APPENDIX B4
Acquisition and Disposal Policy for Land and Property
Contents
1.0 Introduction
2.0 Acquisition of land and property
2.1 Options for acquisition of land and property.
2.2 Compulsory Purchase
2.3 Acquisition of land or property for service delivery.
2.4 Acquisition of land or property for investment purposes.
2.5 Acquisition of land for strategic acquisition for future development in line with Council priorities and objectives.
2.6 Financial criteria for acquisitions
2.7 Money Laundering
2.8 Internal and External Audit
3.0 Disposal of land and property
3.1 Options for disposal of land and property
3.2 Determination of the method of disposal.
3.3 Open Market disposal
3.4 Criteria for consideration of a private treaty sale
3.5 Joint development
3.6 Disposal by short tenancy
3.7 Obtaining best consideration and disposal at an undervalue
3.8 Determination of sites for disposal or redevelopment
3.9 Definition of a site for redevelopment
3.10 Disposal of sites identified as suitable for redevelopment
3.11 Definition of surplus asset for disposal
3.12 Disposal of surplus asset by freehold or leasehold interest
3.13 Financial criteria for disposals
3.14 Community Asset Transfer
3.15 Valuations for disposal for inclusion in Asset Register
3.16 Money laundering
3.17 Internal and External Audit
Appendix
A Statute law relating to acquisition and disposal
1.0 Introduction
1.1 The purpose of the Council’s Acquisition and Disposal policy is to set out the principles and rules by which the Council will acquire and disposal of land to inform Officers, Members and also other interested parties.
1.2 The Council’s Scheme of Delegation for Land and Property sets out the financial levels for delegation in the decision making process.
1.3 This policy together with the Scheme of Delegation are key documents in the overall management of the Council’s land and property portfolio.
1.4 To be read in conjunction with the Scheme of Delegation to Officers and Members, Financial Rules, Anti money laundering policy, Procurement Rules and Strategy, the Capital Strategy and the Asset Management Plan including property key considerations and property appraisal framework.
1.5 Any Service Manager considering or identifying the need to acquire or disposal of land or property for service delivery purposes must consult the Property Services Manager at the earliest opportunity and prior to any commitment being made on behalf of the Council.
1.6 This policy deals with acquisition and disposal in line with scheme of delegation. Any acquisitions or disposals proposed which fall outside this policy would need to be reported on an individual basis to Cabinet or Council for approval, dependant on the values involved.
2.0 Acquisition of land and property
2.1 Options for acquisition of land and property.
2.1.1 The Council can choose to acquire property in any of the following forms:
· Freehold
· Leasehold (more than 7 years)
· Short tenancy (less than 7 years)
2.1.2 The reasons for the Council to acquire land or property would be:
· Service delivery
· Investment
· Strategic acquisition for future development in line with Council priorities and objectives
2.1.3 Prior to the purchase of any site a full option appraisal, including whole life costing, should be carried out which would involve appraisal of all the options for delivery of the final objective. Consideration should be given to all other Council owned property and its suitability prior to any acquisition.
2.1.4 All option appraisals should take into account the on-going cost of ownership of the property over its life time and ensure that any decision to acquire land is informed by both the capital and revenue implications of ownership and the risks associated.
2.1.5 VAT implications must be considered as part of the appraisal process prior to any decisions being made. Financial Services to be consulted with regard to VAT implications.
2.1.6 If the Chief Executive seeks to exercise his/ her emergency powers under Council Procedure Rule 38 for the acquisition or disposal of property, the decision must only be taken following consultation with the Asset Management Group.
2.2 Compulsory purchase
2.2.1 The Council may consider, where appropriate the acquisition of land through its compulsory purchase powers.
2.2.2 Powers of Compulsory Purchase are conferred on public authorities by legislation. They enable the authorities authorised to compulsorily purchase land which is required to carry out a function which Parliament has decided is in the public interest. These powers will be used where the owner or occupier of the land required is not willing to sell by agreement or where agreement cannot be achieved.
2.2.3 There are a number of stages in the Compulsory Purchase Procedure and the approval of the relevant Government Minister is required before such powers can be used. When deciding whether or not to exercise Compulsory Purchase powers the Council must take into account all relevant considerations (including, but not exclusively), the rights of the affected landowner(s) under the Human Rights Act 1998.
2.2.4 Where Compulsory Purchase powers are used, the land owner or occupier is generally entitled to compensation.
2.2.5 Legal Services to be consulted at the earliest opportunity if consideration is being given to acquisition in this way.
2.2.6 Authority for the decision to pursue a compulsory purchase of any land or property would be taken by Cabinet/ Council as necessary.
2.3 Acquisition of land or property for service delivery.
2.3.1 Land or property may be acquired for the purpose of service delivery in line with the scheme of delegation, subject to the following criteria:
i. Authority from Corporate Team confirming that the level of service delivery is required.
ii. An option appraisal has been carried and reported to the Asset Management Group, the result of which identifies the requirement for the land or property for service delivery.
iii. The on-going revenue costs are contained within an approved budget which has been confirmed as appropriate by the Financial Services and Audit Manager, and/ or an appropriate budget is approved by Cabinet.
iv. Where acquisitions will result in an asset to be recognised on the Council’s Balance Sheet; the purchase must be subject to the Council’s Capital Appraisal Scheme and a capital budget approved by the Cabinet or Council in accordance with the Financial Rules.
v. Advice on whether a leasehold or short tenancy should be included on the Balance Sheet must be obtained from the Financial Services and Audit Manager.
vi. VAT has been considered and the Financial Services have been consulted on the implications on VAT and that these are included in the option appraisal.
2.4 Acquisition of land or property for investment purposes.
2.4.1 Land or property may be acquired for the purpose of investment in line with the scheme of delegation, subject to the following criteria:
i. Net return of 6% plus
ii. Minimal tenant risk/ Strong covenants – so other Local Authorities, Primary Care Trust or similar.
iii. Modern properties in generally good condition on full repairing and insuring leases.
iv. Location of property - prime location potentially anywhere in the UK.
v. Single let or multi let, but preference away from management intensive properties.
vi. The on-going revenue costs are contained within an approved budget which has been confirmed as appropriate by the Financial Services and Audit Manager, and/ or an appropriate budget is approved by Cabinet.
vii. Where acquisitions will result in an asset to be recognised on the Council’s Balance Sheet; the purchase must be subject to the Council’s Capital Appraisal Scheme and a capital budget approved by the Cabinet or Council in accordance with the Financial Rules and/ or any delegated authority.
viii. Advice on whether a leasehold or short tenancy should be included on the Balance Sheet must be obtained from the Financial Services and Audit Manager.
ix. VAT has been considered and the Financial Services have been consulted on the implications on VAT and that these are included in the Capital Appraisal Scheme and report for decision.
2.5 Acquisition of land for strategic acquisition for future development in line with Council priorities and objectives.
Land or property may be acquired for the purpose of future strategic development in line with Council priorities and objectives and in line with the scheme of delegation and subject to the following criteria:
i. An option appraisal has been carried and reported to the Asset Management Group, the result of which identifies the land as suitable for current or future strategic development in line with Council priorities and objectives.
ii. The on-going revenue costs are identified as part of the review and contained within an approved budget which has been confirmed as appropriate by the Financial Services Manager, and/ or an appropriate budget is approved by Cabinet.
iii. Where acquisitions will result in an asset to be recognised on the Council’s Balance Sheet ; the purchase must be subject to the Council’s Capital Appraisal Scheme and a capital budget approved by the Cabinet or Council in accordance with the Financial Rules.
iv. VAT has been considered and the Financial Services have been consulted on the implications on VAT and that these are included in the option appraisal.
2.6 Financial and other criteria for acquisitions
2.6.1 The Council needs to take a strategic approach to land and property acquisitions. The requirement to invest in land and property for any of the purposes identified in 2.3 to 2.5 should be identified as part of the Council’s procedures for developing its Medium Term Financial Plan, Capital Programme, Corporate Plan and Service Delivery Plans.
2.6.2 Service Managers will be required to take a medium to long term view when planning delivery of their services and will need to identify any requirement to acquire land and property or any opportunities to dispose of surplus assets in order that these changes can be incorporated in the Council’s financial planning systems.
2.7 Money Laundering
All transactions should be carried out in accordance with the Council’s Anti-Money Laundering Policy.
All cash transactions must be within the limits set out in the Anti-Money Laundering Policy.
Legal Services must make checks for all purchasers and ensure that vendors solicitors, and any solicitors employed to act on behalf of the Council, have an upto date Anti-Money Laundering Policy and that they are registered with the Law Society.
2.8 Internal and External Audit
Audit trails of all acquisitions will need to be maintained and accessible by Internal/External Audit to verify actions/values and how the authority made the decision to acquire/dispose. Any appointment of a third party consultant must reserve the right of access to their records in relation to the transaction. This will need to be dealt with by way of appropriate contract conditions.
3.0 Disposal of land and property
3.1 Options for disposal of land and property
3.1.1 Disposal under the Local Government Act 1972 deals with all types of disposal, freehold, leasehold and short tenancy agreements.
3.1.2 The disposal of the Councils land and property could therefore be progressed in a number of ways and does not necessarily have to result in a freehold sale. The following options are available:
i. Freehold disposal - The sale of the property with or without future covenants to restrict or protect future use.
ii. Permanent grant of rights over land – i.e. easement in fee simple.
iii. Leasehold disposal – Leasehold interest can be agreed for any time period. A leasehold interest of 7 or more years has to be registered as an interest in land with the Land Registry. All leasehold disposals will be agreed outside the Landlord and Tenant Act 1954 to exclude business protection, unless the property is categorised as an investment property where terms will be agreed based on advice from an Independent Valuer to seek best consideration for the lease.
iv. Non permanent grant of rights over land – i.e. access licence, way leave etc.
v. Short tenancy – tenancy for a term of less than 7 years or the assignment of a term which at the date of the assignment has not more than 7 years to run. All short tenancy disposals will be agreed outside the Landlord and Tenant Act 1954 to exclude business protection.
3.2 Determination of the method of disposal.
3.2.1 Except where certain criteria applies, open market disposal will be the preferred method of disposal.
3.2.2 Methods of disposal are:
i. Open Market disposal
ii. Private Treaty disposal
iii. Joint Development
3.2.3 The method for the disposal of assets will be assessed and determined on a case-by-case basis by reviewing all of the options and completing an option appraisal.
3.2.4 All issues relating to the land or property, including social, environmental and economic benefit and legal issues and agreements, will need to be taken into account when determining the method of disposal.
3.2.5 The authority for determining the method of disposal will align with the delegated authority for the disposal.
3.2.6 Property Services Manager, Estates Officers and Strategic Development Officer will seek advice from Legal Services and external surveyors and valuers, where necessary, on the type and method of disposal.
3.2.7 In principle the Council will choose the method of disposal which provides best consideration, this may be more than just financial consideration and can include social, environmental and economic considerations, and will be the method which best secures the desired objectives/ outcomes for the land and/ or property.
3.3 Open Market Disposal
3.3.1 The decision to dispose will be taken in line with the scheme of delegation.
3.3.2 For freehold disposal and leasehold interests over 7 years the properties will be advertised, bids invited in the form of sealed bids by an agreed date or through open auction.
3.3.3 Whenever possible the Council will advertise for the disposal. This will be by way of an advert placed in an appropriate media and on the Councils website. Where appropriate recommendations will be sought on appropriate terms, including rent, from an independent agents/ Valuer and where necessary will be appointed to make recommendations on which they consider to be the best consideration taking into account both financial and non-financial benefits.
3.3.4 When appropriate independent agents will be appointed to manage the advertisement and the disposal of the land or property and report to the Council the value of the bids received and recommend which they consider to be the best consideration taking into account both financial and non-financial benefits.