Acquisitions and disposals

Policy

Introduction

Procedure for acquiring property3

Establish the need3

Availability check4

Establish the means of acquisition4

Purchasing a property as freehold4

Purchasing a property as leasehold6

Hiring a property8

Purchasing a property as an urgent requirement8

Procedure for acquiring property10

Appendices11

Guidance note for valuers - acquisition of freehold, long leasehold land or property11

Guidance note for valuers - taking of land and property for rent15

Disposal of land or property19

Disposal of freehold land or property 24

Disposal of leasehold land or property 35

Introduction

  1. The aim of this policy is to ensure that Cornwall Council is able to maximise and focus the use of property resources to effectively and efficiently meet and deliver the Council’s objectives and commitments.
  2. The policy seeks to engender a consistent protocol in the acquisition and disposal of property interests by the Council (and its partners in property interests) which is accountable and transparent and which accords with the Council’s constitution and financial regulations.
  3. It is essential that all council services secure proper professional advice from the head of propertyand adhere to this policy in order to protect the Council from taking on unacceptable risks and liabilities and ensure compliance with all relevant property related legislation.
  4. The rationale for having a council wide policy is:

•To ensure consistency and compliance with all relevant property related legislation and to ensure that best value is achieved in negotiating property transactions. To achieve this:

–All property transactions must come through property services and be conducted by property professionals supported by legal services

•To deliver efficient and effective property solutions

•To ensure the delivery of the Council's corporate priorities

  1. For the avoidance of doubt the hiring of hotel conference suites, village halls etc are specifically excluded from this policy where it is clear that no property interest[1] is being created.

Procedure for acquiring property

Establish the need

  1. Is the requirement for additional property identified in the service plan\property strategy\children, schools and families directorates’asset management plan or other corporate strategy[2]?
  2. If not, is it an urgent requirement which is required before the following years plans/strategies are due to be approved? If yes, see purchasing a property as an urgent requirement.

Availability check

  1. A site within the Council's ownership shall always be chosen unless good reasons dictate otherwise. Generally, the re-use of existing property owned by the Council or other public sector agency is more cost effective and sustainable than new build or adapting/refurbishing private sector properties.
  2. Does another council service or public sector organisation have surplus land or property that could be used? Check the register of surplus public sector land at for surplus land (defined as ‘vacant land or property that is no longer required for the purposes of the public body’).
  3. Conduct a thorough search of private land and property through direct and indirect enquiries either directly or through an agent.

Establish the means of acquisition

  1. Is the property to be;

•Purchased as freehold (i.e. the buyer of the property owns both the property and the land on which it is built)

•Leased (where there is a limited time span for the occupation of the property, a rent is paid and at the end of the lease the property reverts back to the owner of the freehold)

•Hired (e.g. for a short, specific period of one or two days for the provision of training etc)

Purchasing a property as freehold

  1. The head of propertywill inspect the property and complete aproperty procurement - initial inspection record and option appraisal summary. This provides a full appraisal of the statutory, economic and suitability factors which need to be considered prior to a property being acquired, protecting the Council from civil or statutory liabilities and ensuring that the property is cost and energy efficient[3].
  2. The head of propertywill determine if the project is in line with the asset management plan for the whole of the property estate and does not conflict with any long term aims[4].
  3. The head of propertywill survey the property and provide a feasibility study and estimates for the capital works required to bring it up to the Councils’ standards[5].
  4. The head of propertywill carry out an option appraisal; for projects costing over £0.5m, a detailed option appraisal based on whole life costing will be completed by the seconded accountancy teams, service managers and property services. This appraisal must be approved by both the head of service and group accountant and cleared through the corporate finance team. A simplified scheme appraisal process shall be completed for schemes costing less than £0.5m[6].
  5. The head of property will provide a budget estimate for running costs (including rates) and an assessment of the maintenance costs per annum, averaged over the whole life of the asset. This charge must be agreed by both the head of propertyand the head of service. Agreement will also be made by the head of serviceto cover any material costs highlighted by periodic property reviews[7].
  6. The head of servicewill confirm there is revenue support available for running costs (including repairs and maintenance).
  7. The head of servicewill identify capital funding sources for the acquisition and the works required to bring the asset up to the Councils’ standards.
  8. Approval for the capital expenditure will be sought from[8]:

•Asset management group (by the head of service)

•Corporate management board (by the head of service)

•Capital management advisory group (by the head of service)

•Executive (by recommendation from the capital management advisory group)

•Council (by recommendation from the executive)

  1. Where the capital payment proposed to be made does not exceed £1m and funding has already been provided within the approved capital programme, the head of property may, in consultation with the head of service, council solicitor and county treasurer authorise and approve the acquisition[9].
  2. The head of propertywill negotiate terms for the acquisition. If terms cannot be negotiated and powers of compulsory purchase are available to the Council, the head of propertywill inform the head of service and the council solicitor will, once member approval has been obtained, proceed with the making of a compulsory purchase order[10].
  3. The council solicitor will complete the necessary documentation.
  4. Upon completion, the head of service will transfer the revenue support budget to the resources directorate to cover running costs (including maintenance and repairs)[11].
  5. The head of propertywill notify relevant parties of the acquisition to ensure that the Council’s records are updated and the property is added to maintenance and inspection programmes.
  6. The head of propertywill carry out a post scheme evaluation review for all schemes over £0.5m (and a sample of other capital projects) at 3 months, 15 months and 3 years after completion. This will involve the end user, the head of service, property services and the county treasurer’s directorate[12].

Purchasing a property as leasehold

  1. The head of propertywill inspect the property and complete aproperty procurement - initial inspection record and option appraisal summary. This provides a full appraisal of the statutory, economic and suitability factors which need to be considered prior to a property being acquired, protecting the Council from civil or statutory liabilities and ensuring that the property is cost and energy efficient[13].
  2. The head of propertywill determine if the project is in line with the asset management plan for the whole of the property estate and does not conflict with any long term aims[14].
  3. The head of propertywill survey the property and provide a feasibility study and estimates for the capital works required to bring it up to the Councils’ standards[15].
  4. The head of propertywill carry out an option appraisal; for projects costing over £0.5m, a detailed option appraisal based on whole life costing will be completed by the seconded accountancy teams, service managers and property services. This appraisal must be approved by both the head of service and group accountant and cleared through the corporate finance team. A simplified scheme appraisal process shall be completed for schemes costing less than £0.5m[16].
  5. The head of property will provide a budget estimate for running costs (including rates) and an assessment of the maintenance costs per annum, averaged over the whole life of the asset. This charge must be agreed by both the head of property and the head of service. Agreement will also be made by the head of serviceto cover any material costs highlighted by periodic property reviews[17].
  6. The head of servicewill confirm there is revenue support available for running costs (including repairs and maintenance).
  7. The head of servicewill identify capital funding sources for the works required to bring the asset up to the Councils’ standards.
  8. Approval for the capital expenditure will be sought from:

•Asset management group (by the head of service)

•Corporate management board (by the head of service)

•Capital management advisory group (by the head of service)

•Executive (by recommendation from the capital management advisory group)

•Council (by recommendation from the executive)

  1. Where the annual rental (proposed or anticipated) does not exceed £100,000 and funding has already been provided within the approved capital programme, the head of property may, in consultation with the head of service, council solicitor and county treasurer authorise and approve the taking of leases, licences, dedications and easements of or over any land (including buildings) whether by way of valuable consideration or exchange[18].
  2. The head of propertywill negotiate terms for the acquisition[19].
  3. The council solicitor will complete the necessary documentation.
  4. Upon completion, the head of service will transfer the revenue support budget to the resources directorate to cover running costs (including maintenance and repairs)[20].
  5. The head of propertywill notify relevant parties of the acquisition to ensure that the Council’s records are updated and the property is added to maintenance and inspection programmes.
  6. The head of propertywill carry out a post scheme evaluation review for all schemes over £0.5m (and a sample of other capital projects) at 3 months, 15 months and 3 years after completion. This will involve the end user, the head of service, property services and the county treasurer’s directorate[21].

Hiring a property

  1. Periodic hiring of rooms or even whole premises for meetings, training or other one off purposesdo not fall under the scope of this policy, but may have implications for other areas of policy such as accessibility or fire.
  2. Advice must be sought from the valuer where the arrangement takes on a more regular pattern and a hiring might slip into an informal lease with its attendant legal implications and pitfalls.

Purchasing a property as an urgent requirement

  1. New projects/programmes for inclusion in the capital programme may only be brought forward by the portfolio holder when at least one of the following applies:

•The project is a key priority and will be met from existing revenue budgets or any uplift awarded through the forward budget process

•The project provides savings, e.g. from invest to save schemes

•The project will generate additional income[22]

  1. Any schemes which arise during the year outside the normal budget process will only be considered for borrowing or funding from central resources if they meet a key service need and one or more of the following criteria:

•The location of the property to be purchased will bring added value to the estate

•The requirement for the asset is an extraordinary service demand which could not be anticipated in the normal planning processes

•There is a limited time span when the opportunity is available

•There is no flexibility within the service’s existing capital or revenue allocations to enable the purchase

  1. Schemes deemed urgent will still require a feasibility study to be completed. If there is not enough time for this to be completed before an executive report, the approval shall be given in principle only, until a feasibility study can be completed[23].
  2. In the case of urgency where it is not reasonably practicable to obtain the decision of the executive to acquire property, the chief executive or authorised deputy may, after consultation with the leader, the relevant portfolio holder and the county treasurer, authorise the head of property to negotiate for and acquire by agreement (whether at public auction or otherwise), property required by the Council for any purpose, provided that they shall report to the executive as soon as possible any such action taken[24].
  3. The use of compulsory powers of purchase is not delegated to any officer of the Council and shall only be exercised by the executive or, in case of emergency, by the leader and relevant portfolio holder, acting on advice from the chief executive, head of legal and democratic services and the head of property[25].

Procedure for acquiring property

Appendix A

Guidance note for valuers – acquisition of freehold/long leasehold land and property[26]

This section deals with the freehold or long leasehold acquisition of land and property by the Council, the latter being defined as any leasehold interest where a premium is paid at the commencement of the Council’s period of ownership in full or partial substitution for the payment of annual rent. Where the context so admits in this section, freehold is to include long leasehold as now defined.

Delegated limits

The head of property has delegated power to authorise acquisitions up to a maximum of £1m (the purchase price).

Principles of acquisition

The business case for the acquisition of a freehold interest needs to be prepared. Close liaison with the service seeking accommodation is needed to explore alternatives and accurately identify requirements. Option appraisal will identify the most appropriate property types and potential properties. It is necessary to ascertain that there is no suitable property already in the ownership of the Council and whether any other available property in the ownership of other public sector organisations might be suitable. If nothing is available then conduct a thorough search of privately owned property using all appropriate sources.

Pre-acquisition checks

When acquiring land with existing buildings or for new buildings, the following shall be observed:

•Check the availability and likely price of the land

•Check general accessibility to the site for all users, especially in respect of public transport

•Check legal title and restrictive covenants that might prevent anyproposed development

•Ensure that the site is capable of being developed as required (i.e.are services available, are ground conditions suitable, is the density adequate etc) or that the buildings are suitable for the required conversion - check that the utilities capacity is sufficient without expensive upgrades

•Ensure the scheme is capable of implementation - check with the planning service that planning consent for the required use will be granted and with the highways service that access arrangements for the proposed development are adequate

•Surveyors will use the pro forma report; property procurement - initial inspection record and option appraisal summary

Business case

Before capital expenditure is committed, a business case needs to be prepared by the head of service. An appropriate option appraisal then needs to be carried out by the head of property, in conjunction with the head of service once specific properties have been identified. Factors such as sustainability, BREEAM rating and a full environmental assessment shall be taken into account.

Planning

Once the preferred property has been identified, it is necessary to determine whether the current planning consent will permit the proposed use. If not, then consult with planners and, if necessary, secure the required planning consent or make completion of acquisition conditional upon securing consent. The head of propertywill assess the impact of any planning conditions and/or obligations such as section 106 agreements.

Site investigation report

Ifland is to be acquired, preliminary investigations to establish the presence of obvious problems such as contamination, invasive plants, landfill, mine workings, badgers and bats etc will avoid time being wasted at a later stage of negotiations. If an existing building needs to be demolished to allow development then approximate costs shall be assessed, particularly if the building may contain asbestos or other deleterious materials. Factors such as underground fuel storage tanks or the presence of any form of contaminated material also need to be considered.

Early engagement with property servicesis vital in order to identify any potential problems, to assess compliance with the Construction (Design and Management) Regulations 2007 and Disability Discrimination Act requirements and to examine the energy performance certificate. It will also be necessary to check the current fire risk assessment and any certificates relating to the electrical installation. In each case, aproperty procurement - initial inspection record and option appraisal summary shall be completed to ensure consistent assessment of the relevant factors.

Services/utilities report

The head of propertywill ascertain whether all services likely to be required are either connected or readily available and what the capacity of those services is. If additional capacity is required, then it is essential to assess the cost of delivering that extra capacity. In addition, if land is being acquired for development it is necessary to determine whether any services are present which might need to be diverted.

Title

If the property is registered then an official copy of the register and title plans can be obtained from HM Land Registry. If the interest is unregistered, then any relevant documentation will be available via the vendor’s solicitor once both parties’ legal representatives have been instructed (this search will also reveal the presence/existence of legal interests in the land such as easements or wayleaves).