The current leases issued to Privately owned Beach Huts terminate on the 31 March 2022. Demand for the service remains high and the Council must decide on the future shape of the service. This report seeks to set out several options available to the Council, with their Private and Council owned and rented beach huts, with focus on service improvement and financial viability of this non-statutory service, including securing of both increased revenue and increased number of beach huts for the Council.
Upon the invitation of the Chair, the Property, Estates & Facilities Manager presented his report which set out several options available for Private and Council owned and rented beach huts, with a focus on service improvement and financial viability of a non-statutory service including the securing of both increased revenue and an increased number of beach huts for the Council. After briefly defining the seven options outlined in the report, he explained that the Officer recommendation was for Option 2 [to maintain the existing position but with a 30% uplift in rental price]. This Option:
· retained all existing private beach hut leaseholders as well as the leaseholders that rented Arun-owned beach huts and sought to increase the length of the lease offered to customers – the leases for the 92 Arun owned and rented huts be increased from 1 year to 3 years and the leases to private hut owners be increased from 5 years to 7 years (which in reality would be just short of seven years in order that the leases were not required to be registered at the Land Registry).
· included a lease clause that permitted the Council a financial receipt on the assignment of a private beach hut lease. The recommended fee on assignment would be six times the annual ground rent payable at the time of sale or 20% of the sale price agreed, whichever was greater. A large proportion of the overall market value of a beach hut attained on disposal on the open market was derived from the location upon which the beach hut sat. This was land under the Council’s freehold ownership and as such it was considered sound commercial practice for the Council as landowner to receive a proportion of this attained value. Under the current 5-year lease, the Council charged the leaseholder an assignment fee of £500 on disposal of the beach hut.
· included a lease clause that permitted a beach hut customer the right to rent out their beach hut (a right currently excluded under the current lease) to assist in making the limited number of beach huts more accessible and also to allow customers flexibility. This option would be available to customers at the outset of their lease following payment of a 25% lease premium
· included a rent increase clause within all leases issued which permitted the sum of 3% to be added to the annual rent from 1 April in each year of the lease.
The Property, Estates & Facilities Manager concluded that Option 2 as recommended would see a 33% increase in annual revenue for the Council when compared to the current financial position this season. This increase excluded the additional revenue that would be raised for the Council following assignment of beach huts and allowing customers the right to rent out their huts commercially following payment of a lease premium. The Option was therefore recommended to the Committee for acceptance as it was considered to be in the best interests of the Council.
Members (and two non-Committee Members) then took part in a full debate on the item where a number of points were raised including:
· no reported consultation with affected Ward Members or existing tenants, and concerns it showed the Council in a bad light as a landlord
· imposing a 30% increase on the assumption that the market could bear it, and fears long-term leaseholders may be forced to give up their beach huts
· whether the Committee should not accept any of the options in the report until it has seen the consultations with Ward Members and tenants and then revisit at a later meeting
· comparing rental rates to build costs, beach huts being great investments and, due to the demand, whether the Council should be building many more, which would keep them affordable but also make the District’s beaches busier
· the need to keep them affordable for the District’s residents and visitors
· a ‘beach hut tax’ where the Council takes a percentage of the sale price being unnecessary if demand were satisfied with prices restrained
· concerns over obscured views and planning restrictions when building more beach huts, and concerns of overdevelopment
· the Council and Councillors being responsible for all residents of Arun, not just those who currently lease beach huts, and so looking at the proposals as a business decision Councillors have a duty to get best value especially if, as the report confirmed, the proposed rents are the market rates
· if not charging market rates, then the Council (and by extension, all taxpayers in the District) is subsidising hut owners
· reinvesting the revenue generated by beach huts into building more
· thinking about what is trying to be achieved, capping revenue also means capping what could be spent
· seeking to service the community as well as increase revenue and bearing in mind the significant number of people on the waiting list, the option of leasing huts for three-year blocks on a rotation basis and then offering them to the next person on the list, and concerns over the feasibility of this idea or even necessary if some huts were available on seasonal leases
· concerns over the 30% increase and many ideas whether to introduce this differently or at all – whether it should be staggered over a period to bring it up to the commercial rate, set at the renewal of annual leases, fixed to RPI if possible, start with a lower figure and review in 12 months times, whether this only applied in the first instance to new rentals – and the need for this to be specific for Officers to action
· beach huts seen as integral to the seaside economy, but recognition that they are also a luxury
· disappointment when the possibility of more beach huts was rejected by Planning Committee
· the need for a clear direction of travel from the Committee
· if only considering maximisation of revenue then the appeal of Option 6 [open market disposal]
· concerns of residents that their beach huts would be taken away from them but none of recommendations made in the report advocating this
· support for Option 2 as it generated additional revenue
· support for Option 7, with some huts retained for daily or weekly rental, as would help with demand and make them more available to visitors, but concerns how these would be chosen
· the issues around sub-letting
· the benefits of composite huts which are virtually maintenance free
· the potential need for more administration and service resource with different options, and the intention of the report to streamline the service and make it more effective
· the number of huts owned or leased by people outside of the District
· Ward Councillors being elected to act as the voice of their electorate and therefore the need to always be consulted during the writing of these reports to consider the local impacts and discuss with residents
· delivering beach huts as a service similar to deck chairs
· making the most of available IT solutions
· the need to be mindful of the ‘traditional holiday scene’ with beach huts differing in colour and size which creates the unique ambience of the setting, and the need to be creative and imaginative to achieve this
· all about encouraging people to come and have fun on the District’s seafronts
· the need to improve beach access
The Property, Estates & Facilities Manager and Director of Place provided Members with responses to all points raised during the debate.
Councillor Walsh then proposed a variation to Option 2 as
written in the Officer report [to maintain the existing position
but with a 30% uplift in rental price], which was seconded by
Councillor Edwards, and following Member discussion and Officer
input, was as follows – additions have been shown using
bold and deletions shown using
To propose a 30% increase for new tenants
existing tenants and an annual uplift of 10% (in simple
rather than compound interest terms) over the next three years for
existing tenants [without change to recommendation 6 in the
report – to approve for the Council to proceed with the
inclusion of an annual rent increase clause (3%) within all beach
hut leases issued as set out in the body of the main report
2. That a report on the provision on new beach huts be brought back to Committee.
3. That any new leases given only to be given to residents of the Arun district.
On this proposal being put to the vote, this variation to Option 2, it was declared CARRIED.
The substantive recommendations were then proposed and seconded.
RESOLVED - to
1. Approve for the Council to proceed with the beach hut review as set out in Option 2, including information within the body of the report and the attached viability appraisal at Appendix 1, as amended:
i. To propose a 30% increase for new tenants and an annual uplift of 10% (in simple rather than compound interest terms) over the next three years for existing tenants [without change to recommendation 6 in the report – to approve for the Council to proceed with the inclusion of an annual rent increase clause (3%) within all beach hut leases issued as set out in the body of the main report (section 1.8)].
ii. That a report on the provision on new beach huts be brought back to Committee.
iii. That any new leases given only to be given to residents of the Arun district.
2. Approve for the Council to proceed with the award of beach hut leases on Council owned and rented beach huts for a term of 3 years.
3. Approve for the Council to proceed with the award of beach hut leases on all privately owned beach huts for a term of 7 years.
4. Approve for the Council to proceed with the inclusion of a lease clause that ensures that the Council obtain a financial receipt on the assignment of a private beach hut lease as set out in section 1.5 of the report. The fee payable will be 6 times the annual ground rent payable at the time of sale or 20% of the sale price agreed, whichever is the larger of the two sums.
5. Approve for the Council to proceed with the inclusion of a lease clause that permits any beach hut customer the right (upon suitable payment) to rent out their beach hut, as set out in the body of the main report (section 1.7).
6. Approve for the Council to proceed with the inclusion of an annual rent increase clause (3%) within all beach hut leases issued as set out in the body of the main report (section 1.8).
7. Delegate authority to the Group Head of Corporate Support & s151 Officer and the Group Head of Technical Services to alter the use of a small proportion (circa 30 No.) of future provided beach hut units under control of the Council so that the Council may explore alternative commercial uses including letting out to local businesses, daily / weekly rentals and in the event they are not considered to be financially viable, following a minimum 12 month period of operation these may be returned to normal service use.