Meeting documents

Appendix 1 to Executive Report

Proposal to lease Mount Beacon Lodge to Bath Housing Co-Operative at less than Market Value.

Background

Solon Housing association have occupied Mount Beacon Lodge under an arrangement with the former Avon County Council for a number of years.

They decided to terminate their agreements in respect of Bath properties in order to concentrate their resources in their main areas of operation. They, therefore, entered into negotiation with Property Services to release themselves from their occupation of Mount Beacon Lodge.

The property which is a three bedroom link-detached property on the slopes of Lansdown is currently occupied by three single men who share facilities.

The management of the property has been undertaken, on behalf of Solon, by Bath Housing Co-operative. The co-op has indicated that they wish to enter in to a direct contractual agreement with the Council in order to be able to provide for the continuing housing needs of the occupiers.

In a Joint Single Member Decision Co-operative made by Executive Members for Economic Development and Community Safety, Housing & Consumer Services on 7 March 2005 it was resolved to grant the co-op a lease of three years subject to the terms of the lease being negotiated by the Head of Property Services. The principle of leasing the house to the co-op, therefore, already has member approval.

Following discussions between the parties, however, it is clear that it will not be possible to agree terms without the council accepting a rent which is at considerably less than Market Value

Current Situation

Following discussions it was agreed that the agreement with Solon should cease and Bath Co-Operative currently occupy the property on a Tenancy at Will. An urgent decision is therefore required as to whether the Council should enter in to a lease with the co-op at less than Market Value rent.

The estimated market value of a property in this area in a reasonable state of repair and condition is £1,200 per calendar month.

The co-op is offering £90 per calendar month plus an undertaking to do works to the property which are currently estimated to be the equivalent of £500 per calendar month; over and above normal ongoing repair and maintenance.

A schedule of condition has been prepared by the head of Property services and it is proposed that a schedule of works is entered in to as part of the lease.

The shortfall in potential income for the property, if the agreement with the co-op were to be entered in to, is, therefore, estimated at £610 per calendar month (£7,320 per annum.)

If the property were to be sold in its current condition, it is estimated that a capital receipt in excess of £350,000 could be generated, all or part of which could be used to re-provide for social housing within the Councils agreed policies and procedures.

Where a new concessionary rent is offered to an organisation, it is Council policy that the concession should be supported by a sponsoring service. In this case it would normally be Housing services that should support the concession. As the co-op do not fall within the housing criteria accepted by the Council Housing Services will not support this proposal. This proposal therefore represents a loss of potential income to the Council and this should be noted by the relevant Executive Member.

The Executive Member for Economic Development, (being responsible for the Property Service), has asked that the Housing Service consider in more detail whether the Housing Co-op, (or any other similar entity), can undertake any role which alleviates affordable housing pressures and homelessness, by using properties, for example, which do not interest registered social landlords. Other local authorities do enter into such arrangements with co-ops.

The Executive Member for Economic Development believes If such consideration does not yield positive results, the lease should terminate, and the then Executive Members should determine the fate of the property.