Why Garden Wood Residents Pay Maintenance Charges.
We are occasionally asked by new residents why they have to pay maintenance charges. The charges are referred to in the deeds of your property. You may find the notes below helpful.
Management charges are more often associated with leasehold properties but there has been a lot of media coverage recently about estate management charges on freehold properties. So much in fact that the government has commissioned a report on the subject. Many new build estates are charging residents high maintenance charges often with no accountability. This sometimes happens when the local authority refuse to take over the management of public areas and other utilities from the developers.
This is commonly called the Private Estates Model and it has been on the increase. There are three versions of this model.
One is in which the management company is set up by and answerable to the developers. They have no accountability to homeowners who have to pay their charges and are legally obliged to do so even though they have no input to them.
The second version is the Embedded Maintenance Company (EMC) Model. The EMC owns the land maintained and the homeowners are legally obliged to pay the company maintenance charges but as above, have no input to them.
In the third version again the developers set up a management company. When the estate is completed, the developers pass the ownership of the company to the homeowners who become shareholders. The homeowners are still legally obliged to pay the maintenance charge but control the company and hence the charges. This type of company is known as a Residents Management Company (RMC). Garden Wood is such a company. For the RMC model to work requires the homeowners to be actively involved in the management of the company though sometimes the homeowners employ an external management company but they still have overall control.
As Garden Wood homeowners we are all shareholders in our maintenance company. We can decide to spend as much or as little as we want on maintaining our estate.
All our Directors are residents and receive no renumeration.
This means there are no management fees.
On many managed estates, the management fees make up a significant part of the annual charge.
I hope you find the above notes helpful.
John Shead
GW Director
January 2025