Unadopted roads on new developments may drive up costs
under Section 38 of The Highways Act 1980. Subsequent alterations to existing highways are undertaken under Section 278 of The Highways Act 1980. Communal areas or public open spaces are adopted under similar legislation.
Developers enter into Section 38 Agreements supported by bonds (sums of money placed with the council to secure the construction costs). This provides comfort for property buyers and ensures they will not incur a financial cost contribution towards the final construction.
Initially, the developer will create the base and kerbing of the road enabling building work to proceed and houses to be accessed and thus sold. Once the development is complete the final surface will be laid, street lighting installed and the council will inspect with a view to adoption. The developer is then required to maintain the roads to the adoptable standard for a period of 12 months before the council will formally adopt the road and thereafter maintain it at public expense.
All of the above regulatory procedure is time consuming and expensive, both to the developer and local authority. Hence the current trend for the roads serving properties within new developments to be transferred to management companies formed to maintain common parts within the development. However the estate legal documentation pack must define the proposed procedure and financial costs. The relevant management company will usually delegate their responsibilities set out in the transfer documentation to experienced estate managers. Each property owner will ordinarily take a share in the management company. The managers will produce a proposal and estimate as to the management costs.
A proportion of such costs will be allocated to each unit property. The level is usually dictated by the size of the house. For example, the percentage level allocated to a five-bedroomed property will be higher than a one -bedroomed starter home.
It is important your conveyancer makes a thorough inspection of the documentation. It is imperative there is a vehicle in place for the management company’s estate manager to carry out a final inspection of the common parts, public open spaces and roadways to ensure they have been constructed and completed to the same level as if they were to be council adopted. This must take place before ownership is transferred to the management company.
Providing the legal documentation has been properly drafted covering the rights of way required, adoption and future maintenance provisions this arrangement works well and will not adversely affect the value or saleability of the property. However, the initial estimated maintenance costs can, and usually will, increase over time.
John Robson is Residential Conveyancing Manager at Ford & Warren Solicitors, Leeds.