by David O’Connor, Director
Herbert Collins Estates Limited (HCEL) is the freehold owner of land within the Ethelburt Avenue (Bassett Green Estate) Conservation Area. It deals with the long lease properties of the Estate, as well as some roads, footpaths, open spaces and recreational areas. Additionally, plans for alterations or additions to the exteriors of properties in the Estate must be approved by HCEL before any work is started.
When the company was established in 2017, a key priority was to keep costs to a minimum. Consequently, it was decided to set it up as a not-for-profit company run by unpaid directors from within the Estate rather than hand over management and upkeep to a commercial property company. The decision proved wise as problems with commercial companies have increased in recent years. Not only do such companies often impose inflated charges for routine tasks but they tend to out-source services on the basis of convenience rather than cost-effectiveness. Additionally, they can be unresponsive to the needs of residents within an estate and may not take their conservation obligations seriously.
It is becoming clear that financial pressures on HCEL are increasing. In part, this is due to inflation. Although the Company’s outgoing costs, e.g. insurance costs, are inflation-linked, its principal source of income – ground rents from leaseholders – was fixed when the Estate’s houses were built in the first half of the twentieth century. A typical annual ground rent of £8 set in 1933, would, according to the Bank of England’s inflation calculator, now cost about £496 if inflation was taken into account.
Another factor putting pressure on HCEL’s finances is the emergence of additional ancillary costs. For example, imminent new requirements for filing accounts with Companies House may require HCEL to employ the services of an accountancy firm. Similarly, the increasing number of requests for information, e.g. from conveyancing solicitors, mean that part-time administrative assistance may eventually be required.
Taken together, these issues need to be addressed to ensure the long-term sustainability of HCEL. While not urgent, it is clear that costs of HCEL’s obligations will eventually outstrip its income. This can form the basis of a lively discussion at the HCERA AGM in October.