Cedar Chase is a great place to live, and one of the main reasons for that is the community. This did not come about by accident: when Span built the estate they designed in some things to make us all communicate and work together. One of those is the legal structure: there is a Residents’ Society which we all own shares in, and it owns all the communal space (everything except the houses, garages, and back gardens). The Society has rights and responsibilities, and it is entirely run by residents so there is no remote landlord or commercial managing agent to deal with.

We would love to see more estates run like this, so if you are building one do please give it some thought. For historical reasons Cedar Chase houses are now freehold, the Residents’ Society is a Friendly Society, and the mutual obligations are governed by a Scheme of Management. This is not how it would be done now, but it is worth reading our legal docs (mostly set out at the back of the Cedar Chase Handbook) and those of other estates with similar ideals.

Cedar Chase has a lot of communal ground including more than a hundred trees. The Residents’ Society is also responsible for all the external paintwork, the TV aerial, land drains, and some of the lighting. This all costs money so if you are planning to do something similar you will need a structure with enforceable maintenance fees.

Company

You will need a limited company. Whether you call it the X Resident’s Society, the X Management Company or something else entirely is up to you, but every household should own an equal share of it and the shares should be tied to the property. A standard company limited by share capital is simplest. Our status as a Friendly Society makes dealing with banks etc very painful as they don’t know what it is.

The company should own all the communal property and hold it on behalf of the householders. It may be useful to have the company own at least one permanent building on the freehold, as that can make it easier to get insurance (buildings insurance with add-ons is common, but it is harder to persuade an insurer to cover those same add-ons without a building).

One hazard to watch for is having a mix of freehold and leasehold properties. If the company holds the underlying freehold there is a risk that at some stage the interests of leaseholders and those of freehold householders will diverge. At the very least, make sure that all leases are for 999 years – otherwise the leaseholders will have to apply for extensions after a few years (surprisingly few years these days) – this is complex and expensive. Don’t use ground rent as a way to collect money: it is inflexible and can have unfortunate side-effects, so set it to £1 per year and roll it into the maintenance fee collection process.

Rules and Covenants

If all the properties are leasehold then a lot of this might be part of the lease rather than covenant. Whichever way you go, it needs to be defined before the first sale is agreed so that every property is subject to the same terms.

Leases and covenants are effectively fixed for all time, so things that may change should probably be separated into ‘rules’ or ‘byelaws’ – referred to in the lease or covenant, but with a simpler process to update them.

You need to define the relationship between householders and the company. Some things to think about:

  • How will maintenance fees be collected?
  • How is the level of those fees to be set each year?
  • Will every property pay the same or is there a good reason for some to pay different amounts?
  • Do you want to restrict changes to the external appearance of the properties? If so then to what level of detail, and what is the mechanism for approving things and for allowing the rules to evolve if needed?
  • Do you want to require a reasonable standard of exterior maintenance?
  • How much of the maintenance will the management company be responsible for? Some headings to consider:
    • Roads, paths, boundaries
    • Communal gardens, trees, etc
    • Land drains (foul sewers are the responsibility of the water authority as soon as they cross a boundary, but land drains are not)
    • Liability insurance for communal assets
    • External redecoration
    • Running social events
    • Lighting of communal areas
    • Cable ducts?
    • Ground-source heat pump infrastructure? If it is a passive system there is no billing to worry about…
    • EV charging infrastructure? This will certainly require some sort of billing system.
  • You should probably put in something about people behaving in a reasonable and civilised way, but that is incredibly hard to define. One of the problems with making rules is that some people will be offended by a person breaking a rule even if they would not be offended by the same behaviour in the absence of the rule…
  • Do you want to discourage buy-to-let, AirBnB, and similar forms of non-owner-occupier use? This can be very important, as absentee owners are unlikely to take an active part in the management of the estate and may well have lower standards of maintenance than owner-occupiers. Some of the Span estates have a rule that houses may only be let for three years out of any four, but this may not be strong enough in a low-interest/high-rent economy. It might be necessary to require a year of actual on-site owner-occupation to reset the clock. Of course there should also be a mechanism for the term to be extended but this should probably require an explicit vote of the shareholders. It might be worth putting in a minimum rental period or a limit on the number of different tenants in a calendar year.
  • You may want to block subdivision of properties, or at least make it require a large majority of the shareholders in favour. If subdivision is ever allowed, what happens about share ownership? Maybe you should issue 60 shares per property (as that is divisible by 2,3,4,5 and 6).
  • What is the process for changing the rules?

Rental Property

Some of the ideas above are rather specific to owner-occupied property as that is what we know about. What if the plan is to build houses for rent, or (perhaps better) a mixture of owner-occupied and rental units?

The key has to be inclusion, and that requires a benign and trusting owner for the rental properties. At Cedar Chase there are usually just one or two rented houses at a time because of the rule limiting the term to 3 years, but we always treat the tenants just like any other householder and we encourage them to attend the Annual General Meeting and other events. Where there is a good relationship between owner and tenant it is sometimes possible to appoint the tenant as proxy for the owner, or at least get them both to attend.

Where a substantial proportion of the total units are rental it is even more important to give the tenants a formal place in the management of the estate as otherwise it can be captured by the interests of the largest landlord.