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Daily Mail
6 days ago
- Business
- Daily Mail
A new-build, freehold house comes with a £750 service charge: Should I walk away?
I'm looking at buying a three-year-old house on a gated development made up of seven houses. The house is a freehold property, but has an estate management charge for the communal areas, comprising a small green space and a pair of electric gates. The charge is £750 a year but the documentation from the management company gives very little detail. Should there be some detail around how much the charge may increase each year, and how to dispute any charges? Also, I looked up the management company on Companies House and it says it has been dissolved. Should I continue with the purchase or call it a day? Ed Magnus replies: Estate management charges, also known as estate rent charges, have become an increasingly common feature of new build estates. The charge is bound to each property through the title deeds. Sometimes the charge may seem reasonable. However, often it can seem like you're paying money for almost nothing. The charges tend to cover any communal gardens or lawns, private roads, pavements, car parks and play areas located within the new housing estate. In the past, the local authority might have provided these services - but when new housing estates are built, councils don't have to take responsibility for them. This means the residents must fund it themselves. In your case, it's just for a small green area and a pair of electric gates, so £750 seems rather steep. With seven homes, that adds up to £5,250 per year. > We've found a leasehold flat: Should the inflation-linked ground rent put us off? Owners of at least a million newly-built homes face paying these estate charges, according to the Homeowners Alliance, often with no way to challenge them or to take over the management themselves. This is a particular concern when buying a property as you don't want to see an annual charge balloon. While leaseholders in England and Wales have a statutory right to challenge unreasonable service charges, freeholders do not currently have an equivalent statutory right. It is possible to dispute the charges in a county court. However, most people won't have the resources to do so. The fact that the management company has also been dissolved on Companies House is also a major cause for concern. For expert advice, we spoke to Clive Scrivener - a partner at Scrivener Tibbatts and a member of the Association of Leasehold Enfranchisement Practitioners. Clive Scrivener replies: While such charges aren't unusual, there are several areas you must be aware of. You mention that the management company responsible for these shared areas has been dissolved according to Companies House. This raises the question about who is now responsible for maintaining the communal areas, how funds are being managed, and what happens if repairs are needed. Without an active management company, you may be left with unclear or unfair responsibilities, especially if management responsibilities are being split between neighbours or disputes arise. A well-run residents management company will be able to provide you with a service charge budget, service charge accounts every year, a maintenance schedule and possibly a future planned and preventative maintenance plan. The service charge budget and accounts would show actual expenditure, and the management company would be able to provide invoices and receipts for expenditure on request. Your solicitor should investigate the current status of management arrangements, any legal obligations tied to the property, and whether a new management company has been appointed or if residents are now self-managing. You should establish who has legal title of the communal land. If the management company has been dissolved and does own the land, then this title could have gone 'bona vacantia' (ownerless) and would pass back to the Crown. You would then have to contact the Crown Estate's solicitors to apply to acquire the company or land back. This can be a costly and lengthy process. We recently advised on this exact situation for a new development of eight houses where the communal roads and green spaces had reverted to the Crown Estate due to the management company (owned by the original developer) failing to file accounts and therefore being dissolved. You will need to establish who is ultimately responsible for these communal areas and if there is any cost liability to you associated with it before purchasing the house. This situation is increasingly common in modern developments where there are private roads, green spaces, pathways and gates which are managed at residents' expense. Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
Daily Mail
15-05-2025
- General
- Daily Mail
The seller of our new home left old furniture and appliances behind: Can we make them get rid of it?
My wife and I moved into our new home recently and were shocked to find that the sellers had decided to leave behind many items that we didn't want or expect. This included a mouldy fridge with rotting food still in it, and a grimy old washing machine and tumble dryer. In the bedroom there is a cheap chest of drawers and a gigantic freestanding wardrobe. They also left a small stained sofa, and some old curtains. In the garden there is some rotting pallet furniture which looks home made, and the shed is full to the brim with all sorts of rubbish we don't need. The sellers asked if we wanted to buy some of these items when their lawyer sent us their fixtures and fittings list, but we said we didn't want them. Others weren't mentioned at all. We contacted the sellers and they just said 'Sorry, we thought you'd like them.' Getting rid of all this will be annoying and expensive. Can we get the seller to pay? Ed Magnus of This is Money replies: Leaving furniture, fittings and appliances in a property when you sell it is a tricky business. What might seem like a generous gift to the seller, could simply create a headache for the buyer if it's something they don't need, or which isn't to their taste. The Fixtures and Fittings Form (TA10) is something all sellers must fill in prior to the exchange of contracts. It goes into immense detail about what items will be included and excluded in the sale, from light fittings to loo roll holders. It also gives a seller the opportunity to name a price for particular items the buyer may wish to purchase. While one might forgive - or even appreciate - a few small items in good condition being left behind, what our reader has encountered goes beyond the pale. The fact that you already stated you didn't want the items when offered, makes it all the more unforgivable. A washing machine and tumble dryer should be easy enough to get rid of if you are buying new ones, as retailers will often take away old items free of charge. However, ridding yourself of the rest of the furniture left behind may not be so simple. You may be able to find a charity or second hand furniture store nearby that will come and collect some of it for free - but if the condition is as bad as you say, they might not take it. The garden furniture and junk in the shed is probably the worst part and will likely require paying removal costs for. Ultimately, if removing it is going to cost you both time and money, it would be good to know if you can claim some form of compensation from the seller. For expert advice we spoke to Paula Higgins, chief executive of Homeowners Alliance, and Jonathan Handford, managing director at national estate agent group Fine & Country. Paula Higgins replies: What you're describing is unfortunately not uncommon, and it's frustrating. You've explicitly stated you didn't want any of those items. You should be aware that the Fixtures and Fittings Form (TA10) is a legally binding document that forms part of the contract of sale. If the seller indicated that certain items would not be left, but they were, that could be a breach of contract. Your case is further strengthened because you declined these items and they were still left. You may have grounds to claim compensation for removal costs. Jonathan Handford adds: It's unfortunately not uncommon for buyers to inherit a mountain of junk after moving into their new home, which is incredibly frustrating if they've explicitly declined these items during the conveyancing process. Legally, the TA10 fixtures and fittings form is part of the contract. If the seller has left behind items that were clearly rejected, they may be in breach. The buyer is entitled to receive the property in the agreed condition, which does not include mouldy appliances, broken furniture, or rotting garden waste. What should they do? Paula Higgins replies: First off, you could write to the seller via your conveyancer, formally documenting the breach of contract and asking that they remove the items or pay you to remove them. Include photos and a list of the items left behind and ask for a response within 14 days. If this doesn't work, you could instruct a solicitor to send a letter before action, which may spur them into action and prompt a settlement. If all else fails, you can take them to the small claims court. You will want to prepare your evidence, the TA10 form showing you declined the items, your correspondence seeking a resolution, evidence of what was left and quotes and invoices for removal and disposal. Jonathan Handford adds: The best course of action is to document everything thoroughly. Clear, timestamped photos and videos of the items left behind will be helpful. Next, buyers should get quotes for professional removal and disposal so that they can prove their financial loss. From there, the matter should be raised with their conveyancing solicitor, who can contact the seller's legal representative to formally address the breach and seek a resolution. If the seller refuses to engage, buyers may have grounds to pursue a claim through the small claims court to recover reasonable costs. Any other words of advice? Jonathan Handford replies: This scenario underlines the importance of working with experienced estate agents and solicitors who ensure all parties understand exactly what has and hasn't been agreed. Sadly, some sellers lose interest once contracts are exchanged, and what should be an exciting move-in day turns into a costly clean-up. It's worth noting that sellers are not legally required to hand over a clean property unless it's specified in the contract. That means no obligation to clean bathrooms, mow lawns, empty bins or scrub the oven. Many do so out of pride or courtesy, but not all. One legal requirement that often gets overlooked is repairing any damage caused by the removal of wall-mounted items like TVs, shelves or artwork. Buyers shouldn't be left dealing with that, either. Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
Daily Mail
01-05-2025
- Business
- Daily Mail
We've found a leasehold flat to buy: Should the inflation-linked £500 ground rent put us off?
My husband and I are house hunting and came across a great flat that we are really excited about, but there are a couple of concerns. The flat, which is in a block of 18, is leasehold. The service charge is £2,400 a year and that includes bike storage, lift access, a communal roof terrace and buildings insurance. That doesn't seem too bad, but could the costs escalate in the future? Our biggest concern is the ground rent which is currently £500. There is a review period every 10 years at which point it will be increased in line with the Retail Price Index. Could the fact that it is leasehold, with increasing ground rent and the fact it does not have any private outside space mean we may struggle to sell in the future? Its asking price is £50,000 below what the previous owners paid for it in 2019 and that was when it was brand new. There are 119 years left on the lease. Ed Magnus of This is Money replies: There is a lot of nervousness at the moment around buying leasehold. This is translating into stunted price growth. Over the last five years, the average value of a flat has increased by 7 per cent, according to Zoopla. House values increased by 24 per cent during the same period. People's desire for gardens during the pandemic contributed to this - but worries over leasehold, which is the tenure of the majority of flats, also played a big part. At This is Money, we encounter reader after reader having issues with their leasehold home. We have heard from someone who couldn't sell their leasehold flat because the freeholder was refusing to sign the paperwork, someone facing large costs to extend the lease, a person who felt their service charge was too high and wanted justice and someone with a ground rent that was set to double. What costs come with a leasehold flat? Most leaseholders, particularly those in purpose-built apartment blocks, will have a service charge to pay to the freeholder or management company. This can include the costs of buildings insurance, cleaning, gardening, maintaining facilities such as lifts, bike lockers and communal areas, staffing a front desk if there is one, surveyors' fees, fire risk assessments and managing agents fees. The average annual service charge bill for a flat in England and Wales hit £2,300 a year in 2024, an 11 per cent increase on the previous year, according to the estate agent Hamptons. This means the reader's service charge is just above the average. Like our reader, many leaseholders also have to pay ground rent each year to the freeholder. This is a levy charged to reflect that leaseholders do not own the land their property is built on. The Leasehold Reform (Ground Rent) Act banned ground rent being charged on new leases on homes purchased after 30 June 2022. However, it doesn't apply to existing leases, including those which are passed on from one owner to another when the property is sold. Those with existing leases can now effectively reduce their ground rent to a peppercorn rent - essentially no ground rent at all - if they extend their lease through the formal route. The average ground rent on existing leases ranges between £200 and £500 per annum, according to Tayntons Solicitors, so it sounds like our reader's ground rent is definitely on the high side. Some leaseholders have found themselves trapped in homes with increasing ground rents - some which double every 10 years and others that increase in line with the Retail Price Index. It's the ground rents that double every 10 years that are the biggest red flags and can make homes hard to sell or remortgage. This is because costs can snowball from £500 to £1,000 to £2,000 to £4,000 to £8,000 over the next 50 years and so on. Having ground rent that is linked to inflation should in theory be safer, but given the recent spike in inflation there is also reason to be concerned by this clause. For expert advice, we spoke to Alero Orimoloye, advisor at Leasehold Advisory Service, Linz Darlington, managing director and founder of lease extension service Homehold, Gareth Belsham, director of Bloom Building Consultancy and Nigel Bishop, founder of buying agency Recoco Property Search. Is the £2,400 service charge a red flag? Gareth Belsham replies: On the face of it, a service charge of £2,400 a year - £200 per month - sounds reasonable given the list of things you get for it. But a key question to ask the landlord is whether the service charge also includes a provision for future maintenance costs of the building. Some service charges include an element which goes into a 'rainy day' fund - a 'sinking fund' in the lingo - which the landlord sets aside to cover the cost of redecorating or refurbishing communal areas like landings, as well as repairs to the building's fabric. You need to find out if the service charge includes this element. If it doesn't, you and the other leaseholders could get a nasty shock if ever the building needed expensive repairs like a new roof. In theory, each of you could be liable for one eighteenth of the cost, and given that a new roof might cost hundreds of thousands, this could leave you with a big bill. Nigel Bishop adds: Service charges can actually also go down but are much more likely to surge over the years, which could create a substantial financial burden for homeowners. There's no legal limit to how much service charges can increase. It depends on various factors such as inflation and subsequent price increases of service providers but also the age of the building. The older the building, the more likely the need for repairs of communal spaces which in turn drives up service charges going forward. It's therefore important to carry out research about the building, learn about reoccurring maintenance problems and determine when the service charge has last been updated. Linz Darlington adds: I appreciate £2,400 doesn't sound unreasonable for the upkeep of a modern block and its communal space. However, this could increase significantly. Unlike a house, you're unlikely to have control over what work gets done, which contractors do it, or how much it will cost. Is the 119-year lease a concern? Alero Orimoloye replies: With 119 years remaining, a lease extension isn't immediately necessary. However, if you do extend, a statutory extension reduces ground rent to nil and adds 90 years, though the landlord can charge a premium as well as their legal fees. Fortunately, proposed legal reforms are expected to make extensions cheaper and remove the need to pay the landlord's costs. Nigel Bishop adds: Typically, mortgage lenders favour properties that have at least 125 years left on their lease. Even if you did buy the property now, you might want to consider extending the lease after a few years which can be an expensive undertaking. The lease extension premium very much depends on the level of ground rent, how much is left on the lease and how much the property might be worth after the lease extension. As a general guideline, a lease extension would likely cost a minimum of £6,000 in addition to professional fees of £2,000 to £4,000. That being said, the forthcoming changes in the law will allow leaseholders to buy the freehold which can be a solution but can also create administrative challenges for homeowners long-term. Gareth Belsham adds: The 119 year lease sounds like an age, but in reality it's not that long in lease terms. When a lease gets down to 80 years, leasehold properties can become more difficult to sell or mortgage. While this flat is still several decades away from that, the clock is ticking. What about the £500 a year ground rent? Alero Orimoloye replies: A ground rent of £500, increasing with RPI every 10 years, may reduce the property's value and make it harder to sell, unless future legislation offers a fair way to buy it out. The £50,000 drop in value may reflect this impact. You can't change the rent terms unless you extend the lease. Linz Darlington replies: The ground rent of £500 is a concern. If this represents more than 0.1 per cent of what you're paying for the property, it could make it hard to get a mortgage now or in the future. Inflation has been rampant since the flat was leased and if it was reviewed today, I'd expect it to go up to around £700. It's likely to rise again in four have a right to extend your lease by 90 years and this also removes the ground rent – but the cost will be significant because the ground rent is so high. How much will it cost to extend the lease and remove the ground rent? Linz Darlington replies: Based on what you've said, a very rough estimate of the cost would be between £21,000 and £29,000, which includes the professional fees of both yourself and your freeholder. You're right to be concerned about future value – a better bet would be a flat in a smaller building with a share of freehold. Will this property be hard to sell in the future? Nigel Bishop replies: It is almost impossible to answer at this stage as, besides the lease and ground rent, other factors will have to be taken into account. Whether you will attract serious buyers when you put the property up for sale will depend on the wider economy at the time, the availability of mortgage products, the level of interest rates, general buyer interest but also the location of the property and your asking price. Alero Orimoloye replies: Local estate agents can best advise on how the lack of outdoor space may affect the property's value. Roof terrace access may add value, but since it's owned by the landlord, please be aware that they could build upwards in future. This may affect your quiet enjoyment and increase service charges, especially if the building extension exceeds 18 metres due to added legal requirements. Should they buy this property? Gareth Belsham replies: I'm sorry to say that several of the issues you've identified here raise serious red flags for me. Much as you both love the flat, buying the leasehold could expose you and your husband to several big risks. Perhaps the biggest red flag of all is the length of the lease. This may be one of the reasons that the asking price of the flat is £50,000 less than what the first owner paid for it six years ago. Granted, the first owner may have paid a new-build premium, and flats in many areas lost value during the pandemic, but I suspect the relative shortness of the lease is a factor in the low valuation. If that's an issue now, it will be far worse when you come to sell. For this reason alone, I would advise you not to buy the flat. Or if you do go ahead, make sure you do so with your eyes wide open to the risks. Sorry if you had your heart set on it, but take solace from the fact that this is a buyer's market. In many areas, the number of homes for sale outnumbers the number of buyers, so there should be plenty of less risky options - with longer leases - to choose from. Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
