Local authority non‐operational property ‐ serviceable or surplus?

Abstract

Adopts the label “tenanted non‐residential property” (TNRP) rather than employ loaded terms such as “commercial” or “investment”. Deals with the perceived objectives for which local authorities hold TNRP and the functional, financial and legal setting. Compares category bases for property holdings and, in particular, examines attitudes to acquisition, management, retention and disposal of TNRP. Notes the confusion between investment and indirect service objectives and the consequential expected returns. Discusses the findings of a survey of councils centring on the characteristics and management of their TNRP holdings. Concludes that objectives and management strategy for local authority‐owned TNRP remain undeveloped. Suggests that the ability to properly manage and develop a real investment portfolio may be ultra vires. Recommends, in the shorter term, if not ultra vires, dividing TNRP between those held primarily for indirect service and those held primarily as financial investments. Expects, however, in the longer term, pressures from local service needs and central government will encourage, indeed force, the progressive disposal of all non‐operational property, including TNRP. Identifies a new form of TNRP, one within the council. Seeks to clarify and effect the different strategies for operational property between the centralized corporate council landlord and decentralized service tenants, and proposes the creation of “internal leases”.