Newsletter March 2017- Proposed Block/Estate Charge Changes
In our January newsletter we flagged that Avant had given advance notice of their intention to make changes to the way in which the Estate and Block Charges are to be calculated. We also discussed this at the HRRA AGM in February.
Avant have confirmed that they have been in consultation with David Wilson and the principal block freeholders as well as with Trinity, the estate manager to confirm those changes.
It now appears that the changes are to come in effect on 1 April and residents will soon start to receive notification of the change through the post from Trinity.
Why? There has been an issue with transfer documents relating to certain properties sold by Avant. You may have picked up references elsewhere to a ‘TP1’ issue. In essence, those affected transfers are different from others used by Avant such that there isn’t the same obligation on all residents to pay toward communal expenses relating to their blocks (that is, the Block Charge wont provide an equal allocation of the block expenses).
Avant have decided that they can resolve this issue by changing the way the Estate and Block Charges are calculated. The change is intended to allow Avant to collect the relevant contribution to communal block expenses through the Estate Charge.
How are Avant going to do this?
Block Charge: each property in the various blocks across the estate makes a contribution to the repair and maintenance and general upkeep of the block they form part of. This includes car parking, paths and lawned areas. A separate charge is made as a contribution to block insurance. Taken together all of the Blocks cover the central part of the estate. The new build David Wilson homes around the outside of the old hospital are not part of this contribution.
Estate Charge: all properties contribute to the cost of repair, maintenance and general upkeep of the wider communal estate (referred to in the property transfer documents as the common facilities). To date no Estate Charge has been levied, although there was an attempt to start this in early 2016.
Avant propose to adjust the way in which the Estate and Block Charges are calculated. They do this by adjusting the land which falls into the common facilities. The plan below represents the proposed transfer into the Estate Charge, much of which was previously covered by the External Block charge.
HRRA have made various objections on behalf of residents.
Further detail is will shortly be available this website, including Avant’s statement in respect of the provisions within the various property transfer documents which Avant says lets them do this.
When? We are told the change will come into effect on 1 April, but we await receipt of the formal notification.
Once those have been received, the next stage is up to residents. Some of those already affected by the TP1 issue have appointed a firm of solicitors to advise on the changes Avant previously proposed. Others more recently instructed solicitors to advise on Avant’s planning applications.
Let us know what you want to do and we will continue to try and co-ordinate matters and continue to make known to Avant the position of residents.
The HRRA Committee meet at the Social Club at 8.15pm, on the second Thursday of the month. Our next meeting is on 13 April 2017. Come along and have your say.
Avant’s latest statement on this issue follows. A full copy of their response to a number of issues raised by HRRA will shortly be posted to the HRRA website. (http://www.highroydsresidentsassociation.com)
High Royds Residents Committee
EXTRACT OF EMAIL FROM AVANT HOMES TO HRRA CHAIR 16th March 2017
“Changes to the Estate and Block Service Charge definitions:
As you know, we previously forwarded a copy of a draft letter to you which outlined the changes Avant is proposing to make to the extent of the Estate and Block communal areas. These changes are principally being made to provide a solution to the errors in the drafting of some Avant freehold transfers which affected the recovery from a small proportion of residents at the Development of some of the “external” block charges, such as communal parking areas, but are also being made to reflect changes to the development plan for the Estate, which has inevitably evolved since the Developer acquired the site in 2005. The draft communication has been reviewed and approved by David Wilson Homes as well as the ground rent investment owners of those freehold apartment blocks at the development which had previously been sold by either DWH or Avant. A copy has also been provided to and reviewed by Trinity, the managing agents for the development, who will be issuing the communication
As set out in the draft letter, the communication will be followed by:
– a revised service charge matrix setting out the appropriate percentages that each category of homeowner will contribute to under the service charge regime. This will include a weighting in respect of the newly defined Estate areas, so that DWH owners do not contribute towards the cost of areas that previously comprised the external “Block” areas; and
– a separate communication to those freehold owners who have errors in their freehold transfers, to ascertain if they wish to “opt in” to the full management regime. We have previously written to this category of freehold owners, but it is possible that they will make a different decision once they have received the communication regarding the revisions to the extent of the Estate, and we therefore wish to provide them with a final opportunity to opt in, if they have changed their minds.
As advised in my earlier email to you, the proportion of Estate costs payable by DWH and Avant homeowners is not expected to change, due to the application of the weighting that is referred to in the letter. Instead, the effect of the changes to the Estate charge calculation / weighting will be that the minority of Avant freehold owners who, due to an error in their transfer documentation, did not legally have to contribute to external block charges will be brought within the regime for contribution to those costs once they are redesignated as part of the Estate, as was originally envisaged when the management structure was put in place.
[HRRA INSERT of PLAN to help follow]
Original TP1 Estate Plan New Proposed Estate Plan (Land Disposal in Blue)
– the disposal of Block 21 to another developer and its removal from the Block –the purchasers of properties within Block 21 will contribute to Estate costs
– the proposed transfer of an area of land to the south of the development to an adjoining land owner
– the inclusion of the area to the east of the development, surrounding the sports pitches and facilities, within the Estate boundary.
As the development plan continues to evolve, further changes may be required In due course, for example if planning for residential development of the Clocktower is obtained.
Feedback received in relation to the proposed changes to the Estate and Block Service Charge definitions
We have received some preliminary feedback to the proposals from one or two homeowners and via Trinity. I thought it would assist if I respond substantively via the HRRA to these queries.
Firstly, it was queried with us why there is a requirement for other parties interested in the development (such as the owners of the freehold blocks of apartments and David Wilson Homes) to be consulted in relation to decisions regarding the extent of the Estate and Block communal areas, in addition to Avant as the freehold owner of the Estate Communal Areas. When the management regime was originally set up, it was considered that these parties would have an aligned interest in ensuring that the development was managed in accordance with the principles of good estate management, for the benefit of the wider community. These parties have been consulted in relation to the proposed changes and have engaged in reviewing and responding to Avant in a prompt fashion.
It has also been raised as a concern that, if any area is transferred out of the Estate, that land will not continue to be subject to any public rights of way or the obligations under the s106 agreement in relation to the provision of new footpaths or bridleways. We can confirm that any land that is removed from the Estate will continue to be subject to any public rights of way and will also continue to be subject to the terms of the s106 agreement. This has been and will continue to be made clear to any third parties to whom any land is transferred. The potential (as yet uncontracted) land disposal which is highlighted on the revised Estate plan shows the extent of the boundaries of the potential land disposal edged red and coloured blue. The area is clearly marked as comprising a potential land disposal. The area of land that is being disposed of would, broadly, be replaced by the additional area of land adjacent to the sports pitches, which we had understood from
representatives of the High Royds Sports Association, the residents at the development were keen to see as being included within the communal areas in the long term, so that these areas could be included within the management regime and controlled for the benefit of the development in the years to come.
There has also been an inference that making changes to the extent of the Estate may constitute some form of mis-selling or misdescription on Avant’s part. All of the freehold transfers and leases at the development contain provisions allowing the extent of the Communal Areas and Facilities to be amended. This provision is extremely common for residential property developments, since communal areas frequently require adjustment to reflect changes in the development plan or other unforeseen changes that cannot be legislated for at the outset of a large development of this nature. There is no requirement in the documentation for homeowners to provide consent to the proposed changes or for a consultation exercise to be undertaken, which is, again, extremely common and reflects the fact that this is not always feasible on such a large development site, with so many homeowners and occupiers.
We have been advised that certain groups of residents may consider challenging the proposed amendments to the extent of the estate communal areas and blocks. Avant has taken its own legal advice on the matter and is confident that the changes proposed are permitted under the terms of the transfers and leases. However homeowners are, of course, free to take their own independent legal advice on the matter if they wish.
Finally, a query was raised regarding the operation of the “Nominee” provisions which are contained in the leases and transfers for the development. The “Nominee” provisions provide a legal mechanism to replace the existing managing agent, Trinity, at any time after the period of 1 year has expired after legal completion of the final plot sale at the development. This right can be exercised if more than 50% of the owners at the development vote to invoke the “Nominee” provisions. The right cannot currently be exercised by the residents, as the final dwelling has not been built and sold, but in due course the right could be exercised.”