Meeting documents

1 THE ISSUE

1.1 This report sets out the factual situation relating to the property known as Mount Beacon Lodge, Lansdown.

2 RECOMMENDATION

2.1 Consider the options proposed at paragraph 6 below and indicate its views

3  FINANCIAL IMPLICATIONS

3.1 The financial implications of each option are set out within those options. There is no direct cost to any of the options, but various income foregone dependent on the option chosen.

4 BACKGROUND AND HISTORY

4.1 Solon Housing Association occupied Mount Beacon Lodge, under an arrangement with the former Avon County Council who owned the premises and from whom those premises were transferred to this Council for a number of years. This arrangement was therefore inherited by Bath & North East Somerset on the demise of Avon County Council. The occupation by Solon Housing was a leasehold.

4.2 Solon Housing Association decided that they wished to terminate their agreement 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.

4.3 The property which is a 3 bedroom linked detached property on the slopes of Lansdown is currently occupied by 3 single men who share facilities. The management of the property has been undertaken on behalf of Solon by Bath Housing Co-operative. The Bath Housing Co-operative indicated that they wished to enter into a direct contractual agreement with the Council in order to be able to provide for the continuing housing needs of the occupiers. As a result of this, the property is occupied on a "tenancy at will" with the Co-operative which gives the Council the Right to take possession without notice.

4.4 In an attempt to resolve the issues relating to the reversion of this property to Bath & North East Somerset from the Solon Housing Association, a joint single Member decision was made by Executive Members for Economic Development, and Community Safety Housing and Consumer Services, on 7th March 2005 where it was resolved to "grant the Bath Housing Co-operative a lease of 3 years, subject to the terms of the lease being negotiated by the Head of Property Services". A copy of the report to the members is attached as Appendix 1

4.5 To date, the terms of occupation have not been finalised but there are no significant issue of principle that would prevent this happening. The decision of March 2005 was valid although a significant amount of time has now elapsed making it helpful to review the position.

5 UPDATE ON THE POSITION

5.1 The Executive Member for Economic Development has asked that the Housing Service consider in more detail whether the Bath Housing Co-operative (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. It is believed other Local Authorities do enter into such arrangements with Co-operatives. During the negotiations the Bath Housing Co-operative have provided detailed costings of their income and expenditure on the premises whilst the tenants remain in place. The negotiations surrounding these premises have taken account of the dilemma of the Bath Housing Co-operative and the position which the Council finds itself. It has taken some time to consider and discuss this issue, and the Bath Housing Co-operative has already had a tenancy at will for approximately a year. Letters of representation from the Housing Co-op are attached at Appendix 3 and 4 to this report. In addition, the Housing Service have expanded on their original advice in relation to housing service partnerships, and the legal position on the provision of affordable housing. This advice is attached at Appendix 2

6 OPTIONS

6.1 There is no need to take any further (or different) decision at this time in respect of the property, however, it is important to be clear about the position to be taken should a deal along the lines originally proposed still prove unachievable, and should it be determined that notice should be given if an agreement cannot be reached, some time should be allowed to enable and ensure the proper treatment of the current tenants. .

6.2 The executive may also wish to give consideration to the length of term that the Council now grants the Co-op. Because it has taken a year for matters to progress to this point, the executive may wish to comment on whether it should be a two year term that is granted, to give the Co-op a total of three year's occupation. Alternatively a three year tem could be granted from now, to allow them a three-year clear term to bring forward any future proposals.

6.3 The executive may also wish to take a view now on the future use of this property upon expiry of the proposed short-term lease. The options available are set out below:

6.4 Grant a further lease to Bath Housing Co-operative. The current arrangement with the Co-operative will give them the opportunity to prove whether they are able to make a contribution to providing an alternative model of low-cost housing. If, upon review, their contribution is seen as one that the council would wish to or could support, a further lease could be granted to the Co-operative. The expectation is that this would be at considerably less than Market Value and the potential for gaining a capital receipt will be further delayed. The effect on the Council's cash flow & overall borrowing costs for each year that the capital receipt is forgone and assuming that the receipt would be used to fund spending in lieu of borrowing is estimated as £33,250 (9.5% of £350,000) which will partly offset by any rent receivable and any increase in value to the property resulting from improvements undertaken by the tenant.

6.5 Grant a lease at Market Value for residential use. The Market rent of a property in this area, in reasonable condition, is estimated at £1,200 per calendar month (£14,400 per annum). The ability of the Council to grant a lease of residential premises is, however severely restricted by the Housing Act, with leases to Housing associations and similar on business tenancies the only real possibility. These will always tend to be at less than Market Value. This is not, therefore, seen as a viable option.

6.6 Sale. The sale of this property would be expected to realise in the region of £350,000 at current market values. Whilst the house does have some issues which would restrict its value at sale, it is located in one of the most expensive areas of Bath and ought to, therefore, comfortably reach this price level. The Capital receipt could be used to reduce borrowing or to finance other capital schemes in lieu of borrowing.

7 RISK MANAGEMENT

8 RATIONALE

8.1 Not relevant for this report.

9 OTHER OPTIONS CONSIDERED

9.1 The options available are set out above for member consideration.

10 CONSULTATION

10.1 Ward councillor, Other B&NES Services, Section 151 Finance Officer, Chief Executive, Monitoring Officer

10.2 Consultation has been undertaken with the relevant Officers and Members and their comments, if any, have been incorporated in to this report