Limefitt Park Forums

Buying a pine lodge at Limefitt Park from South Lakeland Parks or a Private Owner

First of all, buying a log cabin is not like a buying a house - it is more like buying a car. This sometimes surprises people who expect to go through something like the conveyancing process used when buying a house. You can actually buy a Lake District pine lodge and the associated licence pretty much on the spot if you have the cash in your hand.

Annual Running Costs

The most obvious information that you will need is a list of all the costs involved

• Site Fees - for 2010/11 these are £3,987.48 p.a. They may not make this clear at time of purchase but these need to be paid on November 1st each year, 4 months in advance of the beginning of the season to which they apply. (Yes we winced when we found that out too!)
• Rates - for 2010/11 these are £473.66 p.a. (it doesn't matter how big your lodge is)
• Utilities - Budget about £500 a year in total for gas and electricity depending on how often you use the log cabin. (If you let your lodge this can be as high as £1,400 - in round numbers that was what 2010/2011 cost me in one of my lodges)
• TV Licence - if you let your lodge you need one - £145
• Insurance - You can expect to pay anything from £400 a year or more depending on lodge size and who you buy it from. Premiums have increased dramatically since the Cumbria floods of 2009 and the burglaries in January 2010.  It flies in the face of all logic and reason as the only damage in the 2009 (150 year event) floods was a bit of decking off a very low lying caravan and the security has been hugely beefed up, but then insurance companies always drive in reverse using their rear view mirrors and rarely miss a chance to beef up premiums.
• Drain down - You will need to drain down the lodge (£90 to £180 depending on where you buy the service)
  
• Boiler service - will cost about £100
• Revarnishing / repairing the pine lodge - you need to factor in about £1,500 a year

This list may not be exhaustive but it will give you good idea of the sort of annual costs that you will encounter.

All in all you can expect to pay up to between £7,200 and £8,200 a year (in 2011) in addition to what you pay up front for your licence agreement.

Other Costs

Budget £1000 - £1500 a lodge to get trace heating installed if you don't fancy New Year without being able to shower or wash up. (Trace heating is a system that stops your pipes from freezing by passing an electric current along a small element that keeps them at a minimum temperature). The external temperatures on the park dipped below -17C in winter 2010/11. Without trace heating the pipes start to freeze up at around -7C.

If you intend to sublet your lodge privately you will have marketing costs of between maybe £200 and £1,000 a year (see below)

Your decking

One of the real pleasures of your lodge will be sitting out on your decking, so you want to make sure that it is properly and safely constructed.  Nearly 80 of the lodges on the park have high quality decking that was built by Gus and David over the last 7 years.  Sadly Gus passed away this year, but David still works on the park. If you were to ask any owner who has used him they would, I am positive, recommend David's work. When you are specifying the decking on your lodge I would recommend that you insist as part of your deal that the work is done by David Kaye Joinery. There are other companies that have been used where the quality of work has not been totally satisfactory, so be careful! I have 5 lodges - 4 had decking built by Gus and David. On the only new lodge we bought the decking was done by another contractor as the park insisted on it. Guess which one had the problems. It wasn't built to the specification agreed with the park manager  the deck planks were not secured properly and pieces of the skirting fell off at regular intervals.  This is not an area where you want corners to be cut as remedial work could be quite expensive. For clarity I should state that this endorsement of David's work is not paid for in any way and is purely based on the quality of the work he has done for me.

Site Fees

Now you (and I ) might think that these are paid to make sure that things like on site security, grass cutting and general maintenance are carried out, and that if they can't manage to run facilities at a profit (like a shop or a pub), that these can be subsidised from these fees, but according to one SLP Director, apparently the site fees are really just further rent payments. According to the last South Lakeland Parks official statement I have seen the site fee only "represents consideration in respect of the rights conferred in the site licence".  (I think he really meant the licence agreement you sign with them, as the site licence is something else altogether, but I could be wrong.) So - if it ain't specified in the your licence agreement they believe that they don't legally have to provide it.

In effect you pay up front for buying a Lake District pine lodge and then you pay each year to have the right to use it.

Actually, the site fee issue is a bit confused (and confusing) as the sales list I bought my log cabin off clearly states that site fees do include on site security, grass cutting and the leisure facilities at White Cross Bay. As far as I am aware this document constitutes part of the sales documentation and is therefore contractually binding on South Lakeland Parks. This suggests that maybe what you get told at sale time and what they may try to claim afterwards are not always one and the same thing. It would perhaps be unfair of me to make any further comment on that here, but it does suggest that getting things in writing before purchase is a sensible idea. Don't feel embarrassed about asking for things in writing - it may save you a lot of grief down the line.

Exit charges

Be aware that your agreement probably states that you will have to pay the South Lakeland Parks commission when you come to sell. I am amazed by the people who have told me that they had no idea that this was the case. True, certain older licences make no mention of this (in which case it probably isn't legally enforceable), but the majority do and you really ought to read your licence before you buy!!!

At the time of writing this is set at 7.5% + VAT (Total 9%) of the selling price. That's about £10,000 on the cheapest new pine lodge available today (January 2011). Yes it is a lot isn't it! You may be able to negotiate a reduction to this rate at the time of purchase and get your contract changed. It has been done and I have seen a contract that WAS amended and signed with the amendment initialled by the current Park Manager, so whatever they tell you they do have this authority. It may not be easy to get them to do this though.

Make sure you ask the salesman what help they give to you when you come to sell. Check out the South Lakeland Parks web site to see how many private second hand pine lodges are advertised for sale on the site. (The answer is generally none by the way, which doesn't actually mean there aren't any - just that South Lakeland Parks really don't do much to help owners to sell their used pine lodges). The official view that I have heard expressed is that owners are expected to sell by themselves (without much, if any, assistance from South Lakeland Parks). This is quite amusing given that the Private Sale Agreement that you have to sign states that "you appoint us as your exclusive agent to assist you in  selling your holiday home  to a suitable purchaser". 

The situation does seem to have improved a little recently, and they are now showing the second hand stock list on the For Sale board outside Limefitt Park reception but you should still be aware that it isn't as easy to sell as you might fondly believe as you walk along chatting with that lovely salesperson.  For example, if you visit the South Lakeland Parks web site and look for lodges for sale at Limefitt there is a link that says "Click here to view all holiday homes for sale at Limefitt". From the way that is worded I am sure that they really mean this to lead to a page showing the complete list of lodges for sale including all second hand units but for some reason not one of the second hand lodges are showing.  You should be getting the picture now.

This 7.5% + VAT is thus not really a commission for sales activity but is more like the bid/offer spread on a pension payment. (NB the government decided that the standard 5% bid/offer spread on pension payments was piratical and so fixed the limit on stakeholder pensions at 1% - there's some food for thought there!). You might be best viewing the money you pay when you come to sell as a deferred payment as part of the purchase and adding 9% to the purchase price when you are doing your sums regarding affordability.

To be fair to South Lakeland Parks (and I do try to be scrupulously fair in these posts),  although you and I might think the 7.5% + VAT is outrageous, they are at the better end of the industry where the norm is an eye-watering 15% + VAT !!! I am not suggesting that this excuses charging such a huge amount of money for doing not a great deal, but it does show at least that there are worse operators out there.

If you don't feel comfortable with having a 6 figure asset that may be very hard to liquidate quickly without losing money then walk away now.

Bear in mind that advertising yourself can not include putting a "For Sale" notice in your own pre-owned log cabin! They are very prominent in the new pine lodges. In a conversation with the Operations Director of South Lakeland Parks in March 2010 I asked why owners who are selling are not allowed to put up for sale signs in their lodges whilst South Lakeland Parks can do so in theirs. She said it was to ensure consistency of signage. I then asked her whether owners wishing to sell would be allowed to put up For Sale notices using the same signage as used by South Lakeland Parks and she categorically stated that this would not be allowed. She was unwilling (and/or unable) to provide any explanation for this. Now they probably don't explain THAT to you when you are discussing buying the lodge do they?

It wouldn't be a bad idea to contact the owners who advertise on this site to get some feedback on South Lakeland Parks' level of service in selling second hand lodges. It would appear to be getting better, but as far as we can tell the incentives for them to sell a new lodge are greater, so maybe you can't blame the individuals concerned for concentrating on new sales. Ideally South Lakeland Parks' head office would realise that a vibrant 2nd hand market would help sell new log cabins, but until that light goes on (or until they run out of places to site new pine lodges) it will continue to be quite challenging to get rid of your second hand luxury lodge in what in 2011 is looking like a very saturated market indeed. Be warned!

Customer Service

I suppose that's as good a place as any to discuss customer service. You might want to know how things are dealt with when things go wrong. Perhaps you should ask if they recognise Owners' Associations on Limefitt Park. Not only do they refuse to do this, but they also refuse to meet with any form of group of owners at all, insisting, rather oddly, on only ever meeting owners individually. You should draw your own conclusions as to why they adopt this attitude, what it might mean to you, and if you are happy spending 6 figure sums with a company that works like this.

Interestingly a recent court ruling (March 2010) means that holiday parks where units are sold on leases MUST now recognise properly constituted Owners' Associations, or to be accurate Tenants' Associations, on their parks.

An SLP manager has publicly stated that because we have licences and not leases this ruling does not apply to them.

SLPs units are sold on a licence as most caravans and lodges are. This new ruling does not apply to licences. This topic was covered by the BH & HPA in their May/June addition (sic) page 29.

http://southlakelandowners.freeforums.org/more-rights-for-holiday-home-owners-t173.html
(So that's alright then eh?  )

If you are walking around the park, why not stop and ask an existing owner what they think? As it says on www.justlodges.com "Most park owners will tell you that their existing lodge owners are their best selling force, so take advantage of using them!"

Capital Appreciation

Your sale agreement should include the following statement as part of the signature box:

You should understand that the purchase price of the caravan and any resale value are subject to a variety of factors and resale value may improve or reduce over time.

People who bought a while back have seen some capital appreciation, although you do need to understand that as your lease gets shorter the value of your lodge decreases. A lodge with 40 or 45 years may be worth about the same, but a lodge with 10 years left will probably be seen to be worth considerably less than one with 15.

Logic says that lodge prices must be related to house prices generally and to local property prices specifically. If you buy at the top of the cycle your opportunity for short term capital growth will be limited and you may even expect the value to reduce. In fact asking prices on some lodges for sale fell by as much as 42 % - yes that was FORTY TWO PERCENT (130k to 75k in one example) - in the 12 months (to January 2011). This either means it's a good time to buy or that the lodge market is now VERY saturated. You decide for yourselves.

Remember the first 9% of the growth will go to SLP in commission anyway.

At the time of writing, any gains will be subject to Capital Gains Tax in the normal way. Consult an accountant for more details.

One of the major benefits of buying at Limefitt Park is that the standard licence on a new lodge now allows a licence period of 50 years (on the older style lodges like those on the beck it had been 25 years). This means that you can use it for 20 years and still have a very meaningful length of licence left to sell on afterwards. It also gives you a reasonable chance of getting some capital appreciation over the medium to long term.

When you are comparing the prices at Limefitt with those at other parks (like for example Hill of Oaks where we were told that the standard licence period is considerably shorter - between 20 and 30 years and the exit charge is 15%) you need to bear this very much in mind.

Whilst the equation is not a linear one due to the inclusion of the cost of the lodge, there is obviously a monetary value associated with the remaining time on the licence. The longer this is the more your lodge and its pitch on the site is worth.

Rental Income

Many people I have spoken to tell me that they are told that the sales people tell them how easy it is to sublet a lodge to cover the site fees. Whilst on the one hand this is a great advantage to buying from SLP as many other sites forbid sub-letting, you do need to do some homework here. Before you accept this at face value ask them to put you in contact with an owner who has successfully sublet via their scheme, and do a bit of research yourselves.

Be aware that if you use their scheme you will have to give them 20% + VAT (24%) of the gross income.

They currently have a fleet of green caravans that they sublet themselves and with prices as low as this

in November 2010

22/11/10   4 nights   3 Bed Superior Caravan   £190   £99

and this in JULY 2011!!

we have slashed our prices for this week and this weekend!! Limefitt Park arrive tomorrow for 4 nights, 2 Bed Superior Caravan £199!! OR a 3 Bed Superior just £249!! 

(for July 4th)

you can probably work out which units are likely to get filled up first when people call their reservations department.

Speaking as somebody who lets 4 lodges I am not at all happy to find myself suddenly competing with 20 caravans that are being given away for £6.50 per person per night or £13 per person a night in peak season ! Bear that one in mind when they talk to you about all of  the rental income YOU can make to offset your site fees!

You can sublet successfully but it looks like you WILL be in competition with the park owners! Another strange thing is that they allow themselves to sublet caravans on the site but according to the 2011 Park Rules private caravan owners are not allowed to do so. Now how does THAT one work? hmmm

You will also have to pay for your own marketing costs. An advert on this site under http://www.limefitt.com/rent.php will cost you £200 a year. We limit the adverts to 30 lodges here. An ad on the leading local listing site where you will compete with  70 other lodges will cost you between £100 and £350. A premium ad on an international listing site can cost up to £800 a year (yes really!). You might also set up your own web site. If you have the skills this can be quite cheap but to get a site properly designed and hosted with an element of search engine optimisation can cost more than an ad on a listing site for obvious reasons.

Being realistic you will have to cast your net quite wide in the first few years before you start to be able to rely on some repeat bookings, so do factor in the costs of marketing while doing your sums.

Don't forget to take the minimum £40 a stay you will end up paying someone else to launder your sheets and towels and clean between stays off your potential income.

And finally there's the cost and hassle of those emergency trips up the motorway when your guests have a problem. I'm afraid if it's a private sublet the park office will not want to know, even though you do pay them so much in site fees.
 
Contracts

Make sure that all documents referred to in the contract - Park Rules, Site Charges etc are provided to you before signature. Also get a copy of the BH&HPA Code of Practice (Attached to this post) which South Lakeland Parks are required to give you as a condition of their membership. (Edit - March 2010 - This Code has been suspended so there is now no set of objective standards against which South Lakeland Parks' management can be measured. In my opinion this NOT a good thing.)

Now READ ALL OF THEM. Now read them again! Don't sign until you have done so.

Think before you sign

So - as a (multiple) owner, what do I think about the attitude of the South Lakeland Parks towards the owners who pay them large sums each year? 

Hmmmm..... Well, caveat emptor as they say... It's a lovely park but you need to have your eyes open and your wits about you before you commit large sums of cash to this organisation. SLP could do an awful lot better without straining themselves at all. I have bought 5 lodges off them, four of which I rent out very successfully (but not via their own subletting scheme which I, and others, have found to be less than satisfactory. If you want to sublet you should be prepared to do the donkey work yourself). I now work on the basis that the least I have to do with the management of the park  and the company the happier and easier my life is. Most things can be made to happen once a kick has been administered. It's just a shame that the kick is necessary in the first place when you pay four thousand a year in site fees.

My advice is:

If you don't understand or like anything you read, then ask questions now.
If anything worries going forward get it confirmed in writing now.
If there is anything you don't like either get a side letter exempting you or amending the condition.
I cannot stress enough the importance of getting these all of these issues clarified before signature.

Did I mention that you should read all the paperwork before you sign?

Title and Rights

Curiously many of us owners do not get given any documents that prove that we actually own the pine lodge itself. It may be implicit in the licence agreements, but it would still make sense to insist on a document stating that title of the log cabin is vested in you as soon as your money is paid. If not, and South Lakeland Parks or the pine lodge supplier went bust, you could find yourself in an awkward position.

While dealing with paperwork ask about a lease extension. Ask them to reinstate the lease to the maximum period (depends on the lodge type) It costs them nothing today and helps you when you want to sell later. It would be reasonable to expect to be charged for this unless it's only a year or two.

And it's not just paperwork you need to check. The Park Manager would appear to have been granted the authority to make verbal agreements that contradict and override what we have been told by the logistics manager and the operations director as regards other owners' rights over land adjacent to your lodge. Before buying a lodge you should get it in writing that there are no such agreements that may affect your quiet enjoyment of your lodge.

Warranty

Ensure that you are aware of the warranties provided on the cabin, its fabric and its fixtures and who will be providing remedy in the event of failure. We were not given any written warranty or guarantee when we bought our Lake District pine lodges and had to chase up South Lakeland Parks and the manufacturer to get written details when we hit problems. This was not a comfortable situation to be in.

We have been told by the now ex managing director of South Lakeland Parks that "It is our practice, and has been for some time now, to provide a written copy of the warranty with each new caravan or lodge sale. These are provided as a matter of course by the manufacturer at the time of delivery to park." Whatever you do do NOT accept the verbal promise of a salesman on its own as it will not be worth the paper it's not written on. I have now heard so many stories of random terms between 12 months (the park office manager) and 10 years (the salesman) being quoted that I have to question whether they even have copies of the warranties themselves! I had to get my own copy from the manufacturer with the last lodge I bought.  In fact I received an email in July 2010 that seems to make it rather clear that they really don't actually have copies of the warranty provided by that manufacturer! I find that quite amazing for a company that operates nine parks. The person we bought our own lodge off was convinced he had a transferable ten year Gold Shield warranty because of what he had been told by the salesman. He even had a photocopy of some blurb about it that he had been given. When I looked into before buying it turned out that the lodge manufacturer didn't even belong to the scheme. You couldn't make it up could you?

Anyway, make sure you are given a copy before you part with any cash. It may save a lot of worry and stress later on.

So would I recommend that you buy a lodge at Limefitt?

As I said earlier, it says on www.justlodges.com "Most park owners will tell you that their existing lodge owners are their best selling force, so take advantage of using them!". I think they forgot to add that that can cut both ways at times    It's a lovely place but do keep your wits about you before you commit your cash. On balance I'd say be very very careful - it is not the joy ride you might expect at the outset and it is highly unlikely to be a stress-free experience so don't buy in the fond belief that it's all going to be terribly relaxing. The lodge and the scenery will be but I can't guarantee the same for the ownership experience! If you are not sure then walk away now.

Have you thought about renting instead?

Given that owning your lodge is going to cost you between seven and eight thousand a year, and then you have the opportunity cost of investing upwards of 100k (Properly invested that would have to get you a couple of thousand a year even at today's low rates), have you thought about maybe just renting a lodge?

For that ten thousand a year you could rent one of our lodges for all of every school holiday and bank holiday including Christmas and New Year, or every other weekend including Christmas and New Year and let someone else have the pleasure and expense of dealing with South Lakeland Parks on your behalf. That's actually a lot more than many people use their lodges for and you'd have no money tied up and you could walk away at any time.

That's worth a thought isn't it

PS

Sales Tactics

So you've read all this and you are still going ahead. You are planning on buying a lodge.  You decide to make an offer. What can you expect? If you are buying a new lodge then you will be treated like royalty, at least until you have paid your cheque (but you will after all be paying a premium for that privilege). If you decide buying second hand makes more sense then you do have to make the offer via the park unless you are lucky enough to have made contact with the owner. One owner who called me recently told me that after an offer was made he got a call from the salesman giving him until lunchtime that day to decide on a very low offer. This put him under a lot of stress and he was amazed to find out later that the prospective purchasers had made no such stipulation regarding a time limit - it seems that it was just a high pressure tactic. Yes I know you wouldn't expect to be treated like this when buying or selling a lodge worth tens of thousands of pounds but it's as well to be aware of the sort of tactics you might encounter. In these circumstances if it looks like a duck and walks like a duck then it probably IS a duck and you should not be embarrassed to ask some pointed questions It might be best to try to deal direct with the vendor to avoid the possibility of any such little misunderstandings.