More ignorance?

In January this year I commented on various articles which had appeared in newspapers about leasehold land. I suppose I should not have been surprised, therefore, to come across an article in The Times on October 7th which again showed just how little journalists – and homeowners – know about house buying and selling.

The full-page article was headed ‘The great unadopted road dodge’ and is accompanied by a large photograph of Keith Beattie from Haydock standing on a road full of pot holes. We are told that he bought his house ‘from a developer that has since gone bust, leaving residents to pay the cost of completing the road.’ There is nothing further in the article about Mr Beattie’s problems. The article does correctly tell us about agreements under section 38 of the Highways Act 1980 and the need for developers to provide a bond, but no explanation as to why these were not in place, or did not work for Mr Beattie’s house.

There is then comment from Halima Ali who bought a house in Rochdale from Persimmon, where after 7 years the council and Persimmon have still not  sorted out the adoption of the roads. Apparently, there has been a problem with the installation of street lights. Delays in adoption are, of course not unusual, although it has to be said that 7 years is a little excessive. But there is no suggestion that Persimmon is trying to ‘dodge’ its liability. Ms Ali’s main complaint, however, seems to be over the children’s play area. “There is a children’s playground and even though it is a public park, residents are required to maintain it. The public come and trash it and we can be made to pay for its maintenance, which is outrageous, and we are paying council tax on top.” Now pardon MY ignorance, but what has this to do with the roads not being adopted? Presumably, the play area was constructed by the builder because of the requirements of a section 106 Agreement with the local authority and the builder has passed the liability to maintain it onto the house buyers. But, presumably, the house buyers were told about this by their conveyancers when they bought the property. Or was it made clear to them … ?

Then we come to the real ‘dodge’ that the article is getting at – keeping the roads etc private without any intention for them being adopted. This, we are told, saves the developer money as the roads can be constructed to a lower standard than would be required by the local authority for adoption purposes. There is some truth in this, of course. But the development must still meet the standards laid down by the council in the planning consents for the construction of the estate.

We are then told that Mark Loveday, a barrister from Tanfield Chambers often hears from homeowners who did not realise that their property was on an unadopted road. “What very often happens is that nothing is done to the road for many years and it only when pot holes appear and someone living on the road says ‘hang on someone should be maintaining this road’.” Once again, the thought arises, are conveyancers really not telling buyers that the road is unadopted and they are liable for the cost of maintenance?

This client ‘ignorance’ certainly applies to the other example given in the article. We are told that a 56 year old unnamed buyer – why is it relevant that she is 56? – was made aware that the estate roads were to remain private and a residents’ company would be set up to maintain them. This was done and the residents ‘elected two neighbours as directors’. Did she attend the shareholder’s meeting, I wonder? But she was NOT told that if she wanted to sell her property ‘it would require the directors’ approval and they refused permission over a ‘trivial disagreement about parking’. Was she really not told that the company’s (NOT the directors’) consent was required?  Indeed it seems most unusual that such consent was required. And we are also kept in ignorance of the ‘trivial’ disagreement over parking. The lady in question also states that ‘buyers pulled out when they found out about the unadopted road’. All very strange!

So what to make of all this? Ignorance is not bliss and it is clear that we must take extra care to ensure that buyers do know about the status of the road and the potential expense involved where roads are maintained privately; what we are doing at the moment is obviously not working in all cases.

Do we adopt the approach of a mammoth ‘Report’ including everything, or go for a drip feed method where issues are passed on to clients as and when they are discovered, rather than all at once? Personally, I do wonder whether a report covering everything is the correct approach; far too easy for important matters to get lost amidst everything else. And there is also the worry as to whether clients will actually wade through all the lengthy document and enclosures.

And finally, just a reminder of lenders’ requirements. UK Finance Lenders; Handbook states:

6.8 Roads and Sewers

6.8.1 If the roads or sewers immediately serving the property are not adopted or maintained at public expense, there must be an agreement and bond in existence or you must report to us (see part 2 for who you should report to).

6.8.2 If there is any such agreement, it should be secured by bond or deposit as required by the appropriate authority to cover the cost of making up the roads and sewers to adoptable standards, maintaining them thereafter and procuring adoption.

6.8.3 If there is an arrangement between the developer and the lender whereby the lender will not require a retention, you must obtain confirmation from the developer that the arrangement is still in force.

6.8.4 Where roads and sewers are not adopted or to be adopted but are maintained by local residents or a management company this is acceptable providing that in your reasonable opinion appropriate arrangements for maintenance repairs and costs are in place.

DO ensure that these are complied with.

2 Comments

  • test

    I have spoken before to a Highways officer at a Council as to why so many Section 38 Agreements are still being “finalised” even years after completion. Partly it was to do with the condition of the roads, but also larger developers are having trouble with obtaining the Bond agreements with NHBC.

    From what I understand, NHBC have set limits on the amount of bond money each developer can have with them at anyone time, which amounts to a “one in, one out” kind of situation; The developer needs one of their older developments roads to be adopted to free up space in their NHBC Cap to allow a newer developments S38 Agreement to be finalised.

    Reply
  • test

    In my experience non compliance with the requirement has been the rule on right-to- buy. Until the mid seventies it was assumed that occupiers of social housing would never afford private motor cars and that providing roads of adoptable standard was a waste of money that would be better spent on other aspects of estates. This was rarely raised by purchasers’ conveyancers.

    Reply

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