Service Charge

[JillyB]

Hello,

A couple of years ago I bought a new house and was disappointed there was a service charge for unadopted roads and a landscaped communal area.

The communal area was a requirement of the planners to provide an amenity for the village. It is extremely popular as it has good paths for dog walking, pram pushing, cycling and riding scooters. An excellent resource in lockdown. Also popular of course with those who want to climb on the fences, open and swing on gates, remove signage, drop litter, not pick up after their dog, smoke dope, pick the flowers etc., etc.

I was shown an estimate that totaled £33,589 and my contribution was £283 p.a. The estimate included items such as the Managing Agent Fees £11,520, Accountancy £1695, etc., but also cleaning £900, provision for repairs £2000 a few other items/insurances and a landscape maintenance charge of £5000.

I was required to pay that amount - £283 as part of my purchase price.

Last year we had the first real invoice and the landscape maintenance item was now an astonishing £16,800 - thus increasing the amount I pay.

I queried this and waited a very long time to be told that a gardening company does the work and that is what they quoted so that is the price.

The managing agents have altered/reduced the cost of other services (e.g. no cleaning now, we don't need to put as much aside for repairs, etc.) to reduce the bottom line figure, but I wonder if such an extreme difference in the charge for landscape maintenance means that I was mis-sold this property?

Can they enforce a charge that is 236% more than initially shown, from £5000 to £16,800.

This landscape charge has risen again this year to £17,000.

Look forward to hearing views.

Jilly

[staffordian]

IANAL, but your post implies that the management company are simply accepting whatever price the existing landscaping contracter chooses to charge.

Is this the case? Do you know if the work was tendered, or at the very least a number of quotes were obtained?

Just wondering if the contractor and management company are too close.

[dealtn]

The managing agents have altered/reduced the cost of other services (e.g. no cleaning now, we don't need to put as much aside for repairs, etc.) to reduce the bottom line figure, but I wonder if such an extreme difference in the charge for landscape maintenance means that I was mis-sold this property?

I wouldn't think so. By who, and why?

[Mike4]

IANAL, but your post implies that the management company are simply accepting whatever price the existing landscaping contracter chooses to charge.

Is this the case? Do you know if the work was tendered, or at the very least a number of quotes were obtained?

Just wondering if the contractor and management company are too close.

And... a more cynical person than me might wonder if the landscape contractor was loading their price in order to pay "a commission" to the management company or directors thereof, in return for them not putting the work out for public tender, given the freeholders are over a barrel and obliged to pay whatever the ManCo decides is payable.

I guess this is much the same thing as you suggest in your last line....

[richlist]

It's some time since I was involved with service charges but I remember that there are rules which the man' co' need to comply with and rights and obligations on your part. Presumably there is a lease or other agreement in place and this should set out what is permitted.

You have rights to inspect the accounts and instruct an accountant or surveyor to audit the accounts.

[UncleEbenezer]

Who appoints the managing agent? Do you have a say?

Is the agent broadly speaking OK, or are they a bunch of total crooks and/or incompetents? Have you discussed the matter with neighbours?

Is it possible that the rise in one charge could be an artifact of the accounting, whereby other charges that were previously separate have been included? The management company should presumably have mentioned if so, but maybe there was some communication glitch (like, a letter that fell into the gap between a previous owner and yourself)?

[Mike4]

Who appoints the managing agent? Do you have a say?

Is the agent broadly speaking OK, or are they a bunch of total crooks and/or incompetents? Have you discussed the matter with neighbours?

Is it possible that the rise in one charge could be an artifact of the accounting, whereby other charges that were previously separate have been included? The management company should presumably have mentioned if so, but maybe there was some communication glitch (like, a letter that fell into the gap between a previous owner and yourself)?

Good questions, but the last one is not relevant as the OP states the house was purchased new. I'm now wondering if it is leasehold or freehold. I have a freehold house with an obligation to shell out for estate maintenance. It too costs about £300 a year and I'm wondering what rights I have to quibble should this rise unreasonably, given there is no lease. I think on reflection I actually hold a share in the estate ManCo and have a vote, but I can't remember. Maybe the OP also holds a share and a vote in their ManCo if theirs is freehold. Or even if it isn't! So many questions, the answer to most being to look in the legal docs provided during the house purchase.

[JillyB]

Thanks for your replies.

It is a freehold house.

From memory I agreed that in the future I would be a member of a company that would manage these expenses.

Until then it is managed by a company which includes executives from the builders (Cala) and the managing co (Remus).

My neighbours are furious at the increase in the charges and are hoping to start this company and do a lot of work themselves to reduce the charges. In my 70s and despite being a keen gardener, I am not willing to take this on.

We have asked to see accounts, but so far they have not appeared, despite the changes in some charges which I presume are based on them (the accounts).

I believe there were 3 quotes for landscape maintenance, but do not have evidence.

I am obviously a rather simple soul. I did not think you could make an agreement using a figure, then more than triple that figure and the agreement still stand.

This seems an excellent ruse if it is so. Of course they are going to show a small figure if it does not matter if they can then treble it without any consequences. Had I seen the true cost of how expensive it would be to look after this piece of land, I would have definitely thought again about a purchase. It is only going to get more and more expensive.

If I chose to sell, I believe I will be required by law to truthfully declare all, of course.

Jilly

[dealtn]

This seems an excellent ruse if it is so. Of course they are going to show a small figure if it does not matter if they can then treble it without any consequences. Had I seen the true cost of how expensive it would be to look after this piece of land, I would have definitely thought again about a purchase. It is only going to get more and more expensive.

So during the purchase process, when you presumably appointed a solicitor (or equivalent) to do conveyancing and searches etc and general due diligence, did you ask for any such figures to be checked for reasonableness? That was your chance to estimate such "true costs". Questions asked then, and money spent at that stage if necessary, is how "buyer regret" is avoided I'm afraid.

Caveat Emptor is the reality unfortunately.

[Clitheroekid]

This type of arrangement is increasingly common with freehold housing estates. In the old days the norm was for estate roads to be adopted by the local Council, but this new system arose because the buyers didn’t want the local hoi-polloi driving their Vauxhall Astras up and down the nice new roads outside their house. By making the roads private they could keep the plebs at bay.

But the price for this exclusivity was that the residents had to pay for maintenance of the roads etc themselves. The annual charge is the equivalent of a service charge on a flat. However, there’s a massive difference. Leaseholders have a whole raft of legal rights regarding service charges, and can apply to an independent tribunal to enforce those rights. Freehold owners don’t have any such rights.

Nevertheless, your title documents will set out how the ‘service charge’ is calculated, and will probably include some dispute resolution mechanism. You therefore need to read them.

The conveyancer who acted for you when you bought the house (I hope they weren’t recommended by the developer!) should have explained all this to you in detail. If they failed to do so you may have grounds for a complaint and possibly financial compensation as well.

From a practical point of view you can ask the directors of the manco to justify the expenditure, and if you and the other residents aren’t happy you can sack the directors and appoint replacements. Unfortunately the default position is that people grumble but aren’t willing to take any responsibility for putting things right.

[AsleepInYorkshire]

A huge caveat ... do your own research.

If the road is not adopted that may have been that the builder chose not to go down that route or fell foul of Section 38.

If the majority of residents want to get the road adopted you may be able to exercise statutory rights invoking the little known Section 37.

You may not want the road adopting and as such I think the amount of control you have over maintenance bills is minimal.

AiY

[AF62]

This type of arrangement is increasingly common with freehold housing estates. In the old days the norm was for estate roads to be adopted by the local Council, but this new system arose because the buyers didn’t want the local hoi-polloi driving their Vauxhall Astras up and down the nice new roads outside their house. By making the roads private they could keep the plebs at bay.

The arrangement also benefits the developers as they can put in roads and footpaths which would never be accepted by the council for adoption, but means they can squeeze in a few more properties and make some more profit from the extra land.

When a development near my home was proposed I took a look at the plans submitted to the council - nothing unusual, a circular road around the estate with a normal width footpath each side of the road.

However by the time it was built the 'footpaths' had shrunk from the 1.5 meters initial planned width to a 20cm brick edging edging each side of the road (and the houses are built virtually up to that), so now anyone walking off the estate has to walk in the road. The council are never going to adopt that road.

[Lootman]

This type of arrangement is increasingly common with freehold housing estates. In the old days the norm was for estate roads to be adopted by the local Council, but this new system arose because the buyers didn’t want the local hoi-polloi driving their Vauxhall Astras up and down the nice new roads outside their house. By making the roads private they could keep the plebs at bay.

I can see that that is the theory. But how could it ever be enforced? If a road goes from A to B then putting a sign saying "Private" at either end may not deter anyone using it as a short cut or for a joy ride. The council and cops have no ticketing power on an unadopted road, I would have thought, and little interest in enforcing the restriction.

Of course they could put some kind of gate at either end, which only residents can open, but then that requires an additional stop and delay, and is a hassle for anyone visiting you or making deliveries to you.

I have seen some cases where a "cul de sac" or "no entry" sign is put up to try and fool non-residents into thinking there is no through route. But people in the area wise up to that.

The only real way to ensure those Astras don't invade their hallowed roads is to ensure that those roads do not really go anywhere e.g. it just goes round in a big circle, and ends where it starts.

If I really wanted to feel like I lived on a private estate then I'd do what I have seen in the UK, and have seen a lot more in the US: set it up as a gated community with a guard controlling who enters. But of course then you have to pay for that as well.

[JillyB]

Many thanks for the useful replies.

I did use my own solicitor, who managed to overload my inbox days before I moved in and that created so many problems! She almost certainly mentioned that a service charge is likely to increase. I had been reassured by the developers staff that the developer was exceptionally accurate in their forecasts for the service charge and there was rarely an increase for some time - I did not get this in writing.

I am not in the least interested in having a private road. I do have a section in front of my house that is basically a driveway. It is brick paved and has no pavement. I would recommend no one ever buys a house like this. Delivery drivers hurtle by at great speed inches away from me as I garden. It is truly frightening. I did stop one and ask him to slow down and he asked me what the speed limit was!

So I agree that what is accepted these days is dreadful. Additionally, we have a huge downstairs loo so a wheelchair user can get in there and turn. However, a wheelchair user would struggle to visit us as where there are roads (with pavements) the road is so narrow people park on the pavements to allow cars to pass - a lorry could not. So a wheelchair would have to travel a long way on the road.

To add insult to injury we have to have (pretend) chimney pots on the roof. Another planning requirement. There is no chimney inside and no fire.

My view now is that planning is run by clowns, it was their stipulation that this large area of parkland be provided for the town, without any consideration about its upkeep.

Jilly

[AF62]

My view now is that planning is run by clowns, it was their stipulation that this large area of parkland be provided for the town, without any consideration about its upkeep.

Did planning place that as a requirement for development of the site or did the developer offer it up as a carrot to get their development approved. I suspect the second not the first. And is it public access land if the residents have to maintain it?

[AsleepInYorkshire]

Many thanks for the useful replies.

I did use my own solicitor, who managed to overload my inbox days before I moved in and that created so many problems! She almost certainly mentioned that a service charge is likely to increase. I had been reassured by the developers staff that the developer was exceptionally accurate in their forecasts for the service charge and there was rarely an increase for some time - I did not get this in writing.

I am not in the least interested in having a private road. I do have a section in front of my house that is basically a driveway. It is brick paved and has no pavement. I would recommend no one ever buys a house like this. Delivery drivers hurtle by at great speed inches away from me as I garden. It is truly frightening. I did stop one and ask him to slow down and he asked me what the speed limit was!

So I agree that what is accepted these days is dreadful. Additionally, we have a huge downstairs loo so a wheelchair user can get in there and turn. However, a wheelchair user would struggle to visit us as where there are roads (with pavements) the road is so narrow people park on the pavements to allow cars to pass - a lorry could not. So a wheelchair would have to travel a long way on the road.

To add insult to injury we have to have (pretend) chimney pots on the roof. Another planning requirement. There is no chimney inside and no fire.

My view now is that planning is run by clowns, it was their stipulation that this large area of parkland be provided for the town, without any consideration about its upkeep.

Jilly

If you don't want a private road you may want to consider taking out a Section 37. I'm not aware of the specifics but it could be a viable option?

https://www.legislation.gov.uk/ukpga/1980/66/section/37

AiY

[AF62]

If you don't want a private road you may want to consider taking out a Section 37. I'm not aware of the specifics but it could be a viable option?

https://www.legislation.gov.uk/ukpga/1980/66/section/37

AiY

If the residents wanted to do that now the development is complete (and the developers have their profit and left) then it doesn’t seem it would be an easy or cheap process - https://www.lodders.co.uk/legal-updates ... c-expense/

[AsleepInYorkshire]

If you don't want a private road you may want to consider taking out a Section 37. I'm not aware of the specifics but it could be a viable option?

https://www.legislation.gov.uk/ukpga/1980/66/section/37

AiY

If the residents wanted to do that now the development is complete (and the developers have their profit and left) then it doesn’t seem it would be an easy or cheap process - https://www.lodders.co.uk/legal-updates ... c-expense/

They could use S37 to ask for the public utility which is the cause of the annual bill to be adopted on the simple grounds that it is for "public use". It don't think that's expensive as it looks more like a form filling exercise. If the road is private then there can be no reason for public vehicles to have access to it other than for use by the home owners.
There may be some mileage in at least reviewing the need to pay for a public area through private funds and that may be an easy subject to understand. I would suggest that the private road should be for private use only.

Something doesn't seem quite right - have I understood what the OP is saying?

AiY

[AF62]

If you don't want a private road you may want to consider taking out a Section 37. I'm not aware of the specifics but it could be a viable option?

https://www.legislation.gov.uk/ukpga/1980/66/section/37

AiY

If the residents wanted to do that now the development is complete (and the developers have their profit and left) then it doesn’t seem it would be an easy or cheap process - https://www.lodders.co.uk/legal-updates ... c-expense/

They could use S37 to ask for the public utility which is the cause of the annual bill to be adopted on the simple grounds that it is for "public use". It don't think that's expensive as it looks more like a form filling exercise. If the road is private then there can be no reason for public vehicles to have access to it other than for use by the home owners.
There may be some mileage in at least reviewing the need to pay for a public area through private funds and that may be an easy subject to understand. I would suggest that the private road should be for private use only.

Something doesn't seem quite right - have I understood what the OP is saying?

AiY

But s37 of the Highways Act is about highways and getting them maintained at the public expense, so why would it cover a green landscaped area which is now used by the community?

Although JillyB says that it was a requirement of the planners to provide this green space amenity, has she actually seen the documents that set out that demand by the planners? Or was this green space a selling point by the developers to the planners to get permission.

How is the piece of land marked out? Is it actually signposted and advertised as a communal green space or has it just been adopted by the community as such.

If JillyB is correct and that the planners insisted on a 'free to the council' maintained piece of green communal land be provided by the developers then why would the council now voluntarily take responsibility for maintenance if, as it appears, s37 would not apply.

[AsleepInYorkshire]

If the residents wanted to do that now the development is complete (and the developers have their profit and left) then it doesn’t seem it would be an easy or cheap process - https://www.lodders.co.uk/legal-updates ... c-expense/

They could use S37 to ask for the public utility which is the cause of the annual bill to be adopted on the simple grounds that it is for "public use". It don't think that's expensive as it looks more like a form filling exercise. If the road is private then there can be no reason for public vehicles to have access to it other than for use by the home owners.
There may be some mileage in at least reviewing the need to pay for a public area through private funds and that may be an easy subject to understand. I would suggest that the private road should be for private use only.

Something doesn't seem quite right - have I understood what the OP is saying?

AiY

But s37 of the Highways Act is about highways and getting them maintained at the public expense, so why would it cover a green landscaped area which is now used by the community?

Although JillyB says that it was a requirement of the planners to provide this green space amenity, has she actually seen the documents that set out that demand by the planners? Or was this green space a selling point by the developers to the planners to get permission.

How is the piece of land marked out? Is it actually signposted and advertised as a communal green space or has it just been adopted by the community as such.

If JillyB is correct and that the planners insisted on a 'free to the council' maintained piece of green communal land be provided by the developers then why would the council now voluntarily take responsibility for maintenance if, as it appears, s37 would not apply.

Err ... dunno

I'd have to see the original documents. I suggested the S37 with a huge caveat - please see previous posts (Sorry my bad )

I've simply never heard of this before. I can see no reasonable reason why someone should be paying for the upkeep of land used as an amenity by the public. And that's the source of my confusion. I would add that there is additional confusion as the OP states the road is not adopted?

I wonder if there's a private drive off the main road which hasn't been adopted through a section 38? In addition that has a communal area which has under the planning consent to be maintained by the residents and in order to ensure/police that maintenance the LA have agreed to do the work but re-invoice?

I think the OP may not have completely understood the commitment they were making and now has an issue which impacts negatively on their cash.

I don 't have all the facts and I made a quick suggestion in order to perhaps open the conversation up and be of help. However, there's a point at which a lack of information becomes a large hurdle and guessing isn't perhaps as positive as the gesture.

Take care

AiY