'Astronomical' fees and 'incompetent' management: The risks of living on a freehold estate

Sky News

2 days ago

Imagine owning your own home only to find yourself subject to regular costs, strict rules and extra fees when you try to sell. Welcome to the world of freehold estates - a type of housing development that property experts have told Money is becoming increasingly common.
With thousands already built across the country, families moving into them are often left with confusing terms and big bills, with the government already taking action to intervene.
What are these kinds of properties?
Unlike with most other freehold properties, shared areas and facilities on a freehold estate are not owned or looked after by the local council. Instead, a private management company or homeowners themselves, via an estate management firm, take on the responsibility.
Andrew Bulmer, CEO of The Property Institute, said this is done by councils to avoid the expense of maintaining new housing developments.
Residents are required to pay the management company for the upkeep of the communal spaces, as well as their council tax to their local authority.
Costs increasing every year
A report by the Competition and Markets Authority published earlier this year found that the amount charged by estate management companies per household per year varies greatly, from around £60 to just under £1,000 in 2022.
It found that charges had been increasing significantly year-on-year. In some cases, they doubled or trebled if a new management company was appointed.
"Projecting these costs over a 25-year period, without accounting for future price rises or increasing prevalence, affected households would pay the equivalent of more than £4.4bn," it found.
Bulmer said residents on smaller estates could be left with "astronomical" fees because management companies have to split the costs between fewer people.
Not only do they need to cover the costs of maintaining the property, but also the running fees associated with it. For example, an out-of-hours call line, accountants, insurance, and risk assessments, he said.
'I don't feel safe - we are stuck with incompetence'
"As long as they are getting their money they don't give a damn about anything else," Thame resident Jane Morton Driscoll said about her management company RMG.
The 40-year-old bought her home six years ago but has been left feeling "unsafe" and "infuriated" by a litany of problems on her housing development.
While she knew about the required fees when she bought her home, she expected to get a better level of service for her money.
Morton Driscoll explained that broken equipment in the children's play area has never been replaced, 25% of the street lamps don't work, tarmac has melted, trees and plants have been left to die, and site managers have failed to upkeep the communal gardens.
"The estate is not being managed well at all. They have left parts to just get wrecked," she said.
"As a woman, I don't feel safe walking home at night. It doesn't feel safe at all, and it's really quite scary."
Despite this, her annual management fee has increased.
"It is really irritating. It is a feeling of hopelessness that this is what we are stuck with. We are stuck with incompetence," she said.
'Absolutely atrocious' customer service
Morton Driscoll showed Money a copy of the income and expenditure account sent to her by the management firm, which shows £20,773.24 was spent on grounds maintenance, £3,373.20 was assigned to playground costs, and £3,106.80 went on tree surgery.
Nearly £19,000 was spent on various "professional fees".
But she struggled to see how any of that money had been spent on improving the estate.
"My perception is that it doesn't cost £3,000 to remove and not replace a children's roundabout, and not fix a swing," she said.
"I have no problem with paying for gardening if it is being done, but it isn't."
She was also disappointed to see the amount spent on "professional fees" when she had received "absolutely atrocious" customer service.
"Things just keep disappearing off their records. Why should we have to keep chasing them up?" she asked.
'We encourage residents to get in touch'
RMG, the management firm of Morton Driscoll's estate, told Money: "We take all resident feedback seriously and remain committed to making meaningful improvements across the development."
The company said the children's roundabout was removed after failing a safety inspection, and it is working to reinstate all equipment "as soon as possible".
It is also working with residents to identify faulty streetlights so repairs can be carried out efficiently, and it's "actively progressing discussions with both the developer and contractors to resolve the tarmac issue".
"We recognise that some issues have taken longer than expected to address and are taking steps to improve our communication and responsiveness. Further conversations with residents are being arranged to better understand their experiences and ensure everyone feels listened to and supported," it added.
"To date, we have no record of any complaints being lost or disregarded. All concerns are tracked internally, and we encourage residents to get in touch if they feel an issue remains unresolved."
'It was pretty dangerous if my little boy stepped out'
Nigel Betterton was shocked to find that on top of his £600 a year management fee, he also had to pay extra costs when he looked to sell.
He moved from Germany to his estate in Burgess Hill in West Sussex with his partner and three-year-old son in 2018 but ended up feeling like he was the victim of an "elaborate con".
The 64-year-old's home was on a bridal pathway, which appeared on sat navs as a road, causing cars to drive very close by.
"It was pretty dangerous if my little boy stepped out. I insisted we did something about it and wanted boulders put at the end of the bridal way, but other residents thought it was a waste of money," he said.
He tried to talk to the council, who cared for the houses behind his garden fence, but he was told they didn't know anything about the estate and couldn't help.
"It was horrendous. You just didn't know what was happening," he said.
Residents were also required to stick to strict rules, so Betterton was stopped from building a gate at the front of his own home.
In other cases, an elderly neighbour was forced to tear down her car port and people were banned from parking caravans in the driveways, he said.
£700 fees just to sell
After six years of arguments with his management company HML, Betterton decided to sell and move to Cardiff, and that's when he discovered there were more fees to pay.
During the process, management firm Harper Stone took over the estate from HML in October 2024.
"We had to pay £350 for a sale package, which was just information about the house," he said.
"Then the management company changed, and I had to pay another £350 for the same information."
A sale package, also known as a management pack, contains important information about the property for potential buyers. This usually includes documents like accounting information, fire risk assessments, and details of any future maintenance works.
For the seller, it also sets out any requirements or fees payable to the management company for the transaction to be able to go ahead.
This could include any delayed bill payments, a fee for receiving a notice of transfer, or a charge for providing a certificate to comply with a restriction against selling without the management company's consent.
"It was ridiculous," Betterton said. "I'd never, ever, ever consider living in one [a freehold estate] ever again," he said.
How Betterton's management firms responded
Harper Stone said it was not involved in any of the issues raised before it took over management of the estates.
"Any concerns or requests regarding installations or alterations falling under the restrictive covenants would have been addressed appropriately during our period of management," it told Money.
It was responsible for issuing the sales pack Betteron needed.
"Harper Stone acted in accordance with industry best practice, maintaining transparency and clear communication. Preparing a sales pack is an administrative task that involves care and due diligence to ensure accurate disclosure to prospective buyers," it said.
It added: "While we cannot act beyond the scope of our authority, we are committed to ensuring that all residents' enquiries are dealt with respectfully and that requests for consent are relayed appropriately to the freeholder/ freehold company."
HML told Money it could not comment on information provided to Betterton at the time of his property purchase in 2018.
"All covenants, are stated in the legal documentation for each property, either in the Lease or Transfer document (TP1), to which Nigel Betterton would have signed upon legal completion and the purchase of the property, including restrictions on vehicles/caravans and fencing being erected as specifically mentioned by Nigel Betterton," it said.
"The bridle way referenced was not part of the estate managed by HML. It is owned and maintained by the local authority and council and serves as a designated route for right of access and emergency right of way if required."
What needs to be done?
Freehold estates aren't new, and the government has already intervened with the Leasehold and Freehold Act 2024.
This aims to bring greater transparency over charges and more power to residents to challenge unfair costs.
Bulmer said: "A better intervention would be to avoid creating these private areas in the first place and make local authorities adopt them.
"It is easy to understand why councils don't want them, but that is a poor solution that creates long term costs for homeowners. Some complex estates do need those private areas but they should be avoided where possible."
He explained that one of the big issues is that management firms are not putting sufficient funds into reserves to pay for future big bills.
"It saves money for homeowners in the short term, but future owners will be unhappy," he said.
What should you look out for?
Bulmer said residents should make sure they are clear on costs and check what they are buying before going ahead with their purchase.
"Ask your conveyancer to give you advice on what you are buying, and explain the implications, above and beyond simply providing information for you to figure it out by yourself," he said.