DUCHY TENANTS ASSOCIATION NEWSLETTER: SUMMER 2006 NO LEASE BUT THAT WILL BE £500 –THANKYOU: An off-island resident has shelled out with great regret this June more than £500 to Duchy lawyers for the privilege of being told that she cannot extend the lease on her home. And she cannot add to the lease, she has discovered, for the simple reason that her annual Ground Rent is just £7 too high to allow her to do so. Over the past two decades the tenant in question has spent more than £200,000 on improving and modernising a cottage on which the present lease expires in 2018. Under the Leasehold Reform Act of 2002 - bits of which Buckingham Gate ignores, bits of which it has been obliged by the Treasury to accept - the islander will not face eviction (as used to be the case) in 12 years time. She can stay on as a so-called ‘protected’ tenant, at a rent fixed by the Rent Office in Truro. But at that date she loses her entire financial stake in the property. And between now and then, of course, the only realistic purchaser of such a short lease, should she decide to sell, would be the Duchy at a knock-down price. This tenant has had the misfortune to fall foul of the illogical idiosyncrasies of the Low Rent Test (LRT) which the 2002 Act did nothing to ameliorate. The Test provides a nice little earner for solicitors and valuers alike. But is often a lottery loaded against residential leaseholders. It involves a bafflingly arcane but crucial comparison between a property’s Rateable Value and its Ground Rent at the time the lease was first taken out. Finding out an old Rateable Value can often entail a satisfactorily lengthy search through dusty files for our legal friends. And if the letter of the law is adhered to, the results can be frustratingly random. On Scilly, the rough and ready impact of the LRT tends to favour lessees granted tenure back in the 1970s, 80s or earlier AGAINST those whose leases are less than 15 years old. The latter tend to be victims of Mr Pontin’s ‘open market’ Ground Rents which are usually much too high to pass the Low Rent Test. Quite why the law should be drafted in this mysteriously unfair way seems to be lost in the mists of time. In this particular off-island instance, the lease dated from 1978 and the tenant was advised by her agent (who spoke to the current Land Steward) to try and get it extended. Her Ground Rent was just £185 per annum. But sadly this figure, once the Duchy’s Farrer & Co had done their dusty homework, proved just too large. If it had been £178 or less then the extension would have been granted. But sadly, no. Cue, crocodile tears from Farrer’s and a bill for £528.75p, including VAT. For like so many tenancy agreements on the islands this lease requires the tenant to pay in full the Duchy’s legal costs. And Farrer, frighteningly, has the reputation of possessing a scale of fees that is the envy of solicitors across Europe. LEASEHOLD WORKING PARTY Sometimes the Duchy on Scilly seems to have farmers in its sights: witness the Bed Tax saga. Sometimes it’s business, as when Mr Pontin plucked a cash-grab called Overage (pronounced ‘overidge’) from the estate manager’s almanac to bemuse an off-island guesthouse proprietor. As often as not it’s also the family or individual looking for a home and who has to play along with Hugh House’s tendering policy to try and put a roof over their head. This can be stressful enough, even without super-confident commercial bidders laying carpets in cottages while the tendering process is still supposed to be in full swing. Today the target of choice, as the previous story shows and last autumn’s Newsletter hinted, appears to be the long leaseholder. And in a bid to challenge this latest state of affairs, members at this year’s AGM - the DTA’s 10th - voted to set up a working party to share information and try and suggest ways of putting the Duchy on the spot. Down the years Buckingham Gate has let for sizeable sums somewhere between 30 and 40 residential properties on the islands, often in a run-down state, on 40 or 60 year fully-insuring-and-repairing leases. Over the years much of this accommodation has had maybe decades of costly, tender-loving-care from residents invested in it. Now, cynics claim, the Duchy seems fiercely intent on getting back on its books, wherever possible and as cheaply as possible, buildings that (thanks to spending by tenants) are by and large in good condition. Since the 2002 Leasehold Reform Act was passed, residents whose Duchy lease has a life of 21 years or more have been able to acquire their freehold on Scilly, just so long as they don’t live on the Garrison or the off-islands. But lessees in those two areas are in double Duchy jeopardy. Not only can they get ensnared by the Low Rent Test should they want to extend the term of their tenancy, they also no longer have the opportunity, available until three or four years ago, of acquiring a completely new lease altogether. It’s bad news all round and something that needs to be challenged. Elected to the four-strong leasehold working party were your Secretary, Martin Nicolle from Bryher, Rhondda Wraith from Gugh and Alan Davis from St Mary’s. Legal advice is being sought from a leaseholder on St Martin’s. Their first meeting was due to take place as this Newsletter was being printed. At the AGM there were some members who cautioned that too gung-ho a pursuit of the Duchy on the freehold issue might jeopardize the coalition of interests represented by the DTA. ‘We would all like to buy,’ said one ‘but was that necessarily in the interests of Scilly. We musn’t shoot ourselves in the foot.’ DUCHY PAYS UP EXTRA £20,000 TO SETTLE HOLIDAY LET ROW: The financial row over Spray View, a remote and ramshackle St Mary’s farm tenancy by Deep Point, which the Duchy is keen to convert into a holiday let, appears to have been resolved by Buckingham Gate flourishing a further £20,000 at its adversaries. Former flower grower and quay worker Ron Symons bequeathed his two bedroom cottage with handsome sea views to a niece living abroad. But under the 1986 Agricultural Holdings Act her relationship to the deceased was not sufficiently close to allow her to come back and take over the tenancy. Right of succession to the property and two other adjacent World War Two boltholes therefore reverted to the Duchy. However, compensation was due because the cottage was Ron’s creation and nothing to do with the landlord. The row erupted, as outlined in the previous Newsletter, when the Duchy offered the family £25,000, when their own adviser had intimated that the pay-out should at least be in three figures. It took a fresh twist at the end of May when Barry Meade, the Wiltshire-based valuer acting for the relatives, addressed the DTA’s AGM. He said that Farrer’s, as guardians of the Duchy’s purse-strings, were indulging in potentially worrying legal tactics as far as Scilly’s farm tenants were concerned. According to Barry, Farrer’s were arguing that in law Spray View shouldn’t be considered as an Agricultural Holding because the bulk of the late tenant’s income had come from sources other than farming. This interpretation allowed for only token compensation, said Barry, and, if left unchallenged at the upcoming arbitration hearing, would have implications for many growers on the islands with an interest in the visitor trade. In the event, the AGM’s offer of modest financial support at the hearing in opposition to the Duchy will not be required. Buckingham Gate has put £45,000 on the table and agreed to pay Farrer’s costs. At the same time there is now acceptance on the other side that, regardless of holiday letting plans, expecting let alone extracting much more in compensation, such is the general dilapidation of Spray View, coupled with its lack of mains electricity and water supply, is going to be chancy. However, settlement of this dispute leaves untested the validity of Farrer’s bid to undermine the accepted reading of the 1986 Act on compensation for so-called ‘tenants improvements’ to farm property. This situation will need watching. SCILLY TREE COUNT: The Duke of Cornwall is widely held to have tree-hugging and (more alarmingly in some people’s eyes) tree-talking tendencies. Could it be that his representative on Scilly is about to follow suit ? Well, to be fair, at the moment, Mr Sturmer’s enthusiasm seems to be confined to counting rather than communicating with trees. In conjunction with the local Wildlife Trust and as part of Hugh House’s contribution to the current AONB plan for the islands, the Land Steward has set in train a Scilly- wide tree check or to give it its full title, a Woodland Tree and Shrub Belt Survey. The survey, which began in April, is being conducted under the auspices of Duchy forester Geraint Rogers, with the aid of graduate surveyor Jo Batten. So far species, age and condition of trees and shrubs on St Mary’s and Tresco have all been plotted. By this time next year the same will have been done for Bryher, St Agnes and St Martin’s. The aim, says Mr Sturmer, is to produce a long-term tree management plan for the islands, initially for the next 5, 10 and 20 years. NEW RENT RISE TACTIC FOR FARM TENANTS: The past few months has seen the gradual unveiling of a novel and unpredictable Hugh House approach to fixing farm rents. In at least one instance the tactic has sent levels spiralling upwards by getting on for 150%. Yet in other cases increases have apparently been confined to single digits. Under the Agricultural Holdings Act, which most farm tenancies on Scilly come under, rents are set every three years. Any significant rise should normally be linked to identifiable improvements in farm incomes. After 10 years of tumbling flower prices in real terms during which rent reductions were conspicuous by their absence on the islands, last season was much more successful. But, oddly, Charles Dixon from Stratton Holborrow and the Land Steward’s farm figures man, has not really been looking in this direction at all to justify his latest round of increases. Instead he appears to be homing in on what is seen to be the growing discrepancy between what the Duchy can command from residential tenants through the tender process and what island growers pay for their farm accommodation as a proportion of their agricultural rent and then marking up accordingly. Your Secretary has doubts about the validity and what Mr Dixon is doing. DTA adviser Barry Meade, who has offices in Gloucestershire, Shropshire and Wiltshire has not come across this novel interpretation of the 20-year-old Act, on other Duchy estates or anywhere else for that matter. In fact, he cannot recall any case where a landlord tried to increase the impact of a farmhouse on a farm rent coming before a tribunal of any kind. A handful of farm tenancies on the islands are due for a rent review this autumn. Farmers confronted by a three figure rather than a single figure rise at the end of September or whenever should consider taking professional advice before they agree to pay. BEST OF THREE TO GET OFF-ISLAND QUAY CONTRACT: The Duchy is down to a short-list of three in its bid to find a firm to take on the rebuilding and refurbishment work later this year on seven off-island quays. Representatives for each of the firms were down on Scilly at the end of June taking it in turns to go out and about with Assistant Land Steward Adrian Smith. The aim is to have the £4 million contract - half of which is being financed by the Department for Transport, the rest shared between the Duchy and Tresco Estate – allocated by the beginning of September at the latest. The latest working timetable your Secretary has seen now puts Higher Town Quay on St Martin’s along with New Grimsby and both quays on Bryher at the head of the queue. The trickiest job at Porth Conger on St Agnes is still scheduled for next Spring and the project is due to end with Carn Near and Long Point on Tresco. However, nothing is written in stone and the successful firm will have a big say in final timings. Meanwhile, the Duchy is preparing a leaflet on the scheme for islanders and visitors alike and between them Nick Wordsworth of marine engineers Beckett Rankine and Estate Assistant Will Garratt are developing a special website to keep people up-to-date with progress once the scheme gets underway. OLD GRANITE FOR NEW GRIMSBY: Your Secretary was able to confirm at the AGM the Council’s granting of planning consent for the off-island quay project. But there was worry among members at one element of the work, namely what was due to be done to New Grimsby’s 18th century granite structure. According to the architect’s drawings, this historic quay was due to be topped by a brash, new vertical wave wall, cast in concrete and 1.4 metres high. Proposed height, choice of material and the vertical nature of the wall all provoked concern. One or two Councillors had been equally as anxious as DTA members about how New Grimsby will look in the future. But there was reluctance on the night to unpick individual parts of the proposal, given previous delays and the somewhat uncertain grip on things that the Duchy had demonstrated from deep back in Mr Pontin’s time. The AGM charged your Secretary with writing to Robert Dorrien-Smith, copies to Hugh House and the Council’s chief planning officer Craig Dryden, urging Tresco Estate to try and get the wave wall finished in granite using the blocks that already exist and its recommended height lowered. A sympathetic reply from the Abbey indicated that Mr Dorrien-Smith himself preferred granite to concrete and also wanted to see the height limited to no more than a metre above the existing quay level. A few days later ‘clarification’ emerged from Mr Dryden following communication between the Duchy and Beckett Rankine. The existing sea wall will be increased in height by one not 1.4 metres. A planning condition will insist that the wall is faced in local stone, not concrete. DUCHY DOWN DRAINS AGAIN: The Duchy is taking a prolonged peek down the drains on St Agnes again to check out any potential for pollution to the island’s water supplies. Residents have been told by Assistant Land Steward Adrian Smith that this latest examination of pipe runs and septic tanks - the third in six years - is scheduled to take place over a five-day period in mid-July. It is being undertaken on behalf of Hugh House by Messrs. Henry and Norman Lister, two surveyors hired by Stratton Holborrow. Back in 2001 David Watkins of Camborne School of Mines reported a risk of contamination from old and badly-sited septic tanks to local wells and boreholes. Subsequently Mr Badger from the eco-friendly Indian Queens’ firm H2Ok proposed an elaborate system of ponds and reed-beds to get round the perceived problem. But Buckingham Gate deemed his £1 million plus solution too expensive for purpose. So now the Duchy has turned instead to the Listers to examine the possibility of dotting half-a-dozen subterranean bio-digesters across the community should drains, pipe-work and tanks be deemed generally to need replacing. Such an installation programme could save up to 70-80% on Mr B’s scheme. How quickly will the powers-that-be on the Garrison and in SW1 rush to implement (and lash out on) any such proposal ? Don’t hold your breath, say some cynical Turks. Or should that perhaps be your nose. CHARLES TAXES BELIEF: Income up £800,000. Tax up £30,000. How does he do it ? Fleet Street’s finest have been falling over themselves trying to find out how Prince Charles’s clever accountants, including private secretary Sir Michael Peat, contrived to ensure Duchy profits bulged six times larger last year than did royal contributions to the Inland Revenue. But MPs on the influential Public Accounts’ Committee (PAC) won’t be getting a chance to sink their teeth into such juicy morsels, at least until 2007. Grudging praise from the scribes for Clarence House’s pioneering disclosure of the Prince’s tax bill in its Annual Review for 2005/6 was drowned out by waves of displeasure (and envy) at the sheer size of the income he draws from the Duchy - £14 million, up £4 million on four years ago - and the generous volume of his expenses. As a top-rate earner on £270,000 a week and paying Income Tax at 40%, the Prince could have been left with a chit for £5.6 million. Instead he handed over just under £3.3m. His money men managed to write off almost £4.5m in staff salaries, including the cost of two butlers, five chefs and a valet, as a business expense. A £41,000 bill for maintaining his private gardens at Highgrove was also claimed on the grounds he used them primarily for entertaining the public. Meanwhile, the £336,000 Prince Charles paid in rent on Highgrove appears to have gone directly into the Duchy accounts; so in effect straight back to him. Ian Davidson, the astringent Labour MP for Glasgow Pollok and a long-standing member of the Public Accounts Committee, which 18 months ago accused the Prince’s aides of ‘jiggery-pokery’ in dealing with Duchy finances, has lost no time in calling for the National Audit Office to re-examine Buckingham Gate’s tax burden. He reminded readers of the Scotsman newspaper that the Duchy pays neither corporation nor capital gains tax. ‘Since it is primarily a property development company in competition with other property developers, it has an unfair advantage,’ he said. ‘It ought to be paying these taxes.’ Meanwhile, the Annual Review shows the overall value of the Duchy estate rose by 9% to £551m while income from its agricultural portfolio of some 250 tenant farms dropped in real terms. The Review mentioned the Duchy’s commitment to ‘upgrading’ St Mary’s harbour in order to safeguard the future of Scilly’s sea link. It also found space for a reference to the forthcoming renovation of off-island quays. The Review discloses that Prince Charles has been offsetting his carbon emissions on sustainable energy projects. It seems he has changed his car from an Audi to a Jaguar, which is described as being less environmentally damaging, although his favourite Aston Martin and a fleet of classic cars still lurk in the garage. Highgrove is about to get a wood-chip heating system and its cisterns all use water-use reduction bricks known as ‘hippos.’ As a ‘charitable entrepreneur’, the Prince last year helped his 16 favoured charities raise £110m while since its creation 30 years ago, the Review reminds its readers, the Prince’s Trust has helped more than 500,000 young people. Ian Davidson, however, has been reading the small print. He claims, accurately, that while the Prince’s income rose last year his charitable donations actually fell £500,000, serious enough the Glasgow MP thinks to warrant not just the Duchy’s accounts but Charles’s private finances to be scrutinised by the PAC. In 2005, Gordon Brown rode to the Prince’s rescue against the PAC. Mr Davidson thinks the Prince has ‘browbeaten’ the authorities into ‘dealing with him more leniently’ in tax terms. However, your Secretary has discovered that to date the MP is not carrying many of his fellow PAC members with him. The Duchy and its Duke are missing from the agreed programme of hearings from now until Parliament’s recess. Mind you, some of Mr Davidson’s fellow countrymen also appear to be tired of the sound of his voice. A gentleman called Gavin on the Scotsman’s website praises the Prince for turning in a £14m profit and lays into the MP and what he styles the country’s Central Belt Socialists. ‘They seem to have managed to turn Scotland into a place that employs more head of civil servants per head of population than anywhere else, has amongst the unhealthiest population in Europe and still relies on financial handouts to keep it afloat.’ Not a view the Duke of Rothesay would share with anyone, I’m sure, even in his famous ‘black spider’ memos to ministers. TEN YEARS OF TAKING ON THE DUCHY and the DTA GOES GLOBAL: It was DTA Chairman Mike Brown who was first to remind the 20-plus members gathered in the Gig Bar on Thursday May 18th that they were attending the Association’s 10th AGM. ‘The fact that the organisation is still going strong and tackling the Duchy head-on is an indication of both its need and success,’ he claimed. He also indicated his pleasure at the fact that, with membership now spread across nearly 120 agricultural, business and residential (including leasehold) tenancies on Scilly, there had been a marked improvement in payment of subscriptions. At the 2005 AGM, the number of members fully paid-up had been just 40%, he said. Now that figure was more than 90%, with membership almost 100% on the off- islands. Given this welcome news, the AGM proceeded to endorse the Committee’s recommendation to hold down subscriptions for the third successive year at £15 per tenancy and postpone the date at which they next become due until this September. (Treasurer’s note: Early payments never refused. Please send to Liz Watts at Parting Carn on St Mary’s) The AGM also endorsed a further Committee recommendation that flowed from months of sleuthing by your Chairman. An avid internet user, Mike had been stalking it since last year a dormant space on the web. Now for the one-off sum of just £40 he has secured for the DTA its very own global address: www.duchytenants.co.uk. For pc enthusiasts and those who love the lap-top Mike has already put up some preliminary pages. But the site is still very much work-in-progress at the moment. Mike is looking for assistance from would-be webmasters. At the AGM, there was a general welcome from members. Yet caution was urged by the less computer-literate that the ‘site should not try to run before it could walk.’ There was agreement that back issues of the Newsletter should be made available on- line: a useful facility for both existing and would-be members. However, it was accepted that if the latest edition was added too quickly then that might slow down the growth of membership as well as the flow of subscriptions. That said, your Secretary understands that one avid reader has already found the Spring issue. Step forward Mr Sturmer ! EXPENSIVE AND PAINFUL: Your Secretary’s children usually show far less enthusiasm for their father’s scribbles than apparently is the case with the current Land Steward. But a short item in the Spring Newsletter elicited two cheery emails. The item that attracted their attention was the speculative assertion that on Scilly, given the arrivals of Mr Badger, the ecologist; Mr Haddock, the marine safety man and Ms Squirrel, the flying rodent expert, somehow names and jobs were sometimes oddly linked. This also seems to count for something in Birmingham and Cardiff it would seem. Daughter Mel in Brum claims she is worried about her new dentist, Dr Payne. While number two son Quinn in Wales has just moved house and decided to change solicitors. Name of the legal eagle: Mrs Costly. A friend of Farrer and Co perhaps.