(… 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 LKP so applauds the residents of Woodchester Valley Village, near Stroud, for buying their site for £1 million and turning it into a mutual.
LKP 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.