Request for authority to dispose of surplus site in Bromley

Report: 13
Linked to exempt item 17
Date: 15 February 2007
By: Acting Director of Resources on behalf of the Commissioner

Summary

This report requests authority for the disposal of the former residential quarters known as Flats 1-24 Broomleigh, Tweedy Road, Bromley, London BR1 3PS.

A. Recommendations

That members approve the unconditional sale of the MPA’s interest in this property to the highest bidder for the sum shown in exempt Appendix 1.

B. Supporting information

1. The block of 24 flats has been made surplus to requirements by changes in the MPA’s contractual obligations with regard to the provision of police staff housing, together with the revision of the MPA’s residential estate, and subsequent implementation of its revised residential accommodation strategy.

2. The site has been marketed openly by informal tender over the last few months, with advertisements appearing in the national property press. Best bids, unconditional upon the receipt of planning permission, were invited.

3. Nineteen bids were received in the first stage of the tender, including one which was conditional upon obtaining planning permission. Seven of these bidders were then short listed for the second stage of bidding. The two highest bids received at this round were extremely close when potential future sales overage was taken into account. As a result a third stage was called requesting the top two bidders to bid on the same sales overage basis. The final results are shown at Exempt Appendix 1.

4. Conditional bids were not invited as there are a number of disadvantages to the MPA in accepting an offer which is conditional upon planning:

1. There is no guarantee that the scheme as proposed will be granted planning permission.
2. If planning consent is not granted the purchaser will either seek to renegotiate the purchase price (to a lower figure) at a later stage, or may withdraw from the purchase altogether.
3. Any prolonged downturn in the commercial or residential market will affect a developer’s profit margin and may adversely influence a decision to proceed with the purchase.
4. There is a high degree of risk in accepting a conditional bid in this type of market, where there is no certainty of realising the proposed purchase price.
5. Funds would not be received until receipt of planning permission and no certainty can be placed on the timescales to obtaining planning consent

5. The recommended unconditional bid represents certain income receivable now. All bids received were made on the basis that a standard forward-sale clawback clause was included, to enable the MPA to benefit in the event that the purchaser sells on at a price in excess of that paid to the MPA.

C. Race and equality impact

1. There are considered to be no equality or diversity issues arising as a result of this disposal. The Local Planning Authority is also under a duty to consider such matters when a planning application is being reviewed.

2. In the event of residential redevelopment of the site, the provision of key worker or social housing accommodation at this site will need to meet the requirements of the Local Planning Authority, as and when granting planning consent for development.

D. Financial implications

1. The proceeds of this transaction have been included in the Property Services Capital Receipts budget 2007/2008. In accordance with asset management practice and the agreed MPA/MPS Estates Strategy, funds released from the disposal of surplus assets or assets that are no longer fit for use, while being part of the corporate capital programme, are intended to primarily support recycling and re-investment in the estate.

2. Sales overage has been agreed which may potentially yield additional receipts to the MPA if the property is developed and individual units sold at a level above the agreed threshold.

E. Legal implications

1. Apart from normal property contract matters there are no specific legal implications to report save as already noted.

2. Appropriate sales overage provisions have been agreed to protect the Authority.

F. Background papers

• Residential Estate Strategy Review – MPA Finance Committee 16th February 2006

G. Contact details

Report author: Alan Croney – Director of Property Services

For more information contact:

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

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