The tiny Cornish village of Trevalga was owned by former Lord of the Manor Gerald Curgenven. Upon his death in 1959, his will stipulated that the 3,000-acre estate and 16 houses should be held in a property trust, with any profits going to his old school, Marlborough College in Wiltshire.
Since that date, little has changed in rural Trevalga. Many of its residents have inherited their tenancies from farming parents, protecting them from stratospheric property price increases in Cornwall, which has become a magnet for second home ownership. However, their future tenure has been thrown into dispute by a small land sale to a utility company.
An unremarkable transaction, it has nevertheless triggered a bitter dispute over who owns the title to the Trevalga estate. Owing to a tax query, the original documents setting up the trust were re-examined, and a potential defect was discovered in Mr Curgenven's 1959 will. Namely that the trust he set up does not have an end date - which would result in full title being transferred to £28,000-a-year public school Marlborough College, which wasted no time instructing upmarket estate agent Savills to put the estate on the market for £10m. This outraged local residents, who argue that the object of Mr Curgenven's will was to preserve the estate so it could never be sold or broken up. Today, the sale is suspended, with lawyers for both sides set to battle it out in court.
Top property trust lawyer Sarah Albury from Mishcon de Reya says the case rests on an obscure piece of property trust law called "the rule against perpetuities". "This rule requires that an interest in a trust set to vest at a future date must be certain to vest within a defined period of time known as the perpetuity period," she says. "Under recent legislation this period must not exceed 125 years but in 1959 the period would have been less." As no end date was stipulated at the time, the legal validity of the trust can be called into question.
Marlborough College has defended its decision to sell, saying its charitable purpose is to run an educational establishment, not to be a residential landlord. Clearly, it doesn't want to hold onto the properties for the long term, as the property management and refurbishment costs could end up costing it money. So if the title does fall to the college, the best hope for Trevalga's residents is a sale of the whole estate to a specialist residential landlord such as Grainger or a local housing association.
Grainger, which owns and manages 24,000 residential properties, has had a successful year of acquisitions, buying £63m-worth of property in the past year. Some of these deals have been legacy industrial portfolios, where houses were originally built by a factory owner to accommodate workers. A sign of our modern times, such houses are now much more valuable than the factories ever were (and in most cases, the factory probably no longer exists). But even if such a white knight appears, the next hurdle will be the price.
Savills' £10m price guide for Trevalga shows the desirability of Cornish property; there is no way that any property investor could justify paying such a price given the low returns from the current leases. Trevalga's residents are equally unlikely to be able to afford to purchase the homes they live in.
We can look to the Queen for a case worthy of comparison. Earlier this year, the Crown Estate decided to sell off four London residential portfolios where keyworker tenants currently benefit from protected rents. Following a public outcry on behalf of the residents, restrictions on what the new owner could do with rents and property sales meant the original £250m price tag dropped to £150m, enabling registered social landlord the Peabody Trust to complete the purchase of 1,200 homes.
Mishcon's Ms Albury reckons "hundreds of thousands" of properties in the UK are held in trust ownership structures, but the added social implications of the Trevalga case mean the outcome will be of interest to property investors and residential tenants alike. And it's unlikely to be the last dispute involving property-owning charitable trusts. In a few weeks, I hope to bring you the unbelievable story of a trust that for 20 years seemed to forgot it was the landlord to half of one of London's historic high streets!
