The impact of service charges to freeholders on new estates: A case study from the UK.

There is currently a massive development of new housing taking place in the UK to meet rising demand predominantly being delivered in multi-owned new estates which include a mix of freehold houses, leasehold flats and models of affordable housing. Since the financial constraints imposed by the government on local authorities there appears to be a growing requirement for the new residents to set up private companies to manage communal space contained within. This is unprecedented at this scale in freehold purchase and binds new owners to service charges for upkeep and maintenance and for permissions for development in addition to those imposed by statutory legislation. Purchasers are advised that a limited company will be set up to manage a selection of: green infrastructure, parking, roads, lighting and drains. Each resident will hold a share in this company and will then be responsible for appointing voluntary directors from the estate who can in turn appoint a property management agents. This paper investigates the back-ground to the current position and uses case studies and interviews with residents of a number of estates where these service charges are payable to determine how this is working in practice.