The controversy of management companies on new-build estates has become a national issue. Homeowners are frustrated at large bills for shared spaces like green verges and courtyards, but are tied into contracts where if they don’t pay they face legal issues.
In the past two weeks dozens of residents from Timken Way, Duston, have written to leader of Northampton Borough Council, Councillor Jonathan Nunn, about their issues with these companies. They want the council to help them any way they can.
It turns out the council is just as frustrated – but it can’t help either.
“There’s nothing worse than the feeling you’re over a barrel about something and feel you cannot negotiate it,” says Councillor Nunn.
“We’re very much aware of the problem.”
Timken Way’s green spaces and the many shared courtyards between houses are maintained by Meadfleet and Chamonix Estates respectively. Homeowners say they now have to pay annual fees to the companies of more than £400 or more.
So how has it got to this point?
In recent years, housing developers have decided management companies are the way they want to handle shared spaces. In fact, nearly all developments approved in Northampton in the past decade use private companies.
Of course, the alternative is to allow the local council to adopt the spaces from the start – but in Northampton, developers have decided again and again they would rather do it their way.
Councillor Nunn said: “Adopting means homeowners would get the full level of maintenance included with their council rates – but also it means the developers would be held to a higher standard. That’s something they’re reluctant to do, in my opinion.”
The results on estates have been nationally criticised. Complaints have ranged from poor standards of work, to uncapped fees, and even to homeowners having trouble selling because banks seem wary of lending on new-build homes with these fees included [Read more below].
Councillor Nunn said: “We know it is something homeowners are dealing with, not just in Northampton but nationally too.
“But we don’t have the power to stop it.”
That will come as a big disappointment to a lot of Northampton homeowners unhappy with their fees – but the truth is that developers have the only say in whether their estates are adopted.
Councillor Nunn says in every large planning development in recent years, the case is made for developers to adopt instead of introducing management companies – but developers get final say.
“We are not in a position to say ‘we will only approve if you agree to adopt’ because it’s completely their choice,” says Councillor Nunn.
“Working within the rules of planning, the council only has a say over material amendments – and whether they set up a management company is not a material matter.
“All councils across the country feel quite strongly about this because there is a feeling companies have control over them.”
Local councils are not in a position to retroactively untangle estates from management companies either.
And with thousands of home greenlit across the borough, it means many thousands more homeowners in Northampton in coming years could also encounter management companies.
These struggles will continue until central Government steps in to give more power to local authority in planning stages.
A national change may help Northampton’s homeowners – but until then, it seems no-one can do much about the situation.
Freehold in name but not in practice: How homeowners feel frustrated at how their freehold homes have proven no better than leasehold
The criticism of management fees on freehold properties has its roots in how homeowners feel they have been sold a home that is freehold in name but not in practice.
Leasehold homes mean the buyer will still be paying regular fees to their landowner, and in practice are harder to sell.
If a homeowner buys the freehold, they buy the land, and don’t have to pay these extra fees.
But the recent issues have risen from homeowners buying freeholds – but their contracts mean they agree to pay management companies twice a year to look after shared spaces like grass verges and courtyards.
It has become common for developers to hand over the maintenance of shared spaces on their estates to companies like this. Nearly all developments approved in Northampton in the past decade come with management companies, which covers to thousands of homes.
Homeowners who are paying more than £400 a year to the management companies, say their bills have increased dramatically since 2014, claims denied by the management companies involved, see panel on opposite page.
Homeowners across the country have criticised these fees as a “second council tax”.
And national news outlets reported cases elsewhere in the country in 2019 where buyers were turned down for mortgages on new-build homes by banks because the uncapped costs could affect their ability to make payments.
So if homeowners are buying freeholds but are saddled with additional fees that can even affect their ability to sell their homes, how is it different to buying a leasehold?
“I feel as if I’ve bought a freehold in name but a leasehold in real terms,” says one Duston homeowner, Malcolm Clancy, who bought his home off Timken Way in 2014 and now pays £400 or more in fees.
He bought his house from David Wilson Homes and now pays two companies, Meadfleet and Chamonix Estates, to manage shared spaces.
“I feel like the managemnent companies get a say on if I want to sell my house.
“I might not have a problem if there was some transparency over what my money is being spent on.
“But I’ve never had a clear answer and I’ve been asking for years.
“When I refuse to pay, they send threatening letters and say they will charge me another £75 and will contact my mortgage lender.
“Who do we turn to for help? What do we do?”
Malcolm’s concerns are echoed by dozens of Timken residents who have written to the borough council and the Chron in the past fortnight.
What the management companies had to say
Chamonix Estates says their increase in costs for residents was in line with inflation, but acknowledged how residents had to pick up the bill for private gates in March last year, which Chamonix found they were responsible for and invoiced residents for hundreds of pounds. They also claimed its overall charge was “down two per cent this year”.
Meadfleet said it was “factually incorrect” to say their invoices had risen. They are also voluntarily signed on to the Property Ombudsman Scheme and offered reduced fees in its latest bills because of “problems with a subcontractor”.
Meanwhile, developer David Wilson Homes said in cases where it is not acceptable for “smaller parish councils” to take on a space because it is too large, the firm would “then set up a private management company to ensure that the public open space is maintained.”
A spokesperson said: “We always work closely with local councils to achieve the best solution for all parties when it comes to managing the public open spaces on our developments.”