Estates update

Report: 9
Date: 7 December 2004
By: Commissioner

Summary

This report updates members on the latest information on Estate and Property Services matters and includes specific proposals to reinstate the sale and purchase of residential units to facilitate sound property management given the time needed to bring forward a new residential strategy.

A. Recommendation

That

1. Members note the information on current estate issues.
2. Members approve the new, interim, delegated power to the Director of Property Services to reinvest residential sale proceeds in “block purchases” to replace disposed of historic stock based upon a “unit” cost rather than “block” cost assessment. (Paragraphs 10-15) The interim delegated power is dependant upon committee receiving the residential estate strategy and is therefore proposed to be for 6 months terminating 30 June 2005.

B. Supporting information

Introduction

1. At the Finance Committee on 24 October 2002 it was agreed that a report on estates issues would be produced at alternate meetings. Source documents can be found in previous relevant reports and also in the Members' Library. This report follows on closely to the September 2004 report given the timing of meetings.

Trenchard House, Soho

2. The unconditional sale of this former section house was verbally reported to the Committee in September and is confirmed for the record. The purchaser is a group led by English Partnerships.

Former MPA residential property short term let to Housing Associations

3. The dispute with Housing 21 is still being considered by an appointed expert and it is therefore not possible to comment further at this stage. A full report will be made as soon as the Expert’s decision is available.

Central London Estate

4. Plans to relocate units to Empress State are progressing well and in accordance with the Committees approval of the project the fit out works are now underway. First occupation is expected in December 2004.

5. Proposals to refurbish Cobalt Square, to house operational units, are being developed with works due to commence early in the New Year. Some units have already located on a temporary basis to ease the pressure on space in New Scotland Yard.

Action under delegated powers (Director of Property Services)

6. The following significant items have been actioned under delegated powers.

• Numerous operational licenses/indemnities and short term/ operational matters have been signed under delegated powers (particularly in relation to Notting Hill Carnival).
• A number of day to day estate matters have been signed under delegated powers.
• The agreement for the first “patrol base” for Waltham Forest BOCU has been signed.

Interim changes to facilities management outsourced contracts

7. Transition is now largely complete.

Private Funding Initiatives (PFI) projects

8. Demand levels at Gravesend are still high and are under consideration in relation to budgets. Ongoing contractual discussions around certain outstanding staffing issues are close to resolution.

Safer neighbourhoods

9. Good progress on sites and locations continues.

Residential estate

10. The delay in bringing forward the review of the residential estate strategy was reported to Committee in September. Given the delay it is considered appropriate to reinstate the normal programme to adjust the estate content to meet sound estate/asset management criteria. These changes are self funding and tend, over time, to increase the number of units available on the following basis/criteria:

• Sale of legacy units now outside the MPA area.
• Sale of stand alone units to minimise management and maintenance costs.
• Sale of old units that have high maintenance costs and which no longer offer standards expected in 2004.
• Sale of units in expensive areas which consequently make moves up the property ladder difficult – particularly for family occupiers with school age children.

11. No sale takes place unless vacant possession is present (see paragraphs 12-15).

12. Proceeds are then reinvested in new units (after costs of sales/purchases) without the drawbacks mentioned above. In particular, we are seeking to increase the estate provision in smaller units (studios and one bed units) in affordable parts of London to assist officers to move on into the mainstream property markets (renting or buying). Where possible new units are purchased in “blocks” to minimise management costs. New officers and recent joiners only have an average of a three-year “allocation” and are not provided with permanent accommodation.

13. In certain cases we do sell units to current occupiers where a block or location is not earmarked for retention under the asset management assessment approach. Sales in these cases are at Open Market Value but disregarding any occupiers improvements. As there is a saving in such sales on fees and related costs this is reflected in the offer prices on a shared basis (50/50). Where a unit is earmarked for sale under this approach the current/present occupier will be advised and be given an opportunity to purchase should they so wish. If not, sale will be deferred until the MPA has vacant possession. This is considered equitable and reasonable.

14. In some rare cases where a holding or block of units has been “broken up” under previous (and no longer applicable) “Right to Buy” legislation we will also repurchase properties where, in asset management terms, it is sensible so to do.

15. Members may be assured this is not a wholesale or universal policy to sell. Most transactions will be carried out under powers delegated to the Director of Property Services. This report seeks Member approval to deal with block purchases to replace single legacy unit sales on a unit base rather than assessing delegation on a block basis. The market for such block purchases is highly beneficial to the MPA at present and it is considered appropriate to benefit from the current housing market position.

Property capital programme

16. The programme remains broadly on track and a number of smaller projects are being brought forward to fill any gaps caused by delays or rephasing. Most of these small projects are within the delegated powers of the Director of Property Services or remit of the Resource Approval Committee of the MPS. It is not considered appropriate to expedite larger projects, as timing for approvals would not allow them to start within 2004/05. Some modest over spend may occur and this has been agreed with the Director of Resources as appropriate and can be handled within overall funding envelopes given recent property disposals. Budgets will be updated as required under the Capital Programme part of the Budget Monitoring Report and submitted to this Committee for approval.

C. Race and equality impact

1. Any equality and diversity implications arising from the matters in this report are being assessed as part of the individual project or item and will be reported separately to the Committee at the appropriate time.

2. The reported action on active estate/asset management of the residential units owned by the MPA could potentially favour certain occupiers and residents and deny others the opportunity to participate. No equality or diversity data is available to explore this further. The policy is asset based and is not regarded as an intrinsically discriminatory issue but Members should be aware of potential issues presently indefinable.

D. Financial implications

1. Any financial implications from the above items will be reported in full to the relevant committees at the appropriate time. Unless otherwise stated no new implications are anticipated; or are already within existing approved budgets.

2. The residential estate issues raised will be self funding but may require short term use of reserves to cover the time line gap between sales and purchases. The sums involved will be relatively modest and are considered not to raise any financial concerns.

E. Legal implications

1. Contract or other documentation in these matters will contain all the usual commercial terms and provisions, and no unduly onerous or unusual terms – except where reported otherwise.

2. Significant risks have been evaluated and considered and steps taken to minimize or manage such risks.

3. All reported matters are considered to be within the powers of the authority.

4. All/any disposal represents the best consideration that can reasonably be obtained – save where stated otherwise.

F. Background papers

None

G. Contact details

Report author: Alan Croney, Director of Property Services, MPS

For information contact:

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

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