Contact Officer: Geoff Coe
Scrutiny Committee queried how the Council manages repairing obligations across the property portfolio where buildings and land are leased to third parties. This briefing note provides an explanation of how Property and Legal Services deal with this important Landlord and Tenant issue.
The Interim Property Manager presented the BDBC Dilapidations Procedure report. It was noted that the council’s property portfolio comprised just under 800 properties with a mixture of community assets, direct let investments and ground lease properties.
It was noted that 70% of property income derived from ground leases. The report detailed four potential remedies available to enforce obligations under ground leases, and their requisite advantages and disadvantages.
Cllr Kim Taylor was invited to speak. Cllr Taylor had prepared a list of printed questions which were subsequently permitted, with the caveat that this was a unique occurrence, to form an addendum along with eventual responses to these minutes (please see Appendix 1).
· It was explained that there would be a facility to record annual inspections on the new software system, but that there had been no formal recording to date. Consequently, records would be available in the future, but there was nothing historically.
· There has been constant dialogue with the head lessee of the Ice Rink and with the sub-tenant due to the sensitivity and specialised nature of the facility. It was clarified that dialogue would automatically always be with the head lessee as the contractual partner.
It was explained that there was ongoing dialogue due to the substantial repair costs, which were not the council’s responsibility. Further, there was a difficult balance to achieve between progressing the work and maintaining the asset.
It was suggested that a progress report on the Ice Rink which was expected by Community Environment Partnerships committee in June, should incorporate responses to the questions raised in Appendix 1.
· It was noted that all property inspections currently took place externally and was suggested that under the permissions of the Jervis v Harris Clause, a 5-year internal inspection should also take place.
The Interim Property Manager commented that such additional inspections would require significant resource. It was clarified that the majority of the portfolio was industrial sheds, whereby generally the external state of the building would reflect the internal state. It was explained that a pragmatic industry centred approach was taken to inspections due to not wishing to incur significant administration costs to the council.
· It was queried whether there were any obligations on head lessees to apply due diligence when sub-letting.
It was explained that this would not be present in older ground leases but would in newer contracts. It was quantified that a landlord would generally only enforce such an obligation if the proposed sub tenant was bankrupt or not of sufficient covenant strength.
· It was noted that community buildings throughout the borough were run by charitable trusts, which did not tend to generate much income. It was queried whether the council could examine the vulnerability of such trusts to ensure assistance and protection in the future.
The Interim Property Manager responded that there were 28 community halls within the borough and that responsibilities were split so that the charitable trusts were responsible for all internal decoration, repairs and heating costs and the council for structural, external and landscaping obligations. It was confirmed that work was currently underway to investigate ways to assist charitable trusts with their liabilities to ensure that community halls were sustainable in the future.
The Chair thanked the Interim Property Manager for the comprehensive report.
Resolved: The Committee
· Note the report; and
· Request that the above items be actioned.