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200% Council Tax for inherited retirement flat I can't sell, sublet or live in (costing £8K/year)
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Here is a breakdown of the budget for Housing21 for Orchard Court in Reading with the court manager's income redacted. When I became the executor for my mum's estate in January 2023 it was £242.82/month. Now in April 2024 it's risen to £352.95 which is a rise of 45% in 14 months. How can this be legal? Unfortunately the other residents are at the income level where they just have to suck it up since they can't fight it in any way legally. Housing21 are in the process of selling their assets to a private company called Churchill Estates. I can't imagine it will go up any less than a further 20%+ again this coming year. The lease locks families in to this so they can't escape.
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Almost entirely because of the line "repay deficit from prior year".
Why would it not be legal for a deficit to be made up?1 -
Good question. I can’t understand what that deficit is and where that number has come from. I’m going to ask them how this number has been derived.2
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Sir John Redwood (MP) contacted Housing21 on my behalf and they essentially said their hands were tied by the lease clause being a “subsidy-requirement” for affordable housing. They then threw Reading Borough Council under the bus.
Here is Housing21’s reply to him:From Housing 21’s perspective we cannot offer any concession or deferment to the service charge because this is the sole income for all residents at Orchard Court. If the income is not maintained then, at some point, we will be unable to continue to deliver the services there.
Then there is the no sub-let clause within the lease, which is usual to see in shared ownership or shared equity leases as it is a “subsidy-requirement” for affordable housing of this type. We have previously explored a more relaxed view to enforcing the sublet clause but we are invariably met with opposition from the remaining residents at the scheme who do not want their neighbouring properties occupied by tenants. We are then put under pressure from many of them to enforce the no sublet clause.
What seems to be causing unnecessary financial burden is Reading Borough Council’s decision to impose a long term empty premium on the property for Council Tax when Mr Davidson can clearly demonstrate that he is exercising all means available to sell the property and has no other options to avoid the property being empty. I think it would be helpful to him if you could make similar enquiries to Reading BC about an exception to this premium, given the circumstances?
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AdamDavidson said:Good question. I can’t understand what that deficit is and where that number has come from. I’m going to ask them how this number has been derived.
In this case, as it is a housing charity, it is regulated by The Regulator of Social Housing and, as it provides care home services, it is also subject to the Care Quality Commission
the deficit simply means that in previous years the service charge was less than the total expenditure at that property.
When that happens Housing21 paid the difference from its own reserves. Such a situation obviously cannot continue, so they are increasing the service charge to more than the current year's expenditure budget to recoup some of the previously spent money. I agree that their choice to recoup an additional £10,100.72 in 24/25 compared to what they recouped in 23/24 (£1.121) is a big jump, but as you well know all costs have gone up. A big jump is what happens when you have allowed previous years recoups to be too small, you have to catch up in one big go to meet regulatory requirements dictating size of reserves versus annual expenditure level.
In terms of your situation, look at it this way your mother spent the final years of her life in pleasant accommodation that she could pay for herself. The fact it is "sheltered" housing with very strict rules on resale is a factor many people overlook when deciding where to live until death and the fact it may erode any inheritance they can leave is of even less visibility at the point of purchase.
Such properties are notoriously difficult to sell as the occupation rules are a) legal and b) strict.
I think you are starting to appreciate the best way to look at your situation is the estate will become bankrupt and the property will be repossessed for unpaid service charges so no, you will not get an inheritance. However, you will always be able to reflect that your mother spend the final years of her life using her own money for her own comfort rather than living in misery so you could inherit a few £.2 -
Thanks @Bookworm105. I’ve asked Housing21 to explain the sudden hike in the deficit repayments. They’re in the process of selling these assets to a private company called Churchill Estates. It may be that they were just trying to balance the books before the transfer takes place in May (next month).1
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AdamDavidson said:Thanks @Bookworm105. I’ve asked Housing21 to explain the sudden hike in the deficit repayments. They’re in the process of selling these assets to a private company called Churchill Estates. It may be that they were just trying to balance the books before the transfer takes place in May (next month).1
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Reading BC can hardly be the ones creating the unnecessary financial burden when:
a) They have agreed to wait until a sale for their money
b) Even with the premium, the amount they are asking for is still lower than Housing 21's demand.
Have you or any of the residents attended the budget meeting? I think I'd rather have my windows cleaned less often/arrange it myself (for example) at these figures. They haven't done the guttering (or put any money aside for it) for two years so that will be the next massive increase coming down the track. How can gardening be £3.3K and cleaning £40? They're probably spending more on the court manager's phone than they are on general cleaning!
Light and heat up when the trend is down, massive hike in water. As a business, they wouldn't even be stuck with the uncertainty of having no alternative to Thames Water, would they?Will Churchill Estates be taking over then? Worth an approach when it happens, as they might show you some leniency that Housing 21 would not.0 -
Hi @Kim_13, I've read online that some of these properties can take 7 years to sell:
www.thisismoney.co.uk/money/news/article-10182583/The-retirement-home-scandal-wiping-life-savings.html
If it took this long I would have to find ~£40K in cash for H21 while being ~£40K in debt to RBC (After another 3.5 years the rate goes to 300%). The flat isn't selling at £50K and up to £10K of that will go on Estate Agent, Solicitors and Housing21 fees (Housing21 charge an exit fee!). So if it didn't sell within the first 3-4 years it would be worthless anyway. If the council tax were not at the premium level then it would only reach £15K after 7 years, meaning it would have another 1-2 years on the market before it was worthless.0 -
AdamDavidson said:Hi @Kim_13, I've read online that some of these properties can take 7 years to sell:
www.thisismoney.co.uk/money/news/article-10182583/The-retirement-home-scandal-wiping-life-savings.html
If it took this long I would have to find ~£40K in cash for H21 while being ~£40K in debt to RBC (After another 3.5 years the rate goes to 300%). The flat isn't selling at £50K and up to £10K of that will go on Estate Agent, Solicitors and Housing21 fees (Housing21 charge an exit fee!). So if it didn't sell within the first 3-4 years it would be worthless anyway. If the council tax were not at the premium level then it would only reach £15K after 7 years, meaning it would have another 1-2 years on the market before it was worthless.
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