Concerns over so-called ‘fleecehold’ estate charges should not deter buyers from purchasing new-build homes, but they need to understand exactly what they are signing up to before exchanging contracts, Lyons Bowe Solicitors says.
Privately managed roads, green spaces, drainage systems, play areas and other communal facilities are increasingly common on new developments where infrastructure is not adopted and maintained by the local authority.
Homeowners instead contribute towards the cost through estate management charges, an arrangement that has attracted the ‘fleecehold’ label because residents can find themselves paying the charges alongside council tax.
Lyons Bowe says the existence of an estate charge should not itself be a reason to abandon a purchase, provided buyers receive appropriate legal advice and understand their future liabilities.
CHARGES CAN EXCEED £1,000
Estate management charges commonly range between £200 and £500 a year, according to the conveyancing firm, although they can exceed £1,000 on larger or more premium developments.
Unlike council tax, the charges are not generally subject to the same statutory framework, making it important for purchasers to establish how fees are calculated, what they cover and how they can increase.
Conveyancers should also examine the management company’s structure, any rentcharges or enforcement provisions attached to the property and whether the arrangements satisfy the buyer’s mortgage lender.
Paul Lyons (main picture, inset), Managing Director at Lyons Bowe Solicitors, says: “New-build homes offer buyers a huge number of benefits, and the presence of an estate management charge shouldn’t in itself be a reason to reconsider a purchase. The important thing is that buyers understand exactly what they’re committing to before they exchange contracts.
“As developments become larger and more complex, there can be questions around estate charges, communal areas and management arrangements. A good conveyancer should identify those issues early, explain them clearly and, where necessary, work with the developer and other parties to find practical solutions.”
EARLY CHECKS CAN PREVENT DELAYS
Lyons Bowe says identifying potential problems before exchange can also reduce the risk of questions over management arrangements holding up transactions later.
Depending on the circumstances, conveyancers can seek clarification from developers or management companies, examine whether documentation needs amending and identify potential issues affecting the property’s future resale.
Lyons adds: “For estate agents and developers, having the right conveyancing partner can make a real difference. Buyers who receive clear answers to their questions are more likely to proceed with confidence, while identifying potential issues early can help prevent unnecessary delays later in the transaction.
“Ultimately, good conveyancing shouldn’t put obstacles in the way of a new-build sale. It should give buyers confidence in what they’re purchasing and help everyone involved get the transaction over the line.”
