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Somerset Co-operative Community Land Trust

Somerset Co-operative Community Land Trust 2020

£500 minimum

Risk factors

All investment and commercial activities carry risk, and investors should consider whether Somerset Co-operative CLT is a suitable investment for them in light of their own personal circumstances.

 This offer is not covered by the Financial Services Compensation Scheme.

General investment risks

  • Offer Shares will not be transferable or traded on a recognised stock exchange.
  • Members wishing to withdraw their share capital will be able to apply to the Board for this purpose from 2021 giving 3 months notice. Withdrawal of share capital is at the sole discretion of the Board, and is likely to be rationed according to an equitable formula set by the board at the time.

You may lose the value of your shares. As a Registered Society, Somerset Co-operative Community Land Trust Limited does not need to be authorised by the FSA to take deposits by issuing these withdrawable shares; the money you pay for your shares is not safeguarded by any depositor protection scheme or dispute resolution scheme.

Shares are not “investments” for the purposes of the Financial Services and Markets Act 2000. So you do not have the level of protection that you might otherwise be offered by the Act. In particular, this document does not need approval (and has not been approved) by an “approved person”. This document is also not regulated by the Prospectus Regulations 2005. Those regulations do not apply because there is a specific exemption for Industrial and Provident Societies.

Should the CLT get into financial difficulties:

  • They may have to suspend your withdrawals of shares
  • They may have to write down the value of your shares
  • You may lose all the money you pay for your shares

Risks specific to Somerset Co-operative CLT

Somerset Co-opertive Community Land Trust has undertaken a series of mitigation measures to reduce the risks stated below, and confirmed that this project is still affordable even at the minimum investment.

This list is not necessarily comprehensive and you should read the business plan to see what mitigation strategies Somerset Co-operative CLT have in place for each risk and consider other risks which may impact upon your investment.

Failure to secure further planning permissions

While the offer will not proceed without planning permission at East Reach, there is the possibility that SCCLT find it difficult to secure a viable planning permission for the Exmoor Ales site. SCCLT have tested the sensitivity to this outcome, and in fact it is possible to trade profitably from the Taunton units alone. This means they can take the time to develop a proposal that can win the support of the local planning authority. In the course of pursuing further acquisitions and developments, SCCLT will incur additional costs not considered in this offer. In order to avoid this damaging the interests of members, they will commit to only spending resources on speculative property development (that is, lacking pre-application guidance from planners and a secure opportunity to acquire the site) when those costs are either separately funded, fully ‘at risk’ or pro bono.

At all stages from early inception though to planning determination, SCCLT ensures that there is local community engagement and an on-going dialogue with all relevant planning and other key officers and teams at local authorities and other stakeholders. This will help to ensure plans reflect local needs and planning requirements. And of course, their members have considerable opportunity to set the right course.

Loss of key personnel

No person in the CLT is indispensible, given the large and confident board and the excellent support from a range of specialist bodies including Third Sector Accountancy and Clarity CIC. However, they will ensure that signatories are regularly updated and information shared among board members to increase the organisational intelligence and mitigate this risk.

Availability of suitable finance for subsequent phases of development

SCCLT has consulted widely with social lenders and have gone to some lengths to structure their business plan in ways that will meet their concerns about debt servicing and future income. There are very diverse sources now, including some funds specialising in CLTs; and over time there is a sustained trend to increasing sums available for social investment. In addition, they have the opportunity to seek low interest loans from local authorities, who can secure finance from the public works loan board. Residential property remains well regarded as an investment and they think it unlikely that credit will dry up entirely.

Damage to files and records

Electronic copies of most files are kept on cloud storage that can be accessed by multiple board members.

Cost overruns on building work

SCCLT will ensure that their architects monitor the costings and that work does not commence until they have secured fixed price contracts from contractors. In the event that an overrun seems possible, they will work with contractors and stakeholders to identify potential cost-savings. Cost overruns may be mitigated by variations to specifications and/or the introduction of a self-finishing programme. SCCLT retain the power to sell individual units on the open market as a means of subsidising the stock that remains in their ownership and maintaining an offer of affordable rental.

Lack of demand

At all stages of the planning and development SCCLT involve the relevant local authority’s housing team to ensure that schemes meet local housing need not being met by current or planned provision. Where appropriate they also draw on the work of other bodies or conduct their own research into need, such as for workspace demand.


SCCLT now has access to sophisticated project management tools, and has established robust project monitoring and reporting procedures.

Objections from neighbours

SCCLT will maintain close contacts with neighbours and will aim to be considerate builders with regular working hours and with noisy operations on designated days.

Delinquent tenants

SCCLTs procedures for enforcing the tenancy agreements are now much more robust, and they continue to benefit from expert advice from an experienced lettings consultant. They have processes and template documents ready for either section 21 or section 8 evictions as necessary.

Universal credit

SCCLT have adopted tighter procedures for working with UC claimants, and are now able to more closer monitor the progress of claims especially in the crucial first six weeks. They have also prepared a library of templates so that we can submit claims promptly, and will also make increased use of guarantors for tenancies.

Cash shortages prevent withdrawal

This risk does not necessarily affect the value of your shares but may prevent you from withdrawing as much as you want immediately. If this is the case, the board is committed to pursuing alternative finance options to enable withdrawals to meet demand, subject to the need to maintain profitability. This may include remortgaging, appealing for fresh investment from new and existing members, and selling assets where it clearly benefits the community for them to do so.

Covid-19 risks

It is evident that the pandemic, and the economic shocks resulting, will be a serious consideration. The policy of pricing flats at benefit levels means that loss of income from tenants should not in itself be a critical factor; similarly lockdowns are consistent with the design of single person units that SCCLT are building.

Applied for to date, of
£445,000 target

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