Residential estate strategy update paper

Report: 08
Date: 21 October 2010
By: Director of Resources on behalf of the Commissioner

Summary

In February 2006 the Finance Committee approved a Residential Estate Strategy which envisaged a reduction in the size of the residential estate to a maximum of 200 units and no provision for any section house accommodation.

This report updates members on current levels of demand for units and occupation trends.

There are no proposals to change the current strategy with regards to section houses which is to exit the provision of this type of accommodation in the short to medium term. Two section houses closed at the end of September 2010.

A. Recommendations

Members are asked to:

1. Note the progress which has been made in implementing the Residential Estate Strategy including the aim to exit all section houses in the short to medium term.
2. Note that the units in the residential core estate are held to support in priority order:
   1. operational or corporate need,
   2. recruitment from outside the MPS free travel zone, or
   3. in exceptional circumstances only, to support staff who have critical welfare needs.
3. Note the allocation criteria on which units are allocated for use.

B. Supporting information

Background – Residential Estate Strategy

1. In February 2006 Members approved the Residential Estate Strategy which identified the requirement for a core residential estate up to 200 units. Section House accommodation would be exited in its entirety in the medium term as opportunities arose.

2. Demand for residential accommodation at the time was falling, and many of the recruits who left Hendon already had secured residential accommodation from their own resources. The recruitment intake at Hendon had fallen from 2,200 in calendar year 2004 to 1,400 in 2005.

In addition, officers had access to non-MPA residential accommodation through an online MPS facility called "Property Zone", which provides information about the availability of residential accommodation either elsewhere in the public sector or in areas of the private sector. Further, the number of existing residential tenancies that were due to expire was forecast to peak between 2006 and 2008 and there was insufficient demand to match the number of units that would therefore become available.

3. At the time of the last report, the residential estate comprised 1020 units and 747 bed spaces that were in six different section houses across London. A total of 630 units were held for serving police officers who met the allocation eligibility criteria and a further 390 units were used corporately or leased to housing associations; central government departments and government agencies.

4. At that time the proposed core residential estate was determined to be flats (as opposed to houses) and mainly of one or two bedrooms in size. It was agreed that if required, part of the sale proceeds from the surplus residential estate could be used to acquire a number of one bedroom units, subject to the new and the existing units not exceeding a total of 200. It was also agreed that where a block of flats formed part of the core estate and contained a size mix that included three bedroom units, these would be retained if the whole block or site was indivisible.

5. The reduction in the size of the surplus residential estate would be managed by a phased disposal programme as opportunities arose. Individual properties would be sold at open market value either to the resident officer or when they became vacant. It was agreed that the capital and revenue funds released through these disposals would be reallocated to front line policing. Details of the capital funds realised are provided under Section D Financial Implications.

6. It was agreed that the number of units leased to central government departments and agencies provided an income stream that would continue to be maintained, although the units could be recovered opportunistically if necessary.
Current position

7. Since the Strategy was approved a total of 388 units have been disposed of on the open market, mainly by auction, best consideration was obtained in all circumstances in accordance with section 123 of the Local Government Act 1972.

8. Table 1 provides an analysis of the residential estate by type and use.

Table 1 – Analysis of the residential estate (June 2010)

9. Units leased to Central Government Departments/Agencies.
These units are held on periodic tenancies and in 2009/10 produced an income stream of £100,000. These are concentrated in a single block in central London, which facilitates effective management.

10. Units leased to a Housing Association
These units are held on multiple leases across London and expire in phases between December 2010 and December 2015. In 2009/10 the income stream from these leases was £425,000. The housing association has proposed a 5 year extension to most of its leases in return for an enhanced rental stream. A proposal to enter into a further five year leasehold arrangement is being evaluated and will be the subject of a separate report to Members for consideration at a later date.

11. Units used Corporately
These units are allocated to specific business groups or senior police officers in support of operational needs.

12. Section House Accommodation
Two section houses were closed on 30 September 2010. All the appropriate procedures were taken in regard to the relocation of those officers still in occupation. HR and the Police Federation fully supported these closures.

13. The occupancy level across the residential estate has decreased since the last report, see Table 2. Most of the decrease has taken place in the last two years. The number of Units in Table 2 reflects the reduction in the size of the estate during the same period. The occupancy status for section houses is shown in the table on either side of the planned closures executed in September 2010. Even with a reduced number of units the occupancy is unlikely to return to the December 2005 level of 58%

Table 2 – Residential occupancy levels

(Note: To increase the occupancy of the estate we are trialling the use of Gilmour Section House by CO19 and Paddington Section House by CO5. The use will be on an overnight basis, aimed at reducing the use of hotel accommodation by these units, thereby significantly saving departmental costs. Both units carry firearms and need to have optimum sleep/rest therefore the central London location of both Section Houses provides a good solution.)

Recruitment and allocation

14. Traditionally recruits were provided with accommodation at Peel Centre for the duration of their 19 week training then allocated accommodation in Section Houses or units. Now recruits only spend the first 5 weeks of their training programme at Peel Centre, Hendon. The remainder of their training is undertaken on Borough. Demand for accommodation is such that Finchley Section House is able to provide temporary residential accommodation for those recruits whose home is too far away to travel to Peel Centre, Hendon on a daily basis.

15. The majority of those recruits who have completed their training at Hendon travel each day to their Borough posting either from their home or from accommodation that they have obtained in the private sector. Some assistance with accommodation is available through the MPS “Property Zone” website. Alternatively, accommodation can be obtained at one of the four section houses.

16. The pattern of recruit postings is not aligned with accommodation availability which means that at any given time some accommodation will be available but vacant because recruits are not being posted into this area. This is part of the reason for the continuing deterioration in the vacancy level.

17. Tenancies have progressively become shorter as the estate has reduced. This ensures that turnover is managed at a relatively high level in order to meet ongoing demand. However, although demand for accommodation has fallen, this does not support any rationale for giving applicants a longer tenancy. The problem of matching recruit postings with the availability of accommodation at any given time still means that many units are vacant for considerable periods of time before the cycle of postings moves to an area where units are available for allocation.

18. This pattern and level of occupancy is an inefficient use of resources. There are also associated costs such as council tax and payment of service charges that have to be paid despite the property being empty. In 2009/10 these costs are estimated to have been £100,000. As a result the plan is to continue selling vacant houses/units and maximising the use of Section Houses.

Accessibility and the core residential estate

19. London’s transport (both road and rail) is structured on an inner hub that can be defined as representing TfL Zones 1&2, with a radial network to the suburbs.

20.. Part of the core estate is located in the suburbs and it is the occupancy level of these units in particular that has been affected by the pattern of borough postings.

21.. Using TfL’s Zones 1&2 to distinguish between inner and outer London, the Authority’s core residential estate is shown by local authority in Table 7 at Appendix 1. Table 3 provides a summary.

Table 3 – Summary of core residential estate locations

Analysis

22. HR recruitment draws the majority of its applicants either from within London and the 70 mile zone around London. Many officer recruits are in fact former PCSOs who already have accommodation in the London catchment area. Many older recruits who transfer into the MPS do not relocate their families to London. There are many diverse and personal reasons for this, but they include disruption to schooling, property prices in the capital compared to the provinces and availability of mortgage funding. Instead these officers live in temporary accommodation, perhaps a privately rented flat/house share or a section house room, whilst on duty and return home only after finishing their shift cycle.

23. The recruitment and allocation trend since April 2009 is shown in Table 4.

Table 4 – Allocations of units to recruits

24. Since April 2009 the size of the recruitment intakes at Peel Centre have averaged 219, although the trend is downwards from a peak of 291 to a current low of 96.

25. A total of 24 units that are located in the suburbs would become surplus to operational need and available for disposal. The revenue saving from council tax, service charge and maintenance would be approximately £50,000 in a full year. The associated capital receipt would be in the order of £5,500,000 based on the latest asset values.

MPA Residential Allocation Criteria

26. The Residential Allocation Criteria which was reviewed and updated – 2006 following significant Consultation with the Police Federation covers the allocation of both units and section house rooms. Accommodation is offered on the basis of two year tenancies for units and 12 month licences for section house rooms, the eligibility criteria has been reviewed and changes proposed that reflect current operational and financial needs.

27. The review aims to strengthen the priority of operational need. Recent trends for accommodation as analysed above and illustrated in Table 4 would not conflict with the proposed reprioritisation.

28. The current eligibility criteria are shown in Appendix 3 and the proposed changes to prioritise support for operational need are shown in Appendix 4.

29. DoR – Property Services recommend that the Authority should continue to implement the current strategy to exit from all section houses as the opportunity arises to close/dispose of the buildings.

30. In addition, existing occupier entitlements will be respected and remain, that the update allocation criteria be implemented from 1st October 2010 and that the strategy to dispose of surplus properties on the expiry of tenancies or through a sale to an occupier continue; disposals will be based on market values and add at best consideration in line with S123 of the LGA 1972.

31. This Strategy will form one of a suite of Implementation Plans which Property Services have as part of the roll-out of the wider MPA/MPS Estates Strategy.

C. Other organisational & community implications

Equality and Diversity Impact

1. There are no new issues that arise from this review of the Residential Strategy Update Paper.

2. All allocations are made on the basis of the Residential Allocation Criteria which refers solely to the eligibility of an applicant’s housing need.

3. The proposed change in emphasis by prioritising operational need reflects a significant downward trend in the eligible demand for accommodation by recruits.

Consideration of MET Forward

4. In accordance with Met Forward and specifically the drive to provide better value for money as part of Met Support, these proposals will enable the release of capital to support the MPA’s Capital Programme and minimise unnecessary revenue expenditure.

Financial implications

Revenue

5. There are not considered to be any adverse budgetary implications from the continued implementation of the Strategy. In 2009/10 the residential rent income from units totalled £375,000

6. Going forward this income stream would be unaffected by the target reduction in the core estate. The refurbishment programme has more recently focused on units within inner London. The associated revenue savings of £50,000 at 2009/10 prices would be realised by no longer funding the under utilised stock.

7. The Allocation Criteria’s reprioritisation in favour of operational need and the proposals with regards to ACPO residential portfolio and accommodation needs will realise new rental income of £71,000 per annum for the Authority. This supports revenue savings – ACPO of £80,000 per annum. It is expected to extend the provision of ACPO accommodation thereby increasing income to the MPA and reducing costs to ACPO over the next 12/18 months. This is also covered in Exempt Appendix 2 .

8. The savings that will result in the planned activities, as set out above, have all been included in the approved 2010/13 Business Plan.
Capital

9. To date, 388 residential units have been sold generating the following receipts:

The value of units sold is £120m, analysed as follows:

• 2006 : £19m
• 2007 : £57m
• 2008 : £8.5m
• 2009 : £35m
• 2010 (to May) : £0.5m

10. Capital receipts amounting to approximately £5,500,000 will be released to support other corporate operational objectives. Due to current vacancies within the core estate approximately £2,500,000 would be realisable in 2010/11 with the balance coming forward over the next two to three years as tenancies expire. Table 5 summarises the proposed receipts on an annual basis. An allowance of six months has been made between a tenancy expiring and the MPA subsequently obtaining vacant possession (via a possession hearing in court if appropriate).

11. The capital receipts anticipated from the disposal programme as set out above have been factored into the capital receipts budget as set out within the latest Seven Year Capital Programme as approved in the 2010/13 Business Plan.

Table 5 – Forecast capital receipts arising from a reduction in the size of the core residential estate

12. The MPA is under an obligation to achieve best value on disposal and maximising receipts would support meeting front line operational building needs.

Legal implications

13. By virtue of s146A of the Local Government Act 1972, the MPA has the power to dispose of property under s123 of that Act for the best consideration that can be reasonably obtained.

14. The recommendation in this report is consistent with the MPA’s overall policy in respect of the residential estate, which over the number of years has been to move away from direct provision, and instead release the capital tied up in the estate assets (subject to a core minimum) in order for it to be used to meet operational policing needs.

15. Use of released capital in the manner described in paragraph 11 above, is considered to be consistent with meeting the MPA’s core function of ensuring the delivery of an efficient police service, under s6 of the Police Act 1996.

16. Decisions relating to individual property disposals will still be required to be executed in accordance with the approved strategy, internal governance procedures and processes, and the Financial Regulations set out in Part E of the MPA’s standing orders.

Environmental implications

17. There are no specific environmental implications as a result of the recommendations.

Risk implications

18. Unless the Allocation Criteria is refocused on operational need the trend towards lower demand for units will result in more units being vacant. The associated costs for holding the under utilised stock will be a drain on financial resources with no tangible benefits in return and will expose the Authority to public criticism for an inappropriate use of resources and assets.

D. Background papers

• MPA Finance Committee Report – Residential Estate Strategy 16 February 2006
• DoR – Property Services Allocation Criteria, 12th Edition July 2007
• MPA F & R Estates Update Paper, 17 June 2010

E. Contact details

Report author(s): Jane Bond, Director of Property Services, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1

Table 6 - Existing residential estate by local authority

Appendix 2

This appendix is exempt

Appendix 3

Extract from the current Residential Allocation Criteria

Eligibility

1.2 Applications will be considered for an allocation of accommodation on the following basis:

a) Applicants who are police recruits undergoing training and who do not own a property or hold a tenancy, and whose partner (if any) does not own residential property or hold a residential tenancy within the geographic area of the free travel zone (i.e. approximately 70 miles radius of central London.

b) Exceptional welfare cases, subject to the support of Occupational Health and approved at a session of the Residential Appeals Panel

Appendix 4

Proposed substitute for the eligibility section in the Residential Allocation Criteria

Eligibility

1.2 Applications will be considered for an allocation of accommodation on the following prioritised basis:

a) MPS operational or corporate need.

b) Applicants who are police recruits undergoing training and who do not own a property or hold a tenancy, and whose partner (if any) does not own residential property or hold a residential tenancy within the geographic area of the free travel zone (i.e. approximately 70 miles radius of central London.

c) In exceptional circumstances only, to officers or staff who have critical welfare needs, subject to the support of Occupational Health and approved at a session of the Residential Appeals Panel.

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