Cornwall Park could one day, be at financial risk. Find out more in this website.
Cornwall Park relies on income from leaseholders to fund the park. However the trustees refuse to discuss fair market rents, freeholding or full value of lessee’s improvements - their homes. So families are walking away from their loved homes, and not getting fair value.
The risk the Trust Board faces is a serious financial threat thanks for rising inflation and static income. The value of the trust’s residential properties is close to $275 million. It earns around $4.5 million in rent, representing a cash yield of 1.6 per cent per annum. With inflation running at over 8 per cent and likely to be elevated for a few years, the trust’s operating costs will increase while it's income remains static or reduces as Lessee’s walk away.
After most people walk away at the next rent review the net return to the trust is estimated to be about half, $2.75 million. If they freeholded section and invested the $275 million at say 6 per cent their income would be some $16 million.
It’s wrong that there is no protection for people who built or lovingly restored homes and whom are now being forced to walk away from them because the Cornwall Park Trust board is ignoring the Lusk recommendations.
Logan Campbell established a large number of properties around the Park to be leased out and provide a continuing income for the maintenance of the park. His original trustees advertised that the leases allowed for the full value of the Lessee’s improvements - our homes. The Trust Board is not doing this. Instead it takes an adverserial approach with leaseholders.
Over the last decade it has acquired more than 20 homes on non-renewal of leases, mortagee sales, by forfeiture or by direct purchases (some secretly through a blind nominee company) for very low prices.
Leaseholders have paid for a report which shows possible future losses. The Trustees refuse to discuss freeholding and are only offerring ‘backstop’ payments of $180,000 for some houses -including those houses worth $1 million plus.
Cornwall Park is much loved.
Glasgow leases are banned in England.
The residential leases that provide most of the income for the Park are progressively collapsing because the rent structure of the leases no longer works from a market perspective.
Annual ground rents for some properties are already up to $100,000 per annum, and rents are forecast to increase by 2-4 times on average at the next renewal. A report from an independent valuer predicts that most if not all of the remaining leaseholders will have no choice but to walk away from their property if the Trust Board does not come up with a sustainable solution.
Unreasonable leases mean no long term ownership, instead properties are rented out and the Trust has the upkeep, rates, insurance and so on. It also changes the dynamics of those who live nearby former homes now freeholded with fewer families living in the community. Read more on what’s happened in the UK.
Who is on the Trust Board?
The Cornwall Park Trust Board (Adrienne Young Cooper (chair) Keith Smith, John Duncan and Alistair Carruthers, will not discuss fair market rents, free holding or full value of lessee’s improvements. The outcome is devastating for leaseholders. When owners abandon their property, the Trust Board’s income falls by over 50 percent because they rent out the homes for a lot less than the lease and then they have the upkeep responsibility too.
Cornwall Park is a wonderful park. However the trustee’s actions are causing hardship, in some cases, marriage breakdowns, depressions, a suspected suicide, and bankruptcies. It seems wrong that people who built or restored homes are now forced to walk away from them because the Trust Board is ignoring the Lusk recommendations about fairness to lessees.
“The Board is creating hardship for so many: the leasehold house owners who are unable to afford spiralling lease costs & can’t sell their leasehold property for fair value & then there is their attitude to the Showgrounds.”
If all leases are forfeited, it results in millions of lost income for the Park.
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