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ITEM EX7 - ANNEX 3

EXECUTIVE – 29 OCTOBER 2002

COUNTY COUNCIL PROPERTY

 

Freehold/Leasehold

  1. The Council has use of 116 Leasehold properties. The total annual rent is almost £1.5M.

  2. In some circumstances it is appropriate and beneficial for property to be leased:

    • To meet short terms needs;

    • For use of accommodation in buildings owned by other organisations such as Health Trusts or District Councils;

    • Where there is no suitable freehold property available.

  1. However, unless there are specific reasons in favour there can be disadvantages:

    • The rent is an ongoing liability for the use of an asset which the County Council does not own;

    • Any lease for more then 10 years requires credit approval for the capitalised value of the rent for the whole period of the lease;

    • There can be liability for dilapidation at the end of the term of the lease and it may be necessary to give higher priority to repairs to leased premises (where the Council does not benefit from maintaining the capital value of the asset) than to the Councils own freehold property;

    • Leases can include onerous or restrictive conditions e.g. on permitted uses;

    • There are costs involved in rent reviews use and lease renewals;

    • Leases can be terminated at the end of the term even though the Council may still have a need for the premises;

    • The Council does not benefit from any appreciation in the value of the asset but is liable to pay any increase in rental value following a review.

  1. Generally therefore it is more appropriate for the Council to hold the freehold interest in premises for which it has a long-term need.


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