When Denise Sullivan bought her new build home in Pembroke in 2016 she made sure it was freehold.
“I don’t trust landlords and leaseholds. I promised myself I would never get involved with a leasehold property.
“Now finding out my freehold isn’t worth the paper it’s written on makes me so angry.”
Three years on and Denise is beginning to make some worrying discoveries.
Despite using a solicitor at the time, who came recommended by the developer Persimmon, she says only now is she finding out about more than a dozen restrictive covenants placed on her home, limiting what she can and can’t do with it. A covenant is a binding agreement which can be enforceable by a court.
Something else Denise is worried about are strong legal rights for Persimmon which mean she could be evicted if she falls behind on the annual service charge.
Once the estate is finished and handed over to a management company, Denise will be charged each year for services such as the upkeep of the green spaces and the maintenance of the roads.
However, she doesn’t have any control over what that service charge might increase to in the future.
“If the covenants are that straightforward why doesn’t the developer explain exactly what they’re trying to do with these,” she says.
“This is a bomb that’s waiting to go off”.
Persimmon says restrictive covenants are not at all unusual for new developments and that it operates a fair policy of charging reasonable administration fees.
What is a freehold and what is a leasehold?
Someone who owns a property outright, including the land it is built on, is a freeholder.
Most houses are freehold but some might be leasehold – usually through shared-ownership schemes.
With a leasehold, the person owns the property for the length of their lease agreement with the freeholder.
Leaseholders have to pay their freeholders ground rent and other fees in order to make changes to their homes.
When the lease ends, ownership returns to the freeholder unless the person can extend the lease.
Some wish to buy their freeholds to save themselves these costs.
‘Question of judgement’
Andrew Melvill, a real estate lawyer with Baker Skelly law firm, though says whilst restrictive covenants on older freehold properties are unusual, covenants on new build freeholds are much more common.
“Covenants are intended to preserve the amenity and outlook of the wider estate, and to promote good neighbourly relations and when planning the estate, the developer will need to form a view as to how restrictive the covenants should be.
“On the one hand, an owner may feel that certain covenants are too prohibitive and unduly restrict the use of his or her property; on the other hand, the lack of sufficiently robust covenants might impact on the wider amenity value to the estate.”
“It is a question of judgment in each case but with pressure on the availability of development land, and with housing densities required by the planning authorities, the content and suitability of covenants should be carefully considered by both the developer and the plot purchaser”.
Although Denise does admit some of the covenants on her home are reasonable she says some are too restrictive.
“If I want to build anything I have to get permission from Persimmon and pay them a fee. Why should I have to pay them?
“There’s also no limit on how much that fee might be”.
Beth Rudolf, who is the director of the Conveyancing Association, says developers need to make issues like these much clearer to potential buyers.
“People should be enforcing their rights under consumer protection from unfair trading regulations and [developers] should have to make material disclosure over anything that would impact the average consumer,” she says.
“Anyone marketing properties should provide a list of any material facts.
“As for Denise’s service charge it’s right and fair that one should be collected – but she has no control over what is any ‘right and reasonable’ rise in the future.”
Persimmon said “residents will be able to decide for themselves the level of maintenance required for common areas and facilities and have the right to self-manage or appoint an agent of their own choosing to carry out maintenance on behalf of residents.”
It added; “Purchasers and their solicitors are provided with all details material to the property during the purchasing process.”
‘A lot of worry’
Denise though says she knows of another estate where the service charge has tripled in two years.
“It’s a big concern because I’m a pensioner and an increase in that kind of rate will knock me off my feet really.
“It’s also unregulated and uncapped… and that creates a lot of uncertainty and a lot of worry.”
You can hear more on BBC Radio 4’s Money Box programme on Saturday at 12pm or listen again here.