You are viewing 1 of your 1 free articles
Council to pay housing association £450,000 ‘reverse premium’ for lease termination
A council has agreed to pay a £450,000 “reverse premium” to a housing association wishing to terminate the lease on one of its buildings.
The Guinness Partnership will hand back 23 Grosvenor Place to freeholder Bath & North East Somerset Council 39 years earlier than initially planned.
The association said “considerable investment” was needed to make the former hotel, most recently being used as 20 social housing bedsits, fit for purpose. It said it offered to purchase a lease extension to make the necessary investment worthwhile, or surrender the lease and hand back the property to the council.
Richard Samuel, deputy leader and cabinet member for resources at the council, originally agreed to the lease surrender and payment on 13 December but was made to reconsider after the decision was called in by councillors on the corporate policy development and scrutiny panel.
He has decided to stand by the original decision while asking Guinness to reinvest in Bath and North East Somerset, as recommended by the scrutiny panel.
The council’s Liberal Democrat leadership has also agreed to improve transparency around property deals.
Cabinet members will be asked to approve a business case for the future of 23 Grosvenor Place, including the option to ringfence money raised through selling the building for investment in social housing.
READ MORE
Guinness, which owns around 65,000 homes across the country, purchased the lease in 1993 with the agreement set to run until 2058.
It had offered to purchase a lease extension before the council opted to take back control of the property.
A spokesperson for Guinness said: “Grosvenor Place required considerable investment to ensure it was fit for purpose. We engaged with the council with an offer to purchase a lease extension to enable the investment or alternatively to surrender the lease.
“The council opted for early lease surrender on terms supported by an independent valuation. We understand that councillors wanted to scrutinise the decision and appreciate the need for such rigour in this matter.
“Guinness owns 476 social homes in Bath & North East Somerset and we remain committed to investing in the area.”
Mr Samuel said: “My decision was called in for further scrutiny and I welcomed the opportunity to explain and review the background to this decision at the meeting. While the council already owns the freehold to this property, Guinness housing association owns the leasehold which has 39 years remaining.
“Guinness housing association could sell this on the open market to an interested party. However, the council has been given the opportunity to secure the leasehold.
“Buying this combined with the freehold it already owns would then enable the council to carry out a full property appraisal on the asset and decide the building’s future.”
Bath & North East Somerset Council transferred its 10,000 homes to Somer Community Housing Trust – now part of Curo – in 1999.
