ITEM CA10 CABINET - 17 APRIL 2007SALE OF SURPLUS LAND FOR AFFORDABLE HOUSINGReport by Head of Property Introduction1. The Corporate Plan Strategic Priority to: “Help the economy to grow as fast as possible with a real choice of access to jobs, homes, leisure and services and in a way that does not prejudice the future of our environment”. includes a reference to the Local Area Agreement (LAA) providing a focus for working with our partners to deliver important targets relating to skills, tourism, landfill reduction and affordable housing. 2. The Community Partnership and the District Councils have given priority to increasing the supply of affordable housing and there is now an agreed LAA target to deliver 256 additional affordable homes within sustainable communities across Oxfordshire between 2006/7 and 2008/9, of which 70% will be social rented housing and 30% low cost home ownership units. A performance reward grant of £1,476,465 has been allocated to this target. 3. Previously, some District Councils have suggested that the County Council’s policy for the disposal of surplus property has been a hindrance to the supply of land for affordable housing. The Capital Steering Group, CCMT and Informal Cabinet have therefore reviewed the current policies and have agreed that there should be a report to the Formal Cabinet. Policy for the Disposal of Surplus Property4. The Council’s general policy is that surplus property should be sold on the open market for the best consideration that can reasonably be achieved. This is in compliance with Section 123 of the Local Government Act 1972. However, the General Disposal Consent 2003 gives local authorities the power to dispose of property at less than the full open market value without seeking the consent of the Secretary of State where such a sale contributes to the economic, social or environmental wellbeing of the area, and where the undervalue does not exceed £2m. Full market value can also include non-monetary consideration, e.g. where a purchaser might provide a service or accommodation, or undertake works for the County Council. In cases where there is non-monetary consideration the policy established by the Capital Steering Group is that it should only be accepted: (a) If the service or accommodation contributes to one of the Council’s priorities; and (b) Provided that a case is made that in effect justifies the ‘expenditure’ of the foregone receipt in accordance with the normal processes for the allocation of capital resources. 5. In October 2003 the Executive agreed that the principles outlined above for acceptance of non-monetary consideration should also be applied to any sales at less than full value under the General Disposal Consent 2003, and that the Capital Steering Group should consider any specific proposals and be satisfied that they would contribute to one of the Council’s priorities justifying the foregone receipt. The Cabinet would then determine whether property should be disposed at less than the full value in the light of the Steering Group’s advice. 6. There is also a policy that the appropriate District Council is advised before surplus property is placed on the market so that they may request that either they or their nominated housing association be given the opportunity to negotiate an off-market sale.7. In almost all cases the capital receipt from the sale of the surplus property is required to contribute to the provision of replacement facilities or for a related capital programme scheme, e.g. under the contract with Oxfordshire Care Partnership the capital receipts from the disposal of Homes for Older People are allocated to the funding for the redevelopment programme; disposal of surplus school land is generally required for directly related school projects; all of the library improvements or replacement projects are dependent on the capital receipt from the sale of the current premises for part of the funding. Furthermore, the current level of capital funding is inadequate to meet the investment needs related to corporate and service priorities identified in the Capital Strategy and Asset Management Plan. It would therefore be inappropriate for surplus property to be disposed of at less than the best consideration unless there is a benefit from doing so which is at least equivalent to the identified priorities for capital funding such as provision of new libraries. Use of County Council Surplus Property for the Provision of Affordable Housing 8. Notwithstanding the need to secure the best consideration, the disposal of surplus property by the County Council has contributed significantly to the supply of affordable housing across the County. In many cases land has been sold to housing associations nominated by the District Council for 100% affordable housing but at full market value either with the benefit of a Social Housing Grant or because the housing association has been willing to fund the purchase at full value. In some cases there has been a flexible approach to the proportion of social rented and low cost ownership, which has enabled the provision of a higher percentage of affordable homes than required in the Local Plan. 9. Between 2001/02 and 2006/07 there have been at least 555 affordable homes provided on 22 sites disposed of by the County Council, excluding rural exception sites, and including the sites sold following the City Schools Reorganisation. 10. Where rural exception sites have been identified on County Council land, in all cases but one, terms have been agreed and the land either sold or is in the process of disposal. Of the estimated 149 units provided on exception sites across the County between 1996 and 2006, 51 have been on land sold by the County Council and there are potentially a further 50 units to be provided on two sites in the process of sale. Oxfordshire Housing Partnership 11. The Terms of Reference of the Oxfordshire Housing Partnership (OHP) and its Members and Steering Groups have recently been reviewed. They reflect the need for an overall strategic framework for delivering affordable housing across Oxfordshire. The Group had recently agreed to: · appoint a project manager for the delivery of the LAA target; and, · take a perspective on the development of a countywide affordable housing strategy, including a partner-wide approach to provision of land. 12. West Oxfordshire District Council has undertaken research into the prices paid for rural exception sites. It shows that across the country prices range from £2,000 to £20,000 per plot. The District Council have developed a ‘land value calculator’, which takes into account the location, availability of other sites, planning and need. This was recently applied to a site in West Oxfordshire and gave a value of £8,000 per plot. The OHP Members Group recognise that there needs to be more flexibility over the price for exception sites and will consider endorsing the use of the WODC calculator. In principle, this should be consistent with the approach which has been taken by the County Council in assessing the value of exception sites. 13. The figures referred to above on the provision of affordable homes on land disposed of by the County Council, including those for rural exception sites, were reported to a recent meeting of the OHP Members Group. There was no suggestion at that meeting that the Council’s policies for the sale of surplus property needed to be changed. There was, however, acceptance that there should be a common approach by the partners to the provision of land to help achieve the LAA target. Conclusion 14. The Council’s current policies for the disposal of surplus land, and the flexible and positive approach taken where there are opportunities to provide land for affordable housing without prejudicing the capital receipts which are essential for financing the capital project, have resulted in a significant contribution to the provision of affordable housing across the County. There is no evidence that the Council’s policies are inconsistent with those of other public sector partners and they should not prevent the County Council participating in a partner-wide approach to the provision of land to help achieve the LAA target. A more flexible approach by the District Councils to the valuation of rural exception sites should be in line with that of the County Council. 15. The Capital Steering Group, CCMT and Informal Cabinet recommended that there should be no change to the current policies for the disposal of surplus property. RECOMMENDATION 16. The Cabinet is RECOMMENDED to agree that: (a) there should be no change to the current policies for the disposal of surplus property; (b) the flexible and positive approach to negotiation of off-market sales to the District Councils or their nominated housing associations and the disposal of rural exception sites, should continue; and, (c) the County Council should participate in a partner-wide approach to the provision of public sector land to help achieve the Local Area Agreement target, subject to the Capital Steering Group being satisfied that there would be no unacceptable consequence for funding for the capital programme. NEIL MONAGHAN Background Papers: Nil. Contact Officer: Neil Monaghan, Head of Property, Tel: (01865) 81 5712 April 2007
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