2023-4 Freehold Transfer.

At the 2019 AGM, held at Islington Town Hall on 26th Nov 2019, the future of Day Flats Residents Ltd was discussed. The Directors proposed that the freeholds be devolved to individual blocks and that a fair distribution of the Company's remaining assets to its members should take place. Taking into account proxy instructions received before the meeting, the motion was carried with 68 votes for, one against and one unsure.(for draft minutes of our AGMs and any AGM Q&As, you can also use the Reference tab, then the AGM tab).

Hence, Day Flats Residents Ltd is planning to devolve itself into 17 new companies, one for each block.

Progress

Articles in reverse chronological order. (most recent first)

Progress as of Dec 2023

Day Flats Residents Ltd had, by the end of 2023, transferred 13 of the 17 freeholds to 13 new freehold companies under the supervision of Bolt Burdon LLP. The remaining 4 freeholds will transfer during 2024.

Progress as of 4 April 2023

Day Flats Residents Ltd has some good news regarding the freehold transfer. We have now notified shareholders of the date set for the freehold transfers.

We realise that it has been a long time since we all agreed that the transfer would take place. There are many reasons for this, but a significant one is that the running of the company is reliant on volunteer directors. They have had to deal with complex discussions with lawyers and accountants about how best to make the freehold transfer happen in a fair way for everyone whilst still keeping the process affordable. This is in addition to the cumbersome tasks associated with running the unwieldy and increasingly expensive company. Planning for the closing down of Day Flats Residents Ltd has also complicated our efforts.

The freehold transfer process is as detailed in the Freehold update from November 2020. All blocks have a lead contact who has been liaising with DFRL as well as the solicitors in collecting the required details from all shareholders. If you have not yet been contacted by the lead contact at your block, this will take place shortly. The lead contact will request full contact details from each shareholder to be passed on to the solicitors. Closer to the transfer date, they will also coordinate arranging for the required documents to be signed.

Progress as of 8 March 2022

All blocks are now engaging in the freehold transfer process. In some blocks all flat owners have said they are participating, although in some we are still chasing a few responses. In those blocks where all have responded, we are starting to move on to the next stage where the solicitors Bolt Burdon are preparing the necessary documents and setting up the freehold company for each block. It is likely to be the case that a very small number of people who do not respond will delay the process for everyone else, although efforts are being made to minimise any delay.

We must stress again the importance of people responding to all communications promptly.

Progress as of 9 November 2020

The secretary has sent each share holder the following communication

Dear Shareholder,

This is a further update on the process that will take place to transfer the freehold of your block from Day Flats Residents Limited (DFRL) to the individual properties.

We last updated you on 3 June 2020 this year and stated that we would be in touch again once we had more details on how the process will work. The directors have been working on this in conjunction with our solicitors and accountant. We are now confident of the process that will be used.

The directors will apply the following principles to this devolution process -

• The aim is for the transfer of freehold to occur simultaneously at all blocks that can participate.
• All 17 DFRL blocks voted for devolution and we look forward to them all participating.
• The directors envisage that every DFRL shareholder will become a shareholder of the new company that will hold the freehold of their particular block.

Summary of the process

• Day Flats Residents Ltd (DFRL) will instruct our solicitors Bolt Burdon (BB) to set up a Company (NewCo) to hold the freehold for that block on behalf of the flat owners.
• The lead flat owner provides all required details for the other flat owners to BB.
• BB will set up the NewCo.
• BB then prepares transfer documents for the freehold from DFRL to NewCo.
• BB prepares for the appointment of those who wish to be directors in the NewCo.
• Finally, a DFRL Directors meeting will take place to approve the transfer and deal with cancelling the old DFRL shares and allocate the NewCo shares.

Further info

Progress as of 3 June 2020

The secretary has sent each share holder the following communication

Dear Shareholder

This is an update on the proposal to transfer the freeholds for all Day Flats blocks from Day Flats Residents Limited (DFRL) to the individual blocks. All flat owners were notified of the proposal last September, and the matter was discussed and voted on at the Annual General Meeting on 26 November 2019. The proposal was carried with 68 votes for, one against and one unsure.

The first step the directors needed to take after the vote in favour of the transfer was making a decision on the solicitors we will engage to handle what will be a complicated legal and administrative process. It was important that the directors made certain that they were confident of the chosen firm's experience, as well as making sure that the process be as affordable as possible.

A number of firms were approached for proposals which were then discussed in detail by the directors. The process was recently completed with the directors deciding that Bolt Burdon Solicitors will handle the work.As some of you may know, the firm has been handling most of DFRL's legal work for a number of years and is very familiar with the company and its history. The firm gave a competitive tender for the freehold transfer.

We are now in discussion with Bolt Burdon about a detailed and precise plan for the transfer process.

All of the blocks will be contacted in the near future to discuss the next steps in this process.

If you have any questions at this stage please refer to the Frequently Asked Questions attached to the Important Notice sent to shareholders on 1 September 2019 and the Q&A with the most recent AGM draft minutes on our website . Once contact is made with individual blocks there will be the opportunity to ask more questions about the process.

Progress as of 26 November 2019 AGM Minute

The draft minutes of the 2019 AGM which voted to devolve the company contains the following minute of the vote

7. The vote on the Directors' motion on transfer of freeholds The AGM notice sent to all shareholders had included an explanation that the format of the meeting would be different this year to allow time to discuss the important proposal being put forward by the Directors:

The Directors propose that the freeholds be devolved to individual blocks and that a fair distribution of the Company's remaining assets to its members take place.

Members had also been sent an important notice and FAQ dated 1 September regarding the reasons for the directors' proposal.

A discussion took place before a vote by a show of hands on the motion, with slips of paper also recording the wishes of all voters and proxies.

Taking into account proxy instructions received before the meeting, the motion was carried with 68 votes for, one against and one unsure.

Three votes given by a non-shareholder without valid proxy instructions were discounted.

A number of questions were asked, which can be found at the document end. Thanks were expressed to the directors for all their diligent and professional work in managing the company and the process and research.

AGM QUESTIONS AND ANSWERS

The 2019 AGM generated discussion that is reflected in the AGMs record of questions and answers which were distributed to members.

Questions and Answers from the 2019 AGM.

What are the costs of the exercise likely to be and what do they relate to?
We do not have firm costs but do not anticipate a hugely costly exercise. We have some reserves as a company and hope that to a large extent these would cover costs. The costs would relate to legal and accountancy matters in transferring over ownership of the freeholds and winding up the existing company if that's what happens. There would be a small cost in setting up each block's company and a 'cost' in terms of your time going forward.

Have NPS indicated they are happy to continue?
Yes, NPS will continue to manage their blocks. And if there any other blocks that are concerned that they may not be able to manage themselves then they would be happy to assist. The contract currently with Day Flats Residents, covering many blocks, would need to be reviewed but basic terms are not likely to change. There's not going to be any hiatus period in terms of insurance, for example. The process will be managed as a clean handover and sensibly to make sure that it's done correctly.

Will all the blocks move over at once or gradually, depending how far down the line they've got?
That might depend on the processes adopted and we have to ensure that it works fairly so that whoever is left last isn't left with all the benefit or all the burden. It could be that it works in a slightly staggered way, or it might be if it was all at the same time. We would hope to have economies of scale doing this with lots of blocks rather than one at a time.

Is the intention that the existing leases be made over to the new companies, and each block take forward the lease project on its own terms?
Essentially yes. Your lease with DFRL would be moved over to your new company, and you and your own company can then do what you want. This is one of the advantages when different blocks have different needs.

Do you have an approximate timeline?
We are aiming for 12-18 months. In the meantime we'll be carrying on as we are.

If leaseholders don't take up their freehold will you be putting their block on the open market?
We would like to avoid that. We would hope everyone would realise that taking the freehold for themselves and forming a company needn't be a problem. It's possible that two or more blocks might get together. What we're removing is us [the directors] as a layer. So if you're using NPS you can carry on. The additional items will be in running the company, which can be fairly simple.

When it comes to insurance don't we all benefit from doing it together?
Not necessarily, but there's no reason why we couldn't approach a provider together and try to gain economies from that.

What sort of risks are you concerned about?
The danger is we are seen wrongly as some sort of professional management company and our risks are somewhat greater than someone else's would be. We also have this problem always of balancing getting blocks to spend lots of money getting things perfect to eliminate our risks when you may not want to. But that will be your decision rather than ours, so it takes that away that mismatch.

Some people are quite frightened about taking on responsibility.
We would hope that you would get together as a block and decide whether to appoint someone to do this properly on a fulltime basis.

Are you saying that Day Flats Residents Ltd is closing down?
That is an option. The fact that we are the freeholder creates work because we have to be involved when often blocks are dealing with things perfectly themselves. We're just an added layer and we question the need for that. We appreciate the fact that there will be blocks that aren't so enthusiastic about taking on responsibility, in which case again there's no reason why they can't have someone do it on their behalf.

Would you consider selling the freehold of an entire block to some shareholders if there's no interest from the other owners?
We might have to consider that but we would prefer to avoid it. We would like everyone to be involved and to benefit. But if others categorically do not want their freehold, then they might be happy for that to happen. But unanimity would be preferred. The idea is to do this in as fair a way as possible. Camden Council owns a flat in my block. They are not actually a shareholder in the company and they have a different form of lease.

I don't have the documents which prove I'm a shareholder from when I bought the flat 20 years ago. Are records held centrally by Day Flats?
We have records of shares issued and we can check the register.

Will everyone in a block get an offer of the freehold, or only the shareholders?
That's something we will have to consider. Fortunately for most blocks they are all shareholders. It would certainly be simpler if everyone was involved because you could all have the same lease.

Are there any implications for the Land Registry and for individual flats?
That would be part of the legal process. The lease will change because it will be between different parties. It won't change the ownership of the flat. It should be a straightforward exercise and costs should be minimal.

You say you're expecting unanimous take up. If you don't get it and each block goes on its own, how would leaseholders proceed?
Someone would have to own the freehold. So that's a reason for everyone to agree.

Might we be unable to renew our leases?
No, that doesn't mean the lease ends. You'll all have the same interests in wanting to do that and it's easier to get 20 to agree than 180 to agree.

Can people extend their own lease?
Yes, you're all free to do that. When Day Flats Residents Ltd started, nearly everyone came in. But for those who didn't others paid the share of the non-participants. Our aim is to make sure that control of the freehold is in leaseholders' hands so if you need an extension you can agree an extension.

Isn't there a statutory right to extend?
Yes, but with that there is a payment involved. If you were to reach that stumbling block with your freeholder then you could do that. It may well be that we can get advice on a draft lease.

Is what we're voting on today the general principle to set up individual companies?
We're voting on whether to give the freehold from Day Flats Residents Ltd to individual blocks. Once that happens, the most likely thing is to set up their own company.

Whose idea was this?
It's a result of several years of trying to make progress with the extending the leases. It's the directors' joint decision.

What's the benefit of having you?
There is centralisation in terms of arranging things. What we've found though is that it's becoming more bureaucratic and more costly where we don't think it needs to be because there are things that we don't need to be involved in. For some it probably helps to have us and it's probably cheaper than having everything done for them. But for most we think it's not. We've all come over the years to realise that we wonder why we're doing this still. And the principal problem it's fair to say is we are hugely dependent on the company secretary, which for many years was done by Andrew . There is a bigger and bigger burden on the company secretary and she has indicated she doesn't wish to continue. There's also been a realisation that things have changed in terms of the blocks and the regulatory environment. We are feeling like amateurs and this problem needs to be solved. In the current arrangement you don't have sufficient control.

What happens if you all resign and nobody wants to do it?
We're not going to resign. Our aim is to see this through.

Will there be an opportunity for the new company to extend the lease as part of the process?
Administratively that might be possible and we can look at it. But we would not want freehold transfer to be held up by protracted negotiations over a lease.

Would people taking on ownership and management have to take out indemnity insurance and public liability insurance to protect themselves?
You could appoint a manager to do that and satisfy your obligations. There could be any number of possibilities. It doesn't mean you need monthly meetings and all those kind of things. It's normally pretty easy and it's what most people in shared houses do. At the moment we have blocks that are self managed which can carry on as they are, and those that have management can too , or not, if they wish. Some blocks have their own funds for general repairs and maintenance. It's for you to decide. You might decide to pay a nominal amount to someone to be the central point when something does go wrong, to have them on call with tradespeople. It's up to people to work out how you want to do this but the choice will be yours. There is a website, Day Flats Residents, where we are trying to put information and which we encourage blocks to use. We will try to get groups together. Correspond with our company secretary Ruth.

Would the whole of blocks be under the same company?
It might depend how interrelated they are. At Ashurst Lodge, for example, the garages are under the block. If you were to have completely separate freestanding buildings, then possibly. But you may share communal areas. The Land Registry might have a view on what might be registered as a freehold .

Is this the last AGM?
There will probably be another one next year.

What happens in the case of garage owners?
They become a leaseholder of the new company. Garage owners are not shareholders. The new freeholder of the building will take over as the freeholder of the garages, but otherwise nothing will really change for them. The freeholder would be responsible for managing them, with all the current provisions in the lease. They pay ground rent, administration fee and insurance.

What about LEB substations next to some blocks?
A couple of years remains on the leases with UK Power Networks. Those blocks that have substations receive a small annual rent but they could be asked to pay considerably more if the ground rent was negotiated to modern levels. This would be the benefit of the relevant block.

Progress as of 26 November 2019 AGM Invite

The 2019 AGM Invite detailed the devolution proposal that was to be voted on

Dear shareholder

This email includes the Notice for the Annual General Meeting of Day Flats Residents Limited on Tuesday 26 November 2019 at Islington Town Hall, as well as important information about the format of the meeting, which will be different from usual.

At this year's AGM the Directors will be putting forward an important motion on the transfer of freeholds to individual blocks. This will be followed by voting on the proposal.

We will be changing the procedure for this AGM due to the requirement to make time for the proposal. The normal business of the AGM will be limited to no more than 30 minutes. We will not be able to have the usual detailed explanation of the accounts, nor time for lengthy discussion. If anyone does have any questions about the accounts these should be submitted in writing to the Company Secretary no later than seven days before the AGM.

Please note, the draft company accounts may be downloaded - please click here. A small number of copies will be available at the AGM but it would be appreciated if those interested could download them in advance. The draft minutes from last year's AGM will be available on the company website under Reference .

Also, the discussion of management arrangements will not take place immediately after the normal business of the AGM, but after the proposal and voting, depending on time. The majority of the meeting is allocated for the proposal and voting.

Summary of the Directors' motion

The Company Secretary sent out an Important Notice to all shareholders on 1 September 2019. The proposal from the Directors follows on from this.

This is a brief reminder of the summary from the Important Notice - "The Directors believe that each block's interests would be best served by taking their own freeholds and organising lease extensions as they wish."

The Important Notice gave the reasons for reaching this decision and also all of the supporting information we have available at this stage.

We feel that it is important to state to everyone, and to allay any concerns, that the Directors will do everything in their power to support those blocks that wish to have help with this process or that have concerns for their future. We will do everything we can to ensure that this process results in a positive outcome for all blocks. Equally, it is clear that some blocks are already very keen to proceed with this process immediately and may not feel they need any help with it. We would ask them to hold on and to allow the process to take place in a planned and orderly manner as this will be more cost effective and will ultimately benefit all blocks.

The motion being proposed by the Directors is this:

The Directors propose that the freeholds be devolved to individual blocks and that a fair distribution of the Company's remaining assets to its members take place.

The motion will be voted on by a show of hands.

Progress as of 2nd September 2019

The company secretary wrote to shareholders proposing that the shareholders interests were best served by restructuring or "devolving" the company leading to the formation of 17 block specific companies, moving control to the real owners of the freehold.

DAY FLATS RESIDENTS LIMITED

IMPORTANT NOTICE TO ALL SHAREHOLDERS FROM THE DIRECTORS

TO SHAREHOLDERS OF - Ashurst Lodge, Burton Bank, The Croft, Davis Lodge, Davoch Lodge, Denham Lodge, Drummer Lodge, Farleigh House, Frensham Court, Gibbs Court, The Green, Haywood Lodge, Heather Lodge, Ivy Court, The Leys, The Limes, The Poplars.

ANNOUNCEMENT REGARDING LEASE, FREEHOLD AND COMPANY FUTURE

The Directors of Day Flats Residents Limited (DFRL) , the Company which manages the freehold on your behalf , have for some time been looking at how to manage the extension of flat owners' leases for our 17 blocks. We have now reached a point where we consider that each block's interests would be best served by taking their own freehold and organising lease extension as they wish. This may mean major changes in the way that your block is managed. Please read on for more information.

As you may know, the Directors of DFRL have been considering how best to meet its shareholders' needs and provide a lease extension, whether in the form of a new lease or a regrant of the current lease. All shareholders who attended the Annual General Meeting 2018, which took place at Islington Town Hall on Tuesday 22 January 2019, will have gained some understanding of the difficulties surrounding these decisions.

For some time we have also been concerned about the long-term future of the Company.

The Directors, and in particular the Company Secretary, have been facing an increasing workload and it is difficult to see how we can continue with the existing structure or obtain the increasing level of funding required to keep the Company as it is. The Chair of Directors has also resigned due to health and other reasons.

The Company Secretary has voiced her desire to stand down at the end of this calendar year or the financial year. This role is instrumental in the running of DFRL and the Company Secretary undertakes a large number of tasks which extend beyond the usual company secretarial requirements. With more and more legislative demands where property is concerned, this workload continues to increase. With this being the only paid role among the Directors, financing becomes an issue.

At the same time, more responsibility has been placed on the Directors where risk management, health and safety, and legislative compliance are concerned. These responsibilities come with actual and potential legal liability. As the Directors are all volunteers who receive no fee, they are questioning why they are putting themselves in this position and giving their time up free for others who in many cases are letting their properties for profit.

Also, we must consider the very large amount of work required to make progress with the new leases or lease extensions for all blocks. Many blocks have different needs and will require considerable time to be put in by volunteers for others who may be better placed organising the work themselves. It seems very unlikely that we will be able to come up with a new lease that will meet the wishes of each of the blocks; equally, to have different leases for each of the blocks would be unworkable for the Company.

Given all of the above, the Directors have concluded that they must recommend a voluntary winding up of the Company. This would entail a distribution of the assets of the Company to its members. The main assets of the Company are the block freeholds. The Directors would plan to transfer the freehold from the Company to each block. Subsequently, leaseholders would be free to move forward with their own leases as they see fit.

We understand that this is a significant announcement and it may surprise and even worry some people. Please rest assured that DFRL will continue to operate in a normal manner over the coming months. The Directors will do everything within their power to ensure that an orderly winding up of the Company takes place and that there are no detrimental effects to any leaseholder. We will also attempt to provide guidance on all aspects of the process of the transfer of freeholds to blocks, the creation of new leases and also options for block management for those who require it.

On the following pages you will find Frequently Asked Questions which we hope will provide answers to all of the questions we envisage leaseholders may ask at this stage.

We request that leaseholders consult the FAQ before making other enquiries to us. In particular, it would be appreciated if questions to the Company Secretary could be avoided.

There will be an opportunity for shareholders to ask questions and to put forward their views at either an Extraordinary General Meeting (EGM), or the Annual General Meeting (AGM), towards the end of the year.

It has not been easy to reach this decision, but times have changed from when the Company was formed and we now find it to be the best way forward given the varying, and in some cases irreconcilable, needs of blocks.

LEASE, FREEHOLD AND COMPANY FUTURE , FREQUENTLY ASKED QUESTIONS

Why is this change happening?
Day Flats Residents Limited (DFRL) and the Residents Association (DFRA) were established as a means of protecting leaseholders from a (possibly unscrupulous) commercial landlord. Collectively, the blocks had the resources to purchase the freeholds and there were efficiencies in running as a larger group. The situation has changed markedly since then: we have already lost DFRA and the burden and risks that have been placed on the Company Secretary and the Directors have increased hugely. There is also a much-reduced number of owner-occupied flats. We believe that passing the freeholds to individual blocks will spread the load more fairly, while continuing to provide protection from commercial landlords. It should also eliminate a degree of bureaucracy. The leaseholders in a block have the closest interest in its management, so removing the Company from the freehold title will put ownership where it seems more naturally to belong, with those leaseholders themselves.

Why now?
Our Company Secretary has indicated that she is unable to devote the huge amount of time that it has become clear is necessary to run DFRL properly. Many of the Directors feel likewise. We recognise that a system that relies on "volunteers" is inappropriate where many flats are rented out.

What has changed?
The amount of burden and risk faced by Directors, the workload of the Company Secretary and the number of owner-occupied flats.

What does this mean for me/my block?
Rather than be part of a company that owns the freehold in many blocks, each block will be directly owned by its own company. It is anticipated that each of the leaseholders in a block would become the shareholders in that company.
- If self managed
You may continue to be responsible for the management of your block, but in addition will have to deal with the formalities of running a company. This need not be onerous, and it may be possible for certain things (such as arranging insurance) to be done in conjunction with other blocks. Alternatively, of course, you may collectively appoint someone to manage the block on your behalf.
- If NPS managed
We understand that NPS will continue to be available to provide management services to those who require it. They may, in addition, be able to help with the administration of the company.

Do we have to take the freehold?
No, you don't. However, if you don't, then it may become available for someone else to take. Accordingly, it is our recommendation that everyone should participate in one of the new companies.

What if only some people in a block want to take it?
It is possible that the company could be owned by just some of the leaseholders in a block, but this would not be ideal and we would try to discourage this. It may be important to know why some are reluctant: if the issue is cost (as to which, see below), then it may be that we could take a similar approach to when DFRL was created, with loans made from the others in the block.

What if we don't want the freehold?
If most of the leaseholders in a block do not want it, it will be open to a third party to take it. We could explore whether a housing association would be preferable to a commercial landlord.

What about the new lease?
It will be up to the leaseholders in each block to determine the terms of their own lease. We aim to provide a specimen which would be appropriate for a block and company with a single freehold. However, the provisions of the existing lease may be reused if blocks prefer. Each block may need a solicitor to represent them in the transfer and that solicitor would work with them to review the new lease terms. We would provide guidance on selecting a solicitor.

Is this related to the new lease?
Not directly, though the question of determining a new lease has highlighted the disparate views between leaseholders that are difficult to harmonise across all of the blocks. We recognise both that each block may want different things in their lease, but that this could create a hugely complex position if the Company was to continue in its present form.

Who will run things/be in charge?
The Directors will continue to run the Company until it can be devolved in an orderly manner. Thereafter, the shareholders in each of the new block companies will be in charge of their own company.

Will I pay more money?
We do not believe so. Indeed, part of our concern with the present arrangement is that it creates unnecessary bureaucracy and that, while we used to benefit from savings such as collective insurance, it seems that is no longer the case. Needless to say, though, this will depend on how much or how little the leaseholders in a block are willing to undertake for themselves.

What will this cost?
We will be able to provide a clearer picture on this once we know the response of shareholders. It may be that the reserves held by the Company will cover some of the cost.

What about building insurance?
This will be the responsibility of each block, though it may be that one or more blocks can approach insurers together or that we can maintain a forum for exchanging knowledge and experience.

Who will sort out problems?
Until the split is finalised, the Directors will oversee the process. It may be that it becomes necessary to appoint a liquidator (who would be chosen by the Directors and therefore "friendly" to what is sought to be achieved) to push the process through. Following that, though, each block would be responsible for sorting out its own problems. In self-managed blocks, this mostly happens in any event. In NPS-managed blocks, NPS will be able to help.

Will I need a managing agent?
This will be up to you. You may feel able and willing to manage your block for yourselves, or you may appoint someone else to do some or all of it.

How do I find a managing agent?
Again, this is where some sort of knowledge forum may be useful. We aim to provide guidance on possible managing agents.

When will this happen?
We envisage that the process will take 12-18 months.

Can I stop it happening?
You do not have to vote for it, but the issue that we see is that DFRL is unable to continue as it is.

Can I just ignore this?
No, this will affect you.

Will this make things better or worse?
For most blocks, this will allow them to determine their own future. If they are willing to undertake some work themselves, it could be cheaper. For those in blocks who are unwilling to act for themselves, there will be a cost to appointing someone who will act on their behalf. Either way, though, we believe that the result will ultimately be better for the individual blocks, as they will concentrate on their own needs.

What are the pros and cons?
It is obviously a step into the unknown, and some leaseholders may feel isolated. We will do what we can to ensure that vulnerable leaseholders are protected. At the same time, we believe that "devolution" will result in each of the blocks getting the full attention that it deserves.

Will this mean more work for me?
Many blocks already have very active leaseholders and will notice little difference. Those who currently rely on others will, almost inevitably, see an increase in work unless they buy in services from NPS or elsewhere.

What help will we be given with this process?
We aim to do this in an orderly way, advising leaseholders along the way.

Can you advise on solicitors or surveyors?
We can recommend advisers, but the choice will ultimately be yours.