New Build leasehold experiences
Discussion
I thought I would chip in as the OP. My Mrs and I have decided to pull out of our house purchase due to the leasehold issues. The house was perfect in size and location, but not worth the hassle and potential losses long term.
We will loose a few hundred in reservation fees but it is the right thing to do.
Thanks for your input.
We will loose a few hundred in reservation fees but it is the right thing to do.
Thanks for your input.
Thought I'd chuck in my experience, having bought a leasehold reasonably new-build property a few years ago (the house itself is ~7 years old now). At the time I was a FTB, so perhaps knowing what I now know I may reconsider.
During the initial purchase it was a pain. The Management Company (countrywide I think) at the time wanted more than £500 for various deeds and other such rubbish they had to change with the new ownership details. Fortunately the management transferred to a different firm, who wanted a much more palatable ~£60.
After a couple of years the new management company sent out letters seeking additional cash for a balancing charge to cover a shortfall in the final year with Countrywide, despite the accounts not having been signed off (obviously this had nothing to do with them, so was impossible to challenge...). Fortunately during my purchase my solicitor secured an allowed in case of this possibility.
Finally, during the purchase and also confirmed twice afterwards, it only came to light in Dec 16 that the management company don't actually provide buildings insurance. Despite the accounts the sent out showing it as being part of the 'service'. Then they couldn't understand why i was a bit pissed off that my property had been uninsured for the best part of 3 years. Again there was no recourse for me other than to sort out buildings insurance ASAP.
As the above shows, the leasehold aspect has been nothing other than a pain in the balls.
During the initial purchase it was a pain. The Management Company (countrywide I think) at the time wanted more than £500 for various deeds and other such rubbish they had to change with the new ownership details. Fortunately the management transferred to a different firm, who wanted a much more palatable ~£60.
After a couple of years the new management company sent out letters seeking additional cash for a balancing charge to cover a shortfall in the final year with Countrywide, despite the accounts not having been signed off (obviously this had nothing to do with them, so was impossible to challenge...). Fortunately during my purchase my solicitor secured an allowed in case of this possibility.
Finally, during the purchase and also confirmed twice afterwards, it only came to light in Dec 16 that the management company don't actually provide buildings insurance. Despite the accounts the sent out showing it as being part of the 'service'. Then they couldn't understand why i was a bit pissed off that my property had been uninsured for the best part of 3 years. Again there was no recourse for me other than to sort out buildings insurance ASAP.
As the above shows, the leasehold aspect has been nothing other than a pain in the balls.
IrateNinja said:
Thought I'd chuck in my experience, having bought a leasehold reasonably new-build property a few years ago (the house itself is ~7 years old now). At the time I was a FTB, so perhaps knowing what I now know I may reconsider.
During the initial purchase it was a pain. The Management Company (countrywide I think) at the time wanted more than £500 for various deeds and other such rubbish they had to change with the new ownership details. Fortunately the management transferred to a different firm, who wanted a much more palatable ~£60.
After a couple of years the new management company sent out letters seeking additional cash for a balancing charge to cover a shortfall in the final year with Countrywide, despite the accounts not having been signed off (obviously this had nothing to do with them, so was impossible to challenge...). Fortunately during my purchase my solicitor secured an allowed in case of this possibility.
Finally, during the purchase and also confirmed twice afterwards, it only came to light in Dec 16 that the management company don't actually provide buildings insurance. Despite the accounts the sent out showing it as being part of the 'service'. Then they couldn't understand why i was a bit pissed off that my property had been uninsured for the best part of 3 years. Again there was no recourse for me other than to sort out buildings insurance ASAP.
As the above shows, the leasehold aspect has been nothing other than a pain in the balls.
Ah yes... Countrywide. The management company for the flats where I had a leasehold. The same company that refused to let us get an alternative quote for outside painting. As a group we tried to withold service charge but CW contacted our mortage providers and we were forced to pay under threat of reposession. They even included within their quote the painting of a fence that wasn't there, and never had been! I found out that what were described as "audited accounts" had never been audited, so I asked a solicitor if it was possible to get the whole purchase reversed on the basis of this deception, but I was told they'd probably win and it would cost a fortune. I eventually handed the keys to mortgage provider when it was in 30% negative equity and the maintenance bills were doubling every year. Criminal. During the initial purchase it was a pain. The Management Company (countrywide I think) at the time wanted more than £500 for various deeds and other such rubbish they had to change with the new ownership details. Fortunately the management transferred to a different firm, who wanted a much more palatable ~£60.
After a couple of years the new management company sent out letters seeking additional cash for a balancing charge to cover a shortfall in the final year with Countrywide, despite the accounts not having been signed off (obviously this had nothing to do with them, so was impossible to challenge...). Fortunately during my purchase my solicitor secured an allowed in case of this possibility.
Finally, during the purchase and also confirmed twice afterwards, it only came to light in Dec 16 that the management company don't actually provide buildings insurance. Despite the accounts the sent out showing it as being part of the 'service'. Then they couldn't understand why i was a bit pissed off that my property had been uninsured for the best part of 3 years. Again there was no recourse for me other than to sort out buildings insurance ASAP.
As the above shows, the leasehold aspect has been nothing other than a pain in the balls.
There are some interesting and helpful replies in this thread, and it sounds like you've done the right thing, OP. There would otherwise always be that nagging doubt.
I asked Charles Church whether I could buy the FH from the outset and was told no. They maintained that there were no plans to sell the FH and that I would have the right to purchase after 2 years, but the cynic in me was just not comfortable with anything. I couldn't see any documents relating to the freehold ownership/service agreement etc. without going down the purchasing route. I understand from their point of view that they have a very small number of houses left and no doubt would rather deal with a buyer who doesn't want to ask as many questions as me, so I will continue my search elsewhere. I'd also be concerned about selling in the future, in the event that problems did arise.
It's a bit of a shame, as the 2 houses I was looking at were very nice, and I was growing fond(er) of the area too. Who knows, whoever ends up living there might be very happy and not encounter any problems.
As an aside, I get the difference between LH houses on a development as opposed to flats in a communal building. If the former had adopted roads/services etc, then it may not have been such an issue for me. LH houses where the FH is held by a heritage would also not have me running the other way, and perhaps the recent bad press will make developer-owned sites more palatable in the future.
Anyway, my search shall continue...
Steve Evil said:
...Reading up on it, if the maintenance company are doing a crap job and charging a fortune you club together with the other residents and give them the boot.
The above is what developers have said to me. However, I don't know anyone who has first hand experience of this, and, from my position of ignorance, it seems like it has potential to not be straightforward in all cases. One (or more) of the residents must have to take on the administrative side of things, including dealing with third party companies. Then what if not all the residents agree to (a) sign up to the initial 'buy out' or (b) do sign up but then don't agree with proposed expenditure/fall foul of payments? It just seems to me that it *could* be a real pain.I asked Charles Church whether I could buy the FH from the outset and was told no. They maintained that there were no plans to sell the FH and that I would have the right to purchase after 2 years, but the cynic in me was just not comfortable with anything. I couldn't see any documents relating to the freehold ownership/service agreement etc. without going down the purchasing route. I understand from their point of view that they have a very small number of houses left and no doubt would rather deal with a buyer who doesn't want to ask as many questions as me, so I will continue my search elsewhere. I'd also be concerned about selling in the future, in the event that problems did arise.
It's a bit of a shame, as the 2 houses I was looking at were very nice, and I was growing fond(er) of the area too. Who knows, whoever ends up living there might be very happy and not encounter any problems.
As an aside, I get the difference between LH houses on a development as opposed to flats in a communal building. If the former had adopted roads/services etc, then it may not have been such an issue for me. LH houses where the FH is held by a heritage would also not have me running the other way, and perhaps the recent bad press will make developer-owned sites more palatable in the future.
Anyway, my search shall continue...
Cudd Wudd said:
There are some interesting and helpful replies in this thread, and it sounds like you've done the right thing, OP. There would otherwise always be that nagging doubt.
My brother did this at a house he owned some time back, there was a maintenance charge for some gardening work and the upkeep of an electronic gate to the parking area, they found that the charges were unreasonable and between themselves they took on the gardening work and would pay for any maintenance on the gate as needed.Steve Evil said:
...Reading up on it, if the maintenance company are doing a crap job and charging a fortune you club together with the other residents and give them the boot.
The above is what developers have said to me. However, I don't know anyone who has first hand experience of this, and, from my position of ignorance, it seems like it has potential to not be straightforward in all cases. One (or more) of the residents must have to take on the administrative side of things, including dealing with third party companies. Then what if not all the residents agree to (a) sign up to the initial 'buy out' or (b) do sign up but then don't agree with proposed expenditure/fall foul of payments? It just seems to me that it *could* be a real pain.Steve Evil said:
Cudd Wudd said:
There are some interesting and helpful replies in this thread, and it sounds like you've done the right thing, OP. There would otherwise always be that nagging doubt.
My brother did this at a house he owned some time back, there was a maintenance charge for some gardening work and the upkeep of an electronic gate to the parking area, they found that the charges were unreasonable and between themselves they took on the gardening work and would pay for any maintenance on the gate as needed.Steve Evil said:
...Reading up on it, if the maintenance company are doing a crap job and charging a fortune you club together with the other residents and give them the boot.
The above is what developers have said to me. However, I don't know anyone who has first hand experience of this, and, from my position of ignorance, it seems like it has potential to not be straightforward in all cases. One (or more) of the residents must have to take on the administrative side of things, including dealing with third party companies. Then what if not all the residents agree to (a) sign up to the initial 'buy out' or (b) do sign up but then don't agree with proposed expenditure/fall foul of payments? It just seems to me that it *could* be a real pain.Bought Leasehold 3 years ago (£75pa ground rent), all the developments in this area are all doing LH rather than FH now.
We discussed buying the lease and they gave an example figure of how much their last development lease cost to buy @£1000 iirc.
Once the development was all sold up sure enough the letters came through offering the lease or it was to be sold to a 3rd party such as in the horror stories, we got it paid ASAP, £1000 plus the solicitors cost £500 which was fine. The developer has another nearby site where the lease is now £3000 plus the solicitors fees!
We still have management fees (£216pa) pays for the street lighting, road, kids play area, flower beds, even road gritting etc and once they either build or don't build the last 2 plots on the site (being kept for access to another potential site) we can take over the running of the management company and either reduce the costs or increase the quality of the offering
We discussed buying the lease and they gave an example figure of how much their last development lease cost to buy @£1000 iirc.
Once the development was all sold up sure enough the letters came through offering the lease or it was to be sold to a 3rd party such as in the horror stories, we got it paid ASAP, £1000 plus the solicitors cost £500 which was fine. The developer has another nearby site where the lease is now £3000 plus the solicitors fees!
We still have management fees (£216pa) pays for the street lighting, road, kids play area, flower beds, even road gritting etc and once they either build or don't build the last 2 plots on the site (being kept for access to another potential site) we can take over the running of the management company and either reduce the costs or increase the quality of the offering
IanJ9375 said:
Bought Leasehold 3 years ago (£75pa ground rent), all the developments in this area are all doing LH rather than FH now.
We discussed buying the lease and they gave an example figure of how much their last development lease cost to buy @£1000 iirc.
Once the development was all sold up sure enough the letters came through offering the lease or it was to be sold to a 3rd party such as in the horror stories, we got it paid ASAP, £1000 plus the solicitors cost £500 which was fine. The developer has another nearby site where the lease is now £3000 plus the solicitors fees!
We still have management fees (£216pa) pays for the street lighting, road, kids play area, flower beds, even road gritting etc and once they either build or don't build the last 2 plots on the site (being kept for access to another potential site) we can take over the running of the management company and either reduce the costs or increase the quality of the offering
I have some experience as a building surveyor and unfortunately what you will probably find is that those plots are never developed for access. They will find some other way to access the new site (if it's theirs), the on-going and probably un-capped management fee off of a number of properties is worth more than the profit on a couple of homes. The management fee will gradually creep up as it is such a great cash flow tool for their books. You will generally find this more acute in a depressed market where the developers struggle to sell "units", This trend dates back to the last slump where developers needed to find additional cash flow. The whole thing is pretty shoddy really not helped by the LA's not really wanting to adopt these "high maintenance" estates, they can't even look after the kids play areas they have let alone new ones.We discussed buying the lease and they gave an example figure of how much their last development lease cost to buy @£1000 iirc.
Once the development was all sold up sure enough the letters came through offering the lease or it was to be sold to a 3rd party such as in the horror stories, we got it paid ASAP, £1000 plus the solicitors cost £500 which was fine. The developer has another nearby site where the lease is now £3000 plus the solicitors fees!
We still have management fees (£216pa) pays for the street lighting, road, kids play area, flower beds, even road gritting etc and once they either build or don't build the last 2 plots on the site (being kept for access to another potential site) we can take over the running of the management company and either reduce the costs or increase the quality of the offering
stu67 said:
I have some experience as a building surveyor and unfortunately what you will probably find is that those plots are never developed for access. They will find some other way to access the new site (if it's theirs), the on-going and probably un-capped management fee off of a number of properties is worth more than the profit on a couple of homes. The management fee will gradually creep up as it is such a great cash flow tool for their books. You will generally find this more acute in a depressed market where the developers struggle to sell "units", This trend dates back to the last slump where developers needed to find additional cash flow. The whole thing is pretty shoddy really not helped by the LA's not really wanting to adopt these "high maintenance" estates, they can't even look after the kids play areas they have let alone new ones.
I know for a fact that they are there for access to another large site - which will become free next year, they have since sourced other access points but the developer which is a local one will not hold on to these plots, they haven't on any of their previous or other current sites thankfully. The fee hasn't changed in what is going to our 4th year so far.They actually took deposits off people for the properties in question and handed back the cash due to the change in plan
Not read the whole thread, so may have been mentioned, but the Govt are consulting on proposals on how to stamp out this practice, in line with the content of the White Paper published earlier this month:
"Leaseholders
4.36 The Government will act to promote fairness and transparency for the growing number of leaseholders. Leasehold has been a traditional part of the housing market in this country but there are areas where urgent reform may be needed, particularly when buying a house on a leasehold basis. New leasehold houses can be marketed at a reduced price compared to freehold. But some purchasers are not aware at the point of sale that the associated costs
of buying a new leasehold house can make it more expensive in the long run. Some freeholds and ground rents of leasehold houses are sold on and traded, with leaseholders left in the dark, and facing increasing and onerous payments. This is not in consumers’ best interests.
4.37 In particular, ground rents with short review periods and the potential to increase signi cantly throughout the lease period may not be offering a fair deal. We are absolutely determined to address this. We will therefore consult on a range of measures to tackle all unfair and unreasonable abuses of leasehold.
4.38 We will consider further reforms through the consultation to improve consumer choice and fairness in leasehold, and whether and how to reinvigorate Commonhold. We will also work with the Law Commission to identify opportunities to incorporate additional leasehold reforms as part of their 13th Programme of Law Reform, and will take accountof the work of the All-Party Parliamentary Group on Leasehold and Commonhold."
Consultation is open until May, so if you've been affected, do take part.
"Leaseholders
4.36 The Government will act to promote fairness and transparency for the growing number of leaseholders. Leasehold has been a traditional part of the housing market in this country but there are areas where urgent reform may be needed, particularly when buying a house on a leasehold basis. New leasehold houses can be marketed at a reduced price compared to freehold. But some purchasers are not aware at the point of sale that the associated costs
of buying a new leasehold house can make it more expensive in the long run. Some freeholds and ground rents of leasehold houses are sold on and traded, with leaseholders left in the dark, and facing increasing and onerous payments. This is not in consumers’ best interests.
4.37 In particular, ground rents with short review periods and the potential to increase signi cantly throughout the lease period may not be offering a fair deal. We are absolutely determined to address this. We will therefore consult on a range of measures to tackle all unfair and unreasonable abuses of leasehold.
4.38 We will consider further reforms through the consultation to improve consumer choice and fairness in leasehold, and whether and how to reinvigorate Commonhold. We will also work with the Law Commission to identify opportunities to incorporate additional leasehold reforms as part of their 13th Programme of Law Reform, and will take accountof the work of the All-Party Parliamentary Group on Leasehold and Commonhold."
Consultation is open until May, so if you've been affected, do take part.
This topic is back in the news and particularly relevant to me and my wife at the moment, so despite this being an old thread, I thought I might add my experiences.
We bought a new build house in 2014, first time buyers with the associated financial constraints that come with that, and were offered the house £2k 'cheaper' if we went for the leasehold option. We were told by the sales rep that we would be able to purchase the freehold at a later date for a similar amount. As we wanted to save the pennies and in retrospect being particularly naive, we went for the leasehold option.
The ground rent is fixed at £150/year, so not too bad. With this being in the news we called the developer to see what the status of the freehold is. What do you know, they are in the process of negotiating with an investment company to sell all of the freeholds on the estate. No doubt meaning that if we wanted to buy at a later date, it will be well in excess of the £2k we 'saved' when moving in. Ground rents are also likely to rise as per other peoples experiences, meaning that in 50 yrs it could cost in excess of £6k just to live in the house, before mortgage payments.
As we want to sell the house early next year, I have instructed the developer to hold off on selling our freehold. They are offering it to us at £3k, so despite not having that money sat around at the moment, we are going to make sure we grab it before it is sold off.
It looks like we are going to be able to own our home outright (by the skin of our teeth!). Our advice to anyone contemplating buying a leasehold house - AVOID!
We bought a new build house in 2014, first time buyers with the associated financial constraints that come with that, and were offered the house £2k 'cheaper' if we went for the leasehold option. We were told by the sales rep that we would be able to purchase the freehold at a later date for a similar amount. As we wanted to save the pennies and in retrospect being particularly naive, we went for the leasehold option.
The ground rent is fixed at £150/year, so not too bad. With this being in the news we called the developer to see what the status of the freehold is. What do you know, they are in the process of negotiating with an investment company to sell all of the freeholds on the estate. No doubt meaning that if we wanted to buy at a later date, it will be well in excess of the £2k we 'saved' when moving in. Ground rents are also likely to rise as per other peoples experiences, meaning that in 50 yrs it could cost in excess of £6k just to live in the house, before mortgage payments.
As we want to sell the house early next year, I have instructed the developer to hold off on selling our freehold. They are offering it to us at £3k, so despite not having that money sat around at the moment, we are going to make sure we grab it before it is sold off.
It looks like we are going to be able to own our home outright (by the skin of our teeth!). Our advice to anyone contemplating buying a leasehold house - AVOID!
Going back to the start of the thread there is mention that the site would not be adopted by the council, I am pretty sure you will not pay less council tax for the house so that sounds like some kind of deal has gone on so that the council gets their money and the developer gets money to cover what the council tax should too.
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