Thousands of homeowners on private estates are facing unregulated and uncapped maintenance fees, amid allegations that developers have created a “fleecehold” cash cow from charging for communal areas not maintained by the council. Management contracts for “unadopted” private estates are frequently sold off to speculators and property management companies in the same way as freeholds and ground rents leaving homeowners with spiralling fees and nowhere to turn.
If a new-build estate is “unadopted” it means communal areas such as roads, grass verges, pavements and playgrounds are retained by the developer. The developer then usually sub-contracts day-to-day management. These companies then pass on the costs to homeowners (both freeholders and leaseholders) via a deed of transfer which obliges the homeowner, under the Law of Property Act 1925, to pay for maintenance of this land. This is often referred to as an “estate charge” or “service charge”. These are on top of full council tax even though the council doesn’t maintain their street.
A homeowner in Buckshaw Village has urged buyers to be wary of purchasing homes from new housing estates. Bridget Murphy bought her nine year old property under a freehold agreement in 2015. She says that despite owning the full rights to the house she still has to pay fees if she wants to make changes to the property. “The unfairness of the situation in which leaseholders find themselves is widespread and also extends to freehold properties on new housing estates in this area” said Bridget, who is retired. “Although the property is freehold, the deeds contain numerous covenants, some of which are linked to uncapped permission fees. For example, I believe the fee is currently in the region of £200 for permission to add a conservatory or extend the property.
“It seems unethical that, although I own my freehold, the developer still has an interest in my property and can demand permission fees.” In a statement a spokesman from the developer Redrow said “For those who apply to Redrow, in writing, to make changes to their home, for example to add an extension, Redrow charges a fixed admin fee of £150 + VAT to process the application. An exception to this would be if someone applied retrospectively, having already made changes to their property, in which case a reasonable fee would be charged for the time taken to process the retrospective application.”
The leasehold scandal caught Government attention last year when Sajid Javid, the Communities secretary, announced a crackdown on the practice. Also known as fleecehold, the practice sees charges on ground rent ratcheting up for buyers as their freeholds are sold on to investment companies.It means the properties become unaffordable to the leaseholder but also means they are trapped, unable to sell the lease on. On top of this leaseholders have to pay permission fees to refurbish the properties.
But Bridget is warning that this practice is now being transferred to freehold properties. She says that buyers need to be conscientious in buying freeholds from new housing estates as some freehold agreements are now also stipulating that residents need to pay fees if they want to make changes to their homes. “Now that the government has announced plans to sell all future new build houses as freehold properties, people need to be alerted to the fact that this new type of freehold is set to become the norm, if developers get their way” said Bridget.“Leasehold residents planning to purchase their freeholds also need to be alerted to the issue of permission fees in freehold deeds.”
The Mayor of Chorley councillor Mark Perks said “My advice to anyone who has contacted me interested in moving to Buckshaw has been to make sure you get a good solicitor who reads and understands the fine print on the deeds, lease or freehold and what permissions are placed upon each property. Certainly choose your own independent solicitor rather than go with one a developer recommends. It may cost you more at the start but far better than being trapped into something that turns out to be costly and difficult to get out of”.
Buckshaw Annual Service Charge Explained
All Buckshaw property owners pay an annual management fee to the Buckshaw Village Management Co. Ltd (BVMCL) either directly or indirectly. The BVMCL is made up of all Buckshaw developers, with the principle developers being Redrow & Barratt who own the majority of the land on the village. This funding pays for the maintenance of all community amenities including the parks, community centre, Astro pitches and communal green areas etc.
Who are RMG? RMG is the management company that are contracted by BVMCL to collect the annual management fee on their behalf. RMG manage the day to day administration of the Village and its amenities, including the collective management fund.
I’ve heard that if the community amenities don’t make a profit then my annual management fee will go up?The funding is directly related to the profit/loss of the community amenities. Therefore if the Astro turf or the community centre fails to cover their running costs, this impacts the funding and will inevitably have an effect on the annual management fee. The BVCA once sat on the village management group (made up of RMG, Envirocare and BVCA, as residents) and were fully involved to ensure that the community centre and Astro turf maximised their potential to turn a profit in order to safeguard the funding and keep the management fee as low as possible.
Who’s responsible for the upkeep of the street lights, road names and other street furniture? The owners of the road are responsible for all street furniture. At the moment some roads on Buckshaw are still owned privately by the respective developer – it will be some years until the roads are adopted by Lancashire County Council (LCC). RMG has a responsibility for a proportion of the communal areas – including a section of the green corridor. To find out who has responsibility for your street/nearby roads please contact RMG (details below) or your local council.
Will the councils ever adopt Buckshaw and its amenities, meaning we won’t have to pay an extra management fee? Buckshaw Village is split between two Borough Councils and currently there are no plans for the village to be adopted. This process will be a long drawn out issue and until the village construction is finished it is unlikely this will be viewed in any great detail.
I get charged for two sets of Management Fees – why is this? Every household on Buckshaw pays an annual service charge. This service charge covers areas like the green corridor, the mound, the community centre and the sports pitches (as outlined above). If you receive a bill requesting monies for another service charge (i.e. Runshaw MCL, Cuerden MCL, Worden Hall MCL etc), this money covers the cost of shared areas pertinent to your property and could include the maintenance of your car park, shared garden, hallways etc. For more information please contact RMG directly as they will have more detailed relating to your property than can be covered on our website.