(… unless Law Commission’s exit fee report ends this income stream)
It is not often that you are made an offer that it would be simply madness to refuse, and it is a great shame for the elderly at Boughton Hall in Chester that it has come so late in their lives.
The 80 residents have been offered the freehold of their very upmarket retirement village set around a grade II listed hall, and they really, really REALLY should buy it.
The freehold is owned by Barnardos Developments Ltd which wants to sell the freehold for £950,000 to the Enterprise Property Group Ltd.
But first they have to offer the residents the right of first refusal. The deadline is February 4 for them to conclude the deal.
The properties at Boughton Hall are worth around £350,000 each and around eight a year – or 10 per cent – are sold every year, with exit and marketing for re-sale fees of 6.5 per cent.
That’s £182,000 straight off. Then there is the ground rent income of £350 a year, so approximately £28,000. The total comes in at around £210,000 a year.
Or an annual return of 22%. In less than five years, the investment pays off.
“This money could be used to sort out all the problems in the place or reduce the management charges,” says our Broughton House insider. “Sadly, too many residents just do not want to know, and the freehold will very likely slip through their fingers.”
Sadly, this happens again and again at retirement sites, as the house builders and analysts know only too well.
It is why Campaign against retirement leasehold exploitation so applauds the residents of Woodchester Valley Village, near Stroud, for buying their site for £1 million and turning it into a mutual.
Campaign against retirement leasehold exploitation is also full of admiration for retirement developer Bob Bessell, of Retirement Security Limited in Stratford upon Avon, who is leaving the freeholds of all his sites (around 4,500 flats) to the leaseholders in his will.
By buying the freehold, the residents of Boughton Hall would be paying their exit fees in advance. But they would also be securing this site and ensuring that the management is under their control.
Not buying the freehold, means it could be passed around to any commercial interest, which will make all decisions about management. In short, the residents will be utterly unempowered.
There will be no shortage of interest in an asset of this sort if the deal with Enterprise Property Group Ltd falls through.
One of the most assiduous buyers of retirement freeholds in the area is William Waldorf Astor, heir to the viscountcy and David Cameron’s brother-in-law. He trained under Vincent Tchenguiz, who once controlled one per cent of all the residential freeholds in the country, and buys through a well resourced, Chinese backed fund called Long Harbour.
Related posts:
OFT does deal with Tchenguiz to cut sub-letting fees to £85 at retirement developments – but exit fees on sale still stand
Peverel / FirstPort pays back £39,377 wrongly taken from Hillside Court, but residents say another £3,498 is owed
My contingency fund fee on sale paid to modify these six-month old gates
Seven months after buying our retirement flat, we have put it up for sale
To the Leaseholders at Boughton Hall,
You have been presented with a one-off opportunity to protect yourselves and protect the future of your children.
Please, please buy your freehold.
The situation afflicting leasehold is that predatory companies swoop in on owning freeholds, for the power and the profits it gives them .
Once they have the freehold they can use their ownership to fleece innocent leaseholders.
The crazy thing about this is the inventive ways they have discovered to actually use the leaseholders own money to finance the purchase of the freeholds.
If you can’t raise enough to buy the freehold, perhaps your children will invest. After all, they are being protected.
Do not be put off by the thought of freehold ownership. In practice day to day management does not change. All that is different is that you have protected your investment, you have control over the property you own. The value of your home increases, and you no longer have the risk of a financial shark seeking every opportunity to make money out of your home..
To simply hand over such a valuable asset for the sake of a few thousand pounds (which you would end up paying out in speculative charges) would be a crying shame.
Enterprise Property Group have created the EPG Development fund, worth around 11m whose current investors include two Cambridge colleges.
Boughton Hall was a joint project between Barnado Developments and Enterprise Property Group.
Their accounts show they have a 50% interest in Boughton Hall Management.
The accounts underline their “Robust Scheme Profit Margins” ie that is the money they make out of leaseholders.
Boughton Hall leaseholders should note that just because 950 K has been asked for the freehold, there is every possibility the freehold you could be purchased much more cheaply.
Ideally,from Barnado Developments and Enterprise Property Group’s point of view the freehold would never be offered to the leaseholders.
There exist a simple dodge to get around compliance with the Right Of First Refusal.
All that has to happen is that a company is created that owns the freehold. It is the company that owns the freeholds that is sold. Because the freeholds belong to the company, technically the freeholds have not been sold. Possibly because Barnado’s is a registered charity, this option was not open to them.
Various commitments have denied me responding until today,
To the Leaseholders at Boughton Hall, please please tell us you are purchasing the Freehold.
It is a golden opportunity that should never be refused.
The advice from Campaign against retirement leasehold exploitation is second to none and any advice from regular posters such as Michael Epstein should never be ignored.
I could write pages of wonderful reasons why you should purchase the Freehold but Campaign against retirement leasehold exploitation and MEs words sum it all up.
It is not hard to do by any means and once you own the freehold you can carry on with the same MA, if you want, or change when you want. YOU will be in control. No more mark ups on Insurance policies, repair contractors or even electricity/gas bills. No more ground rent.
NO thousands of pounds to pay the Landlord when the lease needs extending (YOU will be the Landlord)
This would benefit everybody in the long term, especially your families.
Get your families involved, they need to understand how important this is.
With respect may I just take the opportunity re an anomaly in the BH website, it states “As an owner of an apartment at Boughton Hall”. Hm, sorry but as it is no resident owns any apartment, or anything else at BH. So many people in leasehold incorrectly think they have actually bought a flat/house. The money you pay/paid is for a lease, a glorified rent book, that allows you access and to stay in the apartment. the shorter the lease the less value it is. When it is time to extend/renew the lease you will each have to pay the landlord thousands of pounds.
If you buy the freehold you will each not only own a share of each apartment but a share of the whole building.
Just buy the freehold and do nothing else if you prefer, but please buy it.