Summary of beach hut consultation December 2013

Summary of beach hut consultation December 2013 1. 2. 3. 4. 5. 6. 7. 8.

Introduction Fees and Charges Phased approach to fees and charges Sublet or no subletting Market rent valuation Tenancy agreement Other general points Submission of the Beach Hut Owners Association joint sub-committee

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Introduction

The council consulted with beach hut owners, local community groups, the e- panel and the general community via the website. The consultation took place between the 12 November 2013 and 11 December 2013. Some people replied with the same points by both email and letter, these were considered as one response. We received 199 responses. Of those, 153 indicated they were beach hut owners whilst 46 were the general public. Not all responses commented on all points. The consultation summary is split into several areas. Fees and Charges Phased approach to fees and charges Sublet or no subletting Market rent valuation Tenancy agreement Other general points In addition a number of points were raised that were not part of this consultation. 2

Fees and charges

All 153 responses from beach hut owners felt the proposed fees were too high. The general tone is one of anger and shock at the proposed fees. The general response from non beach hut owners was that the increases were steep but the move to a market rent should happen, 34 in favour and 7 against. Two non beach hut owners responded that the proposed fees were too low in Whitstable when directly compared to other sites in Whitstable. Long Term Discount – this is a category that currently receives a discount on the annual rent. To be considered for Long Term Discount you need to be a pensioner, pay Canterbury City Council tax and have owned a beach hut for 15 years or more. By moving to a market rent this category will receive the largest increase. 45 beach hut owners – many not qualified for Long Term Discount – felt it was unfair to increase the fees so highly. 44 beach hut owners responded that they were against removal of differential between Resident (paying Canterbury city council tax) and Non Resident (not paying Canterbury City Council tax). 4 beach hut owners agreed with the removal of differential between Resident (paying Canterbury city council tax) and Non Resident (not paying Canterbury City Council tax). Summary conclusion on fees Beach hut owners feel the proposed fees are too high, that the differential should remain and that Long term Discount should remain. Non beach hut owners recognise that it is a steep increase but there should be a move to market rent.

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Phased approach

No beach hut owners felt the proposed fees should be implemented in one year. 32 beach hut owners responded that the proposed fees should be phased over two years and 15 responded that it should be longer if possible. The general view of non beach hut owners was that the fees and charges should be should take place over two years. Although 7 responded that it should be straight away. Summary conclusion on phasing The proposed fees should be phased over two years, if possible phased over more years, especially for those on Long Term Discount.

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Sublet or no subletting

No beach hut owners said they personally wanted to sublet. Some indicated they knew it happened and 36 responded that if people wanted to they should be allowed to sublet to help cover their costs. 77 respond that sub letting should not take place. Non beach hut owners were split on the issue. 13 responded that subletting should not be allowed due to the site on which the beach hut sits being public open space, while 24 responded that it was down to the individual beach hut owner to sublet at a premium if they wanted to. Summary conclusion on fees and charges Do not introduce subletting as standard. Possibly offer option to sub let. 5

Market rent valuation

43 beach hut owners responses questioned where the benchmarking came from and wanted to see the valuation report – the redacted benchmarking of 52 beach hut locations, scrutinised by the BHOA representatives and the valuer’s report are appendices to the committee reports. 5 questioned did the benchmarking consider services to beach huts such as electric, water – the benchmarking was based on similar beach huts to those in Herne Bay and Whitstable, which do not have these type of services. Did the benchmarking consider issues such as south facing – this was originally considered but the BHOA agreed to not include in benchmarking. Did the valuation consider each beach hut site or the site as a whole – the benchmarking and valuation considered the location as a whole and did not consider individual beach hut sites. Did the valuation consider the rent of the site only – yes. 3

9 beach hut owners requested a second opinion on valuation – yes we forwarded all the information to the BHOA, they are seeking a second valuation in the new-year from a qualified independent valuer. This will be considered by the Overview and Executive committees. Did it consider that Herne Bay beach huts are on the beach and Whitstable beach huts on the grass slopes? – yes. Did it consider Whitstable has a busy promenade in front of it and HB a busy promenade behind it? This reiterates the above point. Shouldn’t each beach hut be valued separately? No they were valued locationally. The valuation is of the site not the beach hut. Beach huts are only usable for part of the year? –they are available all year round, the benchmarking and the valuation was based on a full year. The same issue of seasonal use applies to other huts in locations used for benchmarking. Did it consider the space between beach huts? – This was part of the overall locational assessment. Did it consider the risk of high tide to the Herne Bay beach huts? – This was part of the locational assessment. 6

Tenancy agreement

41 beach hut owners who responded requested the Council’s external legal advice - This has been summarised in the main body of the reports but the legal advice is confidential to the Council. 31 beach hut owners responded that they were against Public Liability Insurance being enforced – it is a standard requirement in a tenancy. 3 beach hut owners responded that the landlord (council) should cover the insurance – this has been considered in discussions with BHOA but cannot be done. 2 questioned why council approval is needed to sell the beach hut – the council already checks on the transfer of the tenancy agreement; this is being retained in the tenancy. 4 responded that the tenancy was to legalistic and long – the tenancy document is being made as simple as possible whilst fulfilling legal requirements. A number of other points were raised and these will be considered in the final tenancy document. 7

Other general points from responses

24 beach hut owners responded that if the proposed fees are implemented many beach hut owners may be forced to sell. 15 beach hut owners indicated that if local people are forced to sell this could have a negative impact on the sense of place or community in Herne Bay and Whitstable.

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5 beach hut owners mentioned that beach hut owners support the local community clubs on the coast; this could be affected if local beach hut owners decided to sell. 8 beach hut owners mentioned that beach hut owners help “manage” the areas. Such as: reporting incidents, beach cleaning, adopt a beach etc. This could be affected if local beach hut owners decided to sell. 5 responded that they queried the length of the consultation – 4 weeks - and the timing November and December. And 3 respondents queried the fact we were negotiating with the BHOA representatives and not all beach hut owners - the council wrote to all 639 owners with details of the proposals, giving 4 weeks in which to respond, as well as consulting BHOA, which we consider reasonable 13 raised concerns about the proposed administration fee of £463 – we are reviewing the administration fee in the new tenancy 2 responded that can a longer payment option be considered i.e. direct debt – a longer payment plan is being considered. The submission from the Beach Hut Owners’ Association – joint sub-committee is shown in full overleaf

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SUBMISSION BY THE TANKERTON BAY AND HERNE BAY BEACH HUT OWNERS’ ASSOCIATIONS (‘BHOAs’) JOINT SUB-COMMITTEE TO THE CCC LETTER OF 12 NOVEMBER 2013 ON BEACH HUT TENANCY AGREEMENT AND FEES FOR 2014/2015 1. The BHOAs wish to comment on the latest proposals issued by CCC on 12 November 2013, without prior warning or discussion with the BHOAs. There is a very real danger that Councillors and Members of the Overview and Executive Committees may make a seriously faulty decision based on incorrect facts and bias presented to them by CCC officers. 2. We would ask all those Members who believe in honesty, fairness and reasonableness to discuss the contents of this submission with the BHOAs representatives before making any decisions on the Resolution which CCC officers propose. Background 3. For a number of years the BHOAS have been trying to negotiate with CCC officers for a ‘fair deal’ which recognised not only the private hut owners property rights, but also acknowledged the immense benefit the privately owned huts provide to the local community. 4. CCC’s conduct during these negotiations has been deplorable and probably unlawful. Our members’ many letters rejecting the current proposals are testament to the sadness, anger and disbelief that any Council could impose such unfair and unaffordable charges with less than six months’ notice. If implemented many owners, including pensioners and local families with young children, will have to give up their huts, possibly to non-local wealthy speculators. CCC legal opinion 5. In June 2013 CCC informed the BHOAs that it was to seek a legal opinion (as we thought, on the ‘difficult issue’ of the transfer of property rights). Having waited patiently for five months CCC informed us that it had in fact consulted a barrister as long ago as January 2013 on the Supplementary Rental Fee (‘SRF’). At no time during the many meetings with CCC this year were we informed of what the advice was. 6. Now in November 2013 we are told that the barrister has provided a written opinion, which CCC will provide to Members of the Overview and Executive Committees, but which it refuses to provide to the BHOAs. It also refuses to provide the instructions given or the questions asked and will not even provide the reasoning for the barrister’s conclusions. CCC refuses to tell us whether the barrister was asked about the right of transfer of the site rights from one tenant to another. The sole reason for this is that ‘past correspondence from other beach hut owners has suggested that legal action may be contemplated’. 7. The BHOAs have no wish to contemplate legal action. The BHOAs do not know who these ‘other hut owners’ are. It would have been far better if CCC could have worked with the BHOAs in seeking a joint legal opinion based on agreed instructions, but CCC decided to act unilaterally.

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8. CCC now says that the secret legal opinion gives the 4 CCC statutory officers ‘no choice’ but to follow the advice and implement it as soon as possible. Our BHOAs joint sub-committee contains a barrister, a chartered accountant and a chartered tax adviser, all with extensive professional skills, knowledge and experience. A barrister’s opinion is just that: ‘an opinion’. It is not the law. An opinion often reflects the facts put and the questions asked. CCC’s secrecy on the legal opinion, instead of being open and transparent, has led many of our members to suspect a hidden agenda and that were it to release the instructions and the opinion this would identify errors of fact and bias which would significantly undermine the current proposals. 9. The external barrister’s conclusions (if correct – and that is far from certain) may have far reaching impact on many issues of CCC charges. Consequently, reliance on his advice needs to be supported by full and frank disclosure of the instructions, the reasoning and the case law. 10. We will now comment on specific parts of the proposals Supplementary Rental Fee (‘SRF’) 11. This fee, payable to CCC by a vendor of a hut to a new tenant, IN ADDITION TO annual ground rent, was negotiated with CCC in 2009 and has worked well. CCC has received over £100,000 in revenue from the SRF. The SRF, currently set at 5 x the annual local ground rent means that continuing owners pay reasonable and affordable annual ground rents to CCC and if and when any decide to sell their huts then they also pay an SRF to CCC (at a time when they have funds from the sale of the hut). CCC says that the barrister’s opinion is that the SRF arrangement cannot continue, but it does not explain why. It is worth noting that many other local authorities continue to operate on this basis without problems. 12. The BHOAs extensive legal research leads us to the conclusion that provided such a fee is negotiated between a landlord and tenant it does not fall foul of the Landlord and Tenant legislation and case law. The BHOAs should be allowed to see the CCC barrister’s opinion and reasoning or be allowed sufficient time to seek its own legal opinion on this key issue. Market Rents 13. The BHOAs have never argued against market ground rents, but they must be fair and affordable, with no massive increases of 360% or more with less than 6 months’ notice. The BHOAs representatives had worked with CCC during June – September 2013 on an extensive benchmarking exercise comparing beach hut site rents and other costs across 52 sites around the south and east coasts. This revealed that Tankerton and Herne Bay were already (in 2013) near the top of the most expensive locations to own huts. In addition CCC will require all hut owners from 2014 to buy Public Liability Insurance cover of £5m. 14. A series of agreed increases had been consulted on and agreed with CCC for the period April 2011 through to March 2016 to provide hut owners with some measure of forward rents. Now CCC says it must ‘sweat its assets’ and maximise its income, so annual rents will be determined each year as part of the CCC budgeting process. 15. As well as a secret legal opinion CCC officers rely on a valuation report by DVS (a firm that works for HMRC) of what market ground rents for Tankerton and Herne Bay should be. This report, available on the CCC website, appears to make assumptions 7

backed up by little evidence. It has been criticised by a professional surveyor as ‘very weak’. 16. Many hut owners have also questioned how it can be fair that the ground rent of a privately owned beach hut can be more than the council tax on a small house, when the beach huts sites have no energy supply, water or drainage. The only service provided by CCC appears to be the occasional (now less frequent) grass cutting around the huts. The toilets and water standpipes at both sites are public facilities available to all. CCC provides no assistance against regular vandalism of huts. Long Term Discounts 17. The current rules make it clear that only pensioners who have owned a hut for more than 15 years and live in the CCC area qualify for the LTD. CCC says that the barrister’s opinion means this cannot continue. So local pensioners are to be hit with a ‘double-whammy’, the loss of the LTD and the loss of the local residents’ rate. The BHOAs had already agreed with CCC that from 1 April 2014 no newly qualifying pensioners would receive the LTD, but existing qualifiers would continue to benefit. There are about 75 claimants across both sites. It is inevitable that this group will decline in numbers over a few years. The proposal will be an act of appalling lack of charity to the least advantaged group of hut owners. Differential rates 18. Local Residents. At present local residents (residing in the CCC Council Tax area) pay lower ground rent than non-residents. The CCC external barrister has, apparently, said that concessions cannot continue. But this is not a ‘concession’. It recognises an additional financial contribution (Council Tax) made by local tenants and not made by non-residents. 19. Herne Bay tenants. There was previously a 4 year formula whereby a discrepancy in rental rates (under which the tenants at Herne Bay pay over £10 per square metre more than tenants at Tankerton) was to be adjusted. Instead in the latest proposals we see no formula for that and no amelioration of the existing position. The CCC officer told us that this would be sorted during the benchmarking and rent setting exercise (which now appears to have wasted a considerable amount of everyone’s time) but it is not. This differential is unfair to the tenants at Herne Bay. Administration fee 20. The proposed fee of £463. On 2 December 2012, when CCC first proposed this fee for ‘admin and legal’ work on transfer (not remembering that the SRF had been negotiated to include this) CCC’s officer was questioned at a Council meeting in January 2013 as to its formulation. The Officer advised that it represented an assessment of officers’ time in a). registering the name of the new tenant; b). issuing the new tenancy agreement; and c). receiving the SRF from the vendor. After challenge the proposal was withdrawn for 2013/14. How on earth such a fee can be justified is beyond us. Increased use of online procedures should mean that this work could be done in under one hour.

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21. Currently transfers of sites between family members had been agreed as free of any admin charge. Again we are told that this cannot continue. Another example of broken promises. Sub-letting 22. This is something that no-one seems in favour of. Giving owners the option of paying extra rent to sub-let is likely to lead to wealthy ‘buy-to-sublet’ property speculators snapping up rows of fire-sales of huts which are no longer affordable by local and pensioner residents. The option of a compulsory increase in rent for all to have the right to sub-let (when 99% of owners do not want to sub-let) is a complete non-starter. Lead time 23. CCC says that any increased rents and charges cannot be phased in over more than 2 years. Why? CCC says this may infringe local government rules. Surely Councils must have discretion to phase in any increases over the maximum time possible, particularly if otherwise local and pensioner owners will have no choice but to sell up. Tenancy agreement 24. CCC has so far proposed several different documents, including a non-renewable fixed term agreement, which was totally inappropriate, an interim licence and hassling those who refused (following legal advice)to sign it. The latest document (issued on 12 November without any prior consultation) is equally defective. The BHOAs point out the deficiencies, believe that CCC has understood our concerns and agreed to address them, but then find that CCC adopt a few points and ignore the rest. 25. At the heart of the BHOAs representations is the insistence that the document recognises in clear language the beach hut owners’ legal right to transfer their rights in the site to a new tenant. But CCC legal officers continue to deny we have such a right. They refuse to say whether the right of transfer was put to their external barrister or what advice, if any, he gave. Yet this was the supposed ‘difficult issue’ on which CCC said they would seek legal advice. Amenity value 26. CCC fails to recognise the amenity value provided by the privately owned huts on CCC land. Many hundreds of visitors to the area comment on how much they enjoy the brightly coloured huts and their upkeep and that they enhance the area. 27. On page 31 of the 2008 Scrutiny Review it was stated ‘it is clear that beach huts have long been regarded as a valued feature of our coastal towns’. On page 32 it was stated ‘the council has a role to play in ensuring that the huts remain a successful element of the landscape’. With the current CCC proposals this is likely to lead to empty vandalised huts, especially in the less attractive middle and rear rows at Tankerton, or huts owned by wealthy non-residents being used very occasionally. How is any of that helping local residents and electors or improving the amenity and economy of your seaside towns.

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CCC Resolution 28. The BHOAs will be denied sight of the final draft of the proposed Resolution to the Executive Committee until its report is finalised. 29. We believe that the probable use of incorrect terminology will mislead Councillors and other officers. It may omit to make it clear that currently Tenants pay annual rent and the SRF; further it may omit the possibility of discussion over the formulation of the proposed (new) Transfer Fee. 30. In our view the Resolution should be in 3 parts: a). to replace the current annual rent and the conditional supplementary rental fee (payable at the time of transfer of the site under the tenancy agreement) (currently a sum calculated as 5x the (local) rent to a third party who is not a beneficiary (on death of the tenant) or a close relative, with i) an annual site rent corresponding with an independent valuation and a formulation for re-setting this periodically; and ii). a further fee payable on transfer of the tenancy agreement representing reasonable administration and legal costs (the Fee on Transfer) b). to set the annual rent for 2014/2015 and the Transfer Fee; c). to confirm that the sitting tenant may transfer the site under the terms of the tenancy agreement provided that CCC reasonably approves the prospective tenant, who needs to meet certain criteria and the sitting tenant pays the transfer fee and that the transfer will be effected by the issue by CCC of a new tenancy agreement on the same material terms.’ 31. As regards the CCC legal officers’ views on the right of transfer the Council confirmed in its Joint Report of 10 February 2005 that the relationship was one of Landlord and Tenant; and referred to significant legal issues on ending the ‘right of transfer’ and PROMISED, from 1 November 2005, that CCC would not do this. 32. Under Resolution E71 the means for effecting the transfer of the tenancy remained unchanged and at the time of transfer the tenant was to pay a sum calculated as 5 x local rent. Prior to 1 April 2010 the fee charged by CCC was £81. E71 expressly included the £81 admin fee in this new SRF. Practical implications 33. The Rents. These need setting independently on a forensic basis by an independent expert. The BHOAs, in participating meticulously in the benchmarking exercise, never indicated anything different from that. The issues discussed were a). the criteria for comparison; b) the comparison sites (there were 52). 34. The Timing. CCC is combining 2 separate issues: a). its wish to increase its income regardless, with b). the statutory budget timetable, so it has disregarded its prior commitments to consultation. In doing this it has betrayed implied and express promises and its duty as a public authority to make its reasoning plain.

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35. The Perception. Resident owners are dismayed and bewildered by the CCC proposals. Is this really the local authority they helped elect to serve the best interests of its residents or from some unscrupulous landlord intent on dissuading tenants from retaining their property. If unaffordable rents and no SRF are pushed through, which then leads to many empty vandalised huts the result could well be LESS income to CCC than currently. 36. CCC’s agenda. The BHOAs have spent 8 years on discussing the issues with CCC. The beach hut owners have been mocked and demonised. For some reason it appears that a beach hut owner is a class apart, not a taxpayer or contributor to local businesses, but a pariah and a greedy one at that. Who in the Council is promoting this view? It is time CCC looked at itself and how it treats its citizens. Conclusions 37. The BHOAs recommend that in view of all the points raised in this submission the Members should decide to postpone the CCC proposals to enable a full, proper and open analysis by all interested parties of the CCC external legal opinion and the instructions given, and sufficient time, if required, for the BHOAs to obtain their own legal opinion. There should then be a continuation of negotiations to reach an agreed, affordable way forward which takes into account the views of local residents that CCC is supposed to serve.

The Tankerton Bay Beach Hut Owners’ Association The Herne Bay Beach Hut Owners’ Association 11 December 2013

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