Glasgow homes transfer valuation was ‘irrelevant'

Glasgow Housing Association made a net surplus of £7.6 million in just over three weeks after transfer, its accounts reveal.GHA's financial statements reveal the association paid Glasgow Council ‘a notional consideration' of £25 million for the assets it acquired at transfer (Inside Housing, 10 October). But the value of the homes is zero. Other assets it acquired amounted to £18,000.Head of finance Ian Elrick said the valuation of the council's homes was not relevant. He added: ‘What had a bearing on the purchase price was the value of the investment programme to bring the stock up to a reasonable standard. It needs £1.4 billion invested in it.'The accounts revealed that last year the association drew down more than £53 million of nearly £362 million that the Scottish Executive has made available as a repayable grant over the next 10 years.More than £27.6 million of this was used to pay for the £15.3 million expenditure GHA made during 2002/03 and for £12.3 million expenditure from previous years.The executive has also made a £100 million contingency grant available to the association for use over the eight years from 2004/05 (Inside Housing, 20 December 2002).After the transfer took place on 7 March, GHA made a net surplus of £7.6 million in just over three weeks before the end of the financial year.Mr Elrick told Inside Housing this was because the council's debt was written off by the Treasury at the point of transfer, so it was no longer necessary to spend 40 per cent of tenants' rent on debt charges.But the surplus would be ploughed back into the investment programme to improve the housing stock, he said.The statement emphasised the extent of change within the organisation at the point of transfer. It said: ‘GHA at the point of stock transfer moved from being a project- based organisation with the objective of delivering the transfer and a turnover of around £15 million per annum to become a registered social landlord with a turnover of over £250 million per annum.'