What is an estate charge?
If you live in a new build housing estate, you’ve probably heard of an estate charge and may be wondering what this is. Essentially, it pays for the communal facilities of new build freehold housing estates.
It can also apply to flats and is sometimes billed separately to the service charge. In this case, it pays for the communal grounds of leasehold blocks of flats.
Why am I paying an estate charge when I own my property?
You might be wondering why you have a managing agent and an estate if your home is freehold. In new build estates, the developer who built your home also built communal facilities such as parks, playgrounds, and car parks. This varies between different estates. Some have extensive communal facilities and some may just have communal grass to maintain.
The estate charge pays for the upkeep of these through general maintenance, gardening, ensuring they are free of litter and safe to use.
The estate charge is included on your TP1 form when buying your property and should be highlighted to homeowners by their solicitor. If this wasn’t the case, please contact us and we can explain the estate charge in more detail.
Why isn’t this included in council tax?
The local council need to “adopt” the communal facilities of the estate in order for this to happen. This varies from council to council. In some areas, new build housing estates are fully adopted by the council, but they may also remain as managed estates. Your developer will be able to give you more information about this.
What does the managing agent do?
We work with residents to get them involved in making decisions about their estate. We manage the estate charge budget, appoint contractors and ensure that you live in a well-maintained and safe environment.
How much is the estate charge?
Your estate charge budget will give you a breakdown of all the expected costs over the next financial year, and we are also happy to talk you through this at any time.
For freehold new build housing estates, further details can be found in your TP1.
For leaseholders living in flats, further details can be found in your lease.
Who decides the estate charge budget?
Each year, your managing agent will prepare a budget to cover what we think will be spent over the next financial year. We do this by reviewing the previous year, and by planning what repairs and maintenance will be needed. The budget will be signed off by the Directors of the Management Company before being shared with homeowners.
What happens if there is an unexpected cost?
Within your budget, there should be a reserve fund and we will strongly recommend keeping this topped up in case of any major projects or unexpected costs. There’s a strict process when we use the reserve fund and you’ll get notice before we do anything.
Where is the money kept?
Each development has a separate bank account for the estate charge fund and reserve fund, not shared with any other development, and completely separate from the managing agents’ own funds.
We hope this guide has been useful, we understand that leasehold is not always straightforward, but our team have years of expertise and we are always happy to answer questions. Contact Joe Jobson if you have any questions or would like to talk to us about appointing Principle as a managing agent.