Property Management / Grounds Fees. Do you pay them?

[Pale Rider]

A friend of mine was executor for the estate of a man whose hobby appeared to be buying peppercorn rent freeholds.

Typically, the freeholder would be entitled to £10 or £20 a year from the leaseholder, not that he had to do anything other than collect it.

After this guy died, my friend found himself writing to 50 or so leaseholders asking if they wanted to buy the freehold.

Many of them knew nothing about it - an administrative nightmare.

Research at the time indicated that for this type of freehold there was a maximum 'back rent' payable which I think was six years of annual fees.

This at least capped the maximum liability of the leaseholder, even if the money had not been collected for many years.

 

[Brains]

Many of those peppercorn lease holds come with T&C's

We had a property with a peppercorn lease, the T&C expressly forbade us using the house as either Butchers shop, a premises where alcohol could be sold or drying washing on Sundays.

We eventually sold it on with the T&C's attached, as they has another thousand years of so to run.

 

[Brains]

Estates and Maintenance

If you buy a house on an estate, you need to find out who is running the maintenance.
Roads, lighting, planting, grass, roofs, windows, play areas, access, noise, garage blocks, parking, rubbish, graffiti, lifts, TV Ariel's, sewage, drainage, guttering, window cleaning, broadband, and so on an so on.

Somebody has to pay for it.
There has to be provision for renewal of large items every few years.

If the house on the estate is freehold, then there must be an annual estate maintenance fee.
You would expect the company that does that to be run by the residents, for the residents

If the house is leasehold then the big question is who owns the lease.
If the lease is owned collectively by the residents, then the residents can appoint (and sack) their own maintenance company and decide on the annual fees, but see below.

The problem comes is if the lease is owned by a separate company (often related in some way to the original builder).
They can then make up their own rules, charge what they like.

If you have no control over the the lease holder, I'd walk away.
(Note: Many Councils and Housing Associations and the Church are the ultimate lease holder, they tend to be not too bad, as it's in their long term interest to keep their tenants happy)

The other big problems with leases collectively owned by the residents, is the residents decide on the annual fee.
If the fee is set too low, when something big needs doing, then there is no money to pay for it.

A friend of mine had a flat in a block where the residents committee was taken over by an retired couple and their friends.
They reduced the annual maintenance fee from about £1,500 PA to £300 PA
My friend then promptly sold his flat.
It was obvious that over the next few years the block would slowly fall into rack and ruin, stuff would not get fixed.
(And promised improvements such as a tennis court would not get built)
When the roof blew off some years later the insurance had had a maximum added.
The residents then all got five figure bills to cover the costs (and the place is still dump)

 

[Andrew_Culture]

I'm a bit late to the party with this thread, but I've been working with an organisation that does free reports for anyone thinking of buying leasehold https://www.leasecheck.org.uk/blog/get-a-free-leasehold-report

 

[Hicky]

Often new builds will push their own legal team and many do take them up on it, you'll occasionally get the individual who misses these points and its a legal obligation to point them out.....how strongly this is done leads to the OP's situation. In our village there's an estate directly behind my old house. This issue plagues them, there's very few houses up for sale within the village 80% are from there, the population is quite transient.