Request for approval to dispose of Rennet’s Wood House, Eltham, Greenwich

Report: 11
Date: 15 July 2010
By: Director of Resources on behalf of the Commissioner

linked to exempt item 19

Summary

This report requests Members approval to dispose of the long leasehold interest in Rennet’s Wood House, Bexley Road, Eltham, Greenwich, London, SE9 2NE following an open market tender.

A. Recommendations

That Members

1. Approve the disposal of the long leasehold interest in Rennet’s Wood House, Eltham at the value and to the bidder identified in Exempt Appendix 2 following an open market tender.
2. Note the disposal is consistent with the MPA Residential Estates Strategy and the approval in principle decision made by the Committee on 11 February 2010.
3. Note that the capital receipts from the disposal will support the 2010/11 Capital Programme.

B. Supporting information

1. The MPA/MPS Residential Estate Strategy was first approved on the 16 February 2006 and seeks to reduce the size of the existing residential estate to a maximum of 200 units, by disposing of those properties considered surplus to operational requirements with the funds generated through sales being used to support future capital programmes.

2. Rennet’s Wood House is a block of 12 flats constructed in the 1960s located in Eltham in the London Borough of Greenwich close to its border with Bexley. The flats are arranged over three floors on a site of 0.52 acres. The MPA hold a long lease on the 12 flats which expires in January 2054. The freehold interest is owned by The Crown Estate. Ten of the flats are vacant. The other two flats, Flat 6 and Flat 11, are occupied under long residential subleases granted by The MPA. The property has never been used for operational police purposes and there is no public facing front counter and no blue lamp. The property is considered surplus to need and can be released.

3. External consultants Drivers Jonas provided formal valuation advice that the MPA would achieve the greatest potential disposal receipt if its leasehold interest was disposed of in a joint sale with the freehold interest rather than an individual sale of its leasehold interest or sale of the 10 remaining flats on individual leases. Further detail is included in Exempt Appendix 1.

4. The property was openly marketed in a campaign with two other MPA residential properties in March/April 2010, offering for sale the combined interests subject to the two subleases. A marketing board was situated at the property and advertisements were placed in the national property press and relevant local press. Knight Frank as agents acting on behalf of the MPA hosted a dedicated marketing website and distributed particulars of the property to interested parties.

5. Bids were invited to be received by the agents no later than 12pm on 20 April 2010. All bids were invited an unconditional basis and subject to a standard forward-sale clawback clause, to enable the MPA to take benefit in the event that the purchaser subsequently sells the property on at a price in excess of that originally paid to the MPA. Bidders were also advised to consider including provision for additional sales overage or planning clawback in their bids.

6. Five bids were received in the first stage of the tender. Three of the bids were solely for Rennet’s Wood House two of the bids were included within bids on the other MPA properties being simultaneously marketed. The results of the five bids are shown in exempt Appendix 1. The bids were then evaluated to determine which bids offered the highest value (taking into account any additional sales overage or planning clawback) from a credible purchaser (taking into account the availability of funding) and a shortlist of four were invited to submit their best and final offers. Four compliant bids were received by the deadline of 5.30pm on 29 April 2010 and the results are shown in exempt Appendix 2.

7. With external advice from Knight Frank, Property Services recommend Members approve the sale of the property to the highest bidder identified in Appendix 2. Should approval be granted Property Services will proceed with the completion of this matter and report the transaction in the next quarterly Estate Update Paper.

C. Race and equality impact

There are considered to be no equality or diversity issues arising as a result of this disposal.

D. Financial implications

Capital

1. The target for Capital Receipts for the 2010/2011 financial year is set at £20 million. This target is to be achieved through the disposal of operational and residential properties that are surplus to requirements. These receipts will be allocated to 2010/2011 target.

2. If approved, the receipts generated from the disposal of the freehold will be allocated to 2010/2011 capital programme.

Revenue

3. The revenue costs related to the maintenance of this property based on 2010/11 costs are detailed below. Maintenance/repair works have been kept to a minimum.

4. The revenue savings that will be delivered from this disposal are already included within Property Services budgets as set out in the 2010/13 Business Plan. If the property is retained additional revenue funding will need to be provided in the 2011/14 planning process.

E. Legal implications

1. By virtue of s.146A of the Local Government Act 1972, the Metropolitan Police Authority (“the MPA”) has the power to dispose of land under s.123 of that Act as if it were a ‘principal council’, and also has the power to do anything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of its functions under s.111 of that Act as if it were a ‘local authority’.

2. Any disposal other than by way of a ‘short tenancy’ (i.e. a lease of less up to 7 years’ duration) must, unless the Secretary of State consents, be for the best consideration that can reasonably be obtained. The overriding consideration in determining what constitutes the best consideration that can reasonably be obtained is the commercial value of the disposal to the authority (R (Lemon Land Ltd) v Hackney LBC [2001] EWHC Admin 336).

3. Property Services consider the recommended disposal achieves best possible consideration, having utilised an open and transparent marketing exercise and having sought professional advice.

4. The MPA, in exercising its discretion to dispose of the property, must have regard to its obligation to do so fairly having regard to established policy and procedure. The recommended disposal by way of sale of the long leasehold is considered to be consistent with the Residential Estate Strategy approved by the Finance & Resource Committee in February 2006, and compliant with the MPA’s Standing Orders relating to Property disposals, set out in section 10 of Part F and section 8.3 of Part E.

5. External lawyers have been instructed (via DLS - MetLaw) to complete the conveyancing and to protect ensure the MPA’s interests.

6. The report and appendices are considered to contain exempt information in accordance with paragraph 3 of the Local Government (Access to Information) (Variation) Order 2006, as it relates to information relating to the financial or business affairs of any particular person (including the authority holding that information).

F. Environmental implications

G. Background papers

• Residential Estates Strategy - MPA Finance Committee- 16 February 2006 (Exempt)
• Request for Authority to Dispose of Surplus Properties in 2010/2011 - MPA Finance and Resources Committee - 11 February 2010

H. Contact details

Report author(s): Neil Webster, Interim Director of Asset Management

For more information contact:

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

Abbreviations

• DLS – Directorate of Legal Services
• MPA - Metropolitan Police Authority
• MPS - Metropolitan Police Service

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