Agenda item

To consider and decide the recommendations set out in the report.

Lee Colyer (Director of Finance, Policy and Development) introduced the report which included the following comments:

·         Tunbridge Wells Property Holdings Ltd was established in 2015. It was now quite common for Councils to set up companies to look after and maintain Council property.

·         There were 3 main groups of properties managed by the company:

o   Existing residential properties that were already Council owned;

o   Newly developed properties, e.g. John Street (a small scale mixture of residential and commercial use); and

o   New acquisitions by the Borough Council.

·         The freehold was always in the ownership of the  Borough Council, with only the lease being held by the Property Holdings company.

Discussion included the following issues:

·         The Company was able to offer Assured Short Hold Tenancies, something the Council was not permitted to do.

·         In cases where property owners had approached the Council directly to ask about the possibility of buying their property the Council would consult their property advisors to decide whether there was any merit to the Council taking on any such acquisition. Details of any legal costs paid were not known at the time of the meeting, to follow later.

·         This was a new company, so it would take time to establish. But it was meeting the Council’s objectives and had provided short term tenancies.  The Council had a large number of properties and this was a much better way of managing them. The returns had been far greater than was initially estimated when the acquisitions were obtained. Further information could be found on the asset values and the returns on the rents in the Council’s statement of accounts and it’s quarterly reporting to Cabinet.

·         The Company had an obligation to obtain a rental return of 3% that it would give to the Council. However within that, there was flexibility on how it was achieved. There would be opportunities to achieve a higher return on some properties, with others achieving below that benchmark.

·         Ultimately the purpose of the Company was for privately let residential properties and as such the Council would seek to get market rent for all them. The lease amount would be set at the beginning of the contract and could be reviewed every third year.

·         The Council took on Dowding House to provide temporary accommodation in one dwelling and in one location. The Property Holdings Company was not set up for this purpose.

·         The original estimate of an 8% growth as stated in the Business Plan had been reduced to 3% as a more realistic target.

·         In addition to rent and maintenance costs there was an element of ‘other costs’ included. These could be attributed to a number of factors, including (but not exclusively) property refurbishment, auditor fees, legal and finance costs, website maintenance and the storage of public data. 

·         The lease that the Company had with the Council was for 22 years. The short term leases were for 1 year but with the option to extend.

·         Liability issues relating to any of the properties within the Company’s portfolio rested with the Company and not with the Council.

·         Concern was raised that the motivation for the Company were political and that some property purchases were done to avoid dissent on particularly controversial projects. 

·         The Council had the power within the Local Government Act to manage a property portfolio and Members’ role was to ensure that those functions were being undertaken in an appropriate manner. The Overview and Scrutiny Committee was not the correct forum to determine what, if any, decisions had been taken for political reasons. It was agreed the Chairman would take this issue under advisement and report back to the group at a later date.

·         Community Trusts could be the appropriate vehicle for building Social Housing.

·         The Company as the leaseholder would take on the responsibility for the cost of maintenance for the properties.

RESOLVED – That the update be noted.