NEXTS STEPS….​

 

 

 

 

 

 

Dear Leaseholders/members. Following the recent General Election, a new Labour Government is now in office. We are hopeful that the new Minister for Housing, Matthew Pennycook, MP, will be reviewing the Leasehold Reform Legislation which passed into Law so hurriedly before the close of Parliament. The King’s Speech placed Housing and Leasehold Reform firmly on the agenda, promising:-

•  Further enfranchisement rights

•  Improved RTM rights

•  Ending 'fleacehold'

•  Making Commonhold the preferred legal structure. We look forward to seeing the detail and how it affects us at HP. We also expect the Minister to bring clarification on the formula for calculating the value of a site and the cost of enfranchising. Once this is clear, we can move forward.

 

Two of our Directors recently met with Julie James, (MS, Minister for Housing in Wales), to discuss Leasehold Reform and Enfranchisement in some depth. In response to being asked if she would consider acting for Welsh Leaseholders, should the UK legislation fail to meet our needs on things like ‘marriage value’ and the calculation formula for valuation of a site, the Minister said she would indeed be prepared to act for Welsh leaseholders. Unfortunately, following her resignation on 16th July 2024, Julie James has been replaced by Jayne Bryant, MS, whom we have already written to, requesting an urgent meeting to follow up on the commitment made by her predecessor.

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Once we have clarity on the above, we will draw up a purchase timetable and hold meetings with members to agree the way forward. In the coming months we will be contacting members, through emails, meetings, including zoom-type meetings, asking you to help us by recruiting your leaseholder neighbours and encouraging them to join and contribute to the collective purchase fund.

 

Meanwhile, let us clarify what collectively buying our freehold means to us all

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While out and about at Hayes Point recently, we met Miss Information, Miss Taken and Mr But-I-thought sitting on a bench, here are some of the things they said…….

 

"When we buy the freehold, I can have as many pets as I want, and it won’t cost a penny!”

Sorry, pets will still need to be restricted and registered with our Collective Freehold company. Fees and pet permissions will be decided by the people you elect; however, we expect these costs to be significantly reduced.

 

“When we own the freehold the selling fees, paid to the freeholder, will be halved and the value of my property will rise significantly!"

We expect ‘selling fees’ to be greatly reduced. The existing Freeholder charges unnecessarily high fees on ‘Sales documentation’. Once we collectively own the freehold, we believe that the value of property at Hayes Point should also improve because buyers will be investing in a more secure development knowing that:-

•  There is no external freeholder profiting from extortionate ‘permissions’. •residents will have a say in how the site is managed in their interests, not those of an external freeholder.

•  The apartment they purchase will have attached to it a share in the estate, which is a physical asset (as opposed to just a lease which permits use of the apartment and access to the estate for a fixed period).

 

“I can sell my freehold membership at a premium when I sell my property.”

No, this is not true! Your ‘share’ will be attached to the property, not you as an individual. Leases will be amended slightly to reflect this. When you sell, your ‘freehold share’ will automatically be sold with the property which will be advertised not as “leasehold” but as “share of freehold”, this should be an added incentive for prospective purchasers. The share is with the apartment to prevent people who have sold and moved away from having any external influence over Hayes Point.

 

“If we can buy HP for less than a million pounds, we will make a massive profit."  

We expect the new legislation to make it much cheaper and easier for us to collectively purchase the freehold, this is what was promised. However, the final decision on whether or not to proceed with the purchase will lie with members. Over 50% of leaseholders are already members but we would like more leaseholders to join us and contribute to the collective purchase fund! We ask members to contribute 20x their ground rent. Once the freehold is bought, those who contributed financially will only pay a peppercorn ground rent, while those who do not contribute, will continue to pay their full ground rent. There is no ‘profit’ to be made.

 

“We’ll have lots more money to spend on the site once we own the freehold than we have now.“ 

Not really, we will all continue to pay a Service Charge, as this is the only income source which enables us to manage the upkeep of the site. However, once we collectively own our freehold, making improvements will be less challenging. For example, should leaseholders decide to, say, install EV charging points, it should be considerably cheaper because we won’t have to pay Avon for “permission”. We know that they would want around £10,000 for each additional parking space used, plus extra for “permission” to install a charging station! These costs make it unaffordable. However, once we own the freehold, we can seek to raise funds, possibly with the help of grants, to install charging stations more cheaply.

 

"We need to buy the freehold because it will stop Avon from building more properties on our site which they are free to do at any time."

”The land around HP is all included in the Grade II star listing and therefore has protective planning restrictions which give some protection. However, collectively owning the site will give us greater protection and put decision making in the hands of our members.

 

“When we own the freehold, we can put solar panels on the fields and have free electricity.”

Ownership of the freehold will open up opportunities which would allow us to consider having a small solar farm on the field. In the longer term, this could make our electricity supply cheaper. However, we would need to look at planning requirements, costs and the possibility of getting grants to do this.

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“We can get rid of concierge and save £100k - £200k per year. We will be free to do away with restrictions like not being able to hang washing out or have barbeques. We could also save money on not having CCTV!”

Having a concierge is seen by many as part of the attraction of HP and there are no plans to end this. It is very unlikely that the other restrictions and CCTV would change either because they maintain the integrity and security of HP. However, the Collective Freehold Co-operative has been specifically designed to have a democratic structure, so, it will be up to members to make such decisions. We have marvellous staff at HP who are helpful and committed to the site. They are greatly valued, and all plans envisage the staff being the same.

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“If I pay my £1 to the Board does this mean they can go ahead and buy the freehold without a further vote or commitment from me and use my application as implied consent?”

Firstly, remember, HP Collective Freehold Ltd, is a completely separate entity from HPRTM. When you signed up to becoming a member of HP Collective Freehold, you signed agreement and consented 'in principle' to collectively buying the freehold, otherwise, why did you join? We will, of course call a meeting of members, when the time is right, to formally consent to progressing with the collective purchase! Collectively buying the freehold opens up all kinds of opportunities and, perhaps more importantly, will give us security and peace of mind from being exploited by an external freeholder who is able to place all kinds of restrictions and charges on us, as well as having the right to sell HP to someone else, if he wishes.

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“I’m worried about insurance. The freeholder is currently responsible for it. If it becomes our responsibility, we will be liable if something happens and insurance won’t cover it?”

The new management Co-op would continue to insure the site. At present, if Avon’s insurer’s refused to cover an incident, be in no doubt, they would not hesitate to pass on the cost to us as leaseholders! Evidence of freeholders passing on such costs are abundant - take time to explore the awful ‘cladding issues’ where innocent leaseholders are facing enormous costs forced on them by their freeholders. There are countless other examples.

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“What happens to the RTM once we buy the freehold?”

Because HPCF Ltd, will negotiate to buy the freehold, it will automatically become the holder of the ‘freehold’ on our behalf, once the purchase is complete. As members will know, we have spent much time and consideration in drawing up a Co-operative model, in which democratic and participatory rules are  enshrined. We built the model through meetings with the Welsh Co-operative Centre and the National Confederation of Housing Co-operatives. The Co-operative sector have over a century of expertise in democratic housing models. These ‘Model Rules’, which have been discussed and approved by members, over the years, were sent out to all members with the feedback from our general meeting on 2nd June. As agreed by our membership, the decision was to wait until we are confident that a Co-op legal structure will be accepted under the new legislation before we spend money formally registering it. Once we have final clarification from Government, the Co-op model can be registered and could also be used by other groups like ours.

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Because of the way the purchase works, the current RTM company will no longer have a contract with Avon to manage the site. However, we envisage this process being managed more like a merger of the RTM into the Collective Freehold Co-op. We want this process to be as smooth as possible, indeed, as most people are quite happy with the RTM structure, as it has been set up over recent years, it could simply reconvene under the new name and continue as normal.

 

Of course, as members, you already agree ‘in principle’ with collectively buying our freehold. However, once we know what the total costs will be, including legal fees, etcetera, members will be invited to vote formally on whether or not to proceed. Assuming we go ahead and complete the collective purchase, you, as members, will have the opportunity to decide how you want the site to be managed. Members will decide to simply re-elect the sitting RTM Board members to the Board of our new management co-op, elect new members, or a mixture of the two. Of course, it will be essential to ensure that all Board members/prospective Board members are members of the Collective Freehold Co-op! The important thing to know is that the new management company will work solely with our interests at heart, not those of an external freeholder.