs out the homeowners can get others to bid on the work as I'm sure a lot of small local companies up here have taken over the contracts at half the price.

 

Thanks for your reply's so far all very interesting, as far back as the eighties? well well you learn something every day
the deed of covenant is a three way jobbie, the Developer the Land Managment Company ( who have a portfolio of such estates) and Boy No2
I will get the name off him and see who they are
G

 

I think the question here is, was it disclosed pre contract? If not then I reckon he should be able to claim on the seller.
It's not an uncommon clause but should have been noted before.
IMHO

 

I think Chris has it in one. I had to pay £3000 per year in two parts to the Management Company in Port Solent for the upkeep of the communal areas, admittedly this included some sophisticated gear for the use of boats and security guards, but it should be all down in black and white at the pre-sale stages.

At just £150, I would plow on, it's unlikely to ever exceed £300 in the next ten years and all the communal areas will remain tidy and your house priced buoyant as a result.

 

He needs to check the covenant very carefully. He could (dependent on how far he is into the purchase) sue the seller and the estate agent for not making these details public from the start.

Personal advice - PULL OUT

The amounts to be paid sometimes start low and are forced higher and very rarely should the estate management want to knock everything down and rebuild, they can put it so high that people cant afford it.

If the yearly fee is not stipulated within the covenant, definitely pull out

 

We live on an estate created in the late 1970's. It is not gated but there is a pond and some communal small parks which are looked after by a separate property maintenance company who cut the grass and trim trees as necessary. They do an excellent job. We each have a single share in the holding company and can attend a yearly AGM where we vote on charges. The cost this year is £65. It's not really about the charge, but about who controls the land management company. That's where the problems are likely to arise.

 

You summed it up completely.

Geo, if your son goes ahead it would be a wise move to try to buy a share in the management company. At least then he would be able to ask questions and have them publicly aired and minuted.

He should also look very carefully at the management clause and charge and if there is a limit on increases. If not ask for one to be put in. At this stage he holds all the cards when it comes to what the developer will see as minor clauses in the contract. The developer wants to sell houses and although the London market might be strong the rest of the country is still in recovery.

These charges are not at all uncommon (known as "factoring charges" in Scotland). My daughter decided not to make an offer on a house because of a £400 a year charge on a small terraced house. She said for £8 a week she would cut the communal pocket handkerchief amenity area herself.

 

Is there nothing in the agreement that states how much the maintenance fees can rise by e.g. rate of inflation? If nothing is stated they could in theory rise by an awful lot in a short space of time. With current inflation rates it may not be a problem but what if they rise dramatically like they did in the early 90's, then try selling to a prospective buyer.

 

This should have shown up in the very first Land Registry search. I did my own searches and found a covenant that says I have to pay £4.3shillings per year. The previous owners never paid it as there is no information given as to where/ how to pay it. In law, I've been told, a maximum of 6 years payments can be claimed if unpaid. I.e I move in 2014, whoever owns this covenant claims 20 years from now, they can still only have 6 yrs payments. I'm told these are quite common in Devon--I've no idea what the £4 -odd is for!

Sorry--point I'm trying yo make us solicitors should have found this very early on and also sellers ( who must gave been paying it annually I suppose) should have informed agents who would have had to disclose it.

Maybe legal advice from a separate lawyer?