MD1534 Disposal of 1 & 2 Well Cottages

Type of decision: 
Mayoral decision
Code: 
MD1534
Date signed: 
10 September 2015
Decision by: 
Boris Johnson MP (past staff), Mayor of London

Executive summary

This Mayoral Decision is requesting authority for the freehold disposal of the GLA Land and Property Limited (GLAP) owned 1 & 2 Wells Cottages to Amicus Horizon. 

 

Decision

That the Mayor approves:

1. The freehold disposal of GLA Land and Property Limited owned assets comprising 1 and 2 Wells Cottages to Amicus Horizon on the terms set out in this decision form.

2. Expenditure of up to £20,000 on professional fees to complete the necessary documentation. 
 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    The subject land comprises 1 and 2 Well Cottages which are located to the South of the town centre of Coulsdon, adjacent to the Cane Hill hospital site. 

1.2    The cottages are situated to the west of Lion Green Road, at the junction with Chipstead Valley Road, and adjacent to Lion Green Road car park which is currently owned by LB Croydon and which has planning permission for a supermarket and ancillary uses. 

1.3    The combined GLAP landholdings at Lion Green Road were purchased as part of the Cane Hill Hospital acquisition by English Partnerships (EP) in 2007, under the Hospital Sites Programme. Due to the strategic location between Cane Hill and Coulsdon Town Centre, the sites were safeguarded for the Cane Hill development and provide an integrated link between the town centre retail and commercial activity and the redevelopment of Cane Hill. The HCA’s interest in the Cane Hill site, including the Cottages, transferred from HCA (as successor to EP) to GLAP in April 2012 as part of the devolution of power to the Mayor under the Localism Act 2011. 

1.4    The designation for the sites at Lion Green Road is mixed use with a focus on retail and commercial uses, such as a supermarket and healthcare facility; the key objective being to animate Lion Green Road by providing continuous active frontage and to encourage public accessibility and views from Lion Green Road.

Disposal of 1 & 2 Well Cottages 

1.5    The decision seeks authority for GLAP to dispose of the cottages to Amicus Horizon, a registered provider situated in Croydon.  1 Wells Cottage has been tenanted by the same tenants since 1996 with the tenancy becoming a secure tenancy once it transferred to HCA from EP. 2 Well Cottage is a vacant dilapidated property which will require significant works to make the property structurally sound. 

1.6    Initial discussions had commenced with LB Croydon to acquire the cottages as part of a package deal with the GLAP owned asset Sovereign House. Given the properties had existing tenants, the Council was unable to commit to the acquisition without vacant possession and therefore discussions commenced with Croydon approved Registered Providers. The only interest received was from Amicus Horizon who were  selected on the basis they have existing land ownership in the Coulsdon area. Amicus Horizon have accepted the cottages will be sold by GLAP with tenants in situ. On this basis, Amicus Horizon have offered £300k for the land and properties. 

1.7    Following their acquisition by Amicus Horizon and subject to the existing tenancy, the properties will be used for social housing purposes and provisions are to be included in the sale documentation to ensure that this is the case including disposal clawback provisions. 

1.8    Amicus Horizon have agreed to pay the GLAP’s legal fees in respect of the transaction. 

 

Objectives and expected outcomes

2.1    The disposal to a Registered Provider provides the tenants with certainty of tenancy and will enable the vacant building to be brought back into use.

 

Equality comments

3.1    The GLA’s public sector equality duty has been considered in relation to this recommendation and no specific issues have been identified as a result. Given the tenants’ health needs, Amicus Horizon have provided assurances as to the continued occupation of the existing tenants and GLAP will ensure this is a condition of the agreement for sale.

 

Other considerations

4.1    Key risks and issues      

There is limited risk to GLAP as the proposal is to receive an upfront payment for the freehold of the cottages. 

4.2    Links to Mayoral strategies and corporate priorities 

The sale of GLAP’s assets in Croydon, packaged with the local authority aspirations for its surplus car park, will contribute to the wider Mayoral priorities for housing regeneration, growth and job creation as set out in the Mayor’s manifesto and Economic Development Strategy. The receipt will support the delivery of the Mayor’s objectives for London and in doing so, stimulate future jobs and growth.

4.3    Impact assessments and consultations

Consultation has been undertaken with the tenants of 1 Well Cottage and the Council and prior to the GLA transfer to Amicus Horizon, tenants will be advised of their change of landlord to Amicus Horizon.
 

Financial comments

5.1      The disposal of Wells Cottages has been agreed at £300,000 to Amicus Horizon. The properties were valued as at 31st March 2015 at £390,000 as they are being sold with tenants in situ, subject to a secure tenancy. The proposed sale price of £300,000 is therefore within the terms of the General Consent referred to below as the difference between the consideration and the unrestricted value of the land does not exceed £10m and in that the difference does not exceed 30% of the unrestricted value of the land.

5.2      The disposal may be subject to capital gains tax at 20% of the profit on disposal as the properties are held as investment stock. This will be linked to other disposals of investment property during the financial year and the use of GLAP’s £900,000 annual tax allowance.

5.3      There is currently a revenue budget for disposal of this asset set at £20,000 for 2015-16 for professional fees in relation to the disposal.

5.4      The sale of the two cottages will be VAT exempt (in any event does not apply to buildings which are intended to be used as dwellings).

5.5      The purchaser has agreed to reimburse GLAP’s costs which should include the VAT charged on such costs (VAT is not refunded by HMRC on exempt disposals).
 

Investment and Performance Board

7.    Housing Investment Group

7.1    The proposal was considered at the HIG in September 2013 and a verbal update was subsequently provided on the current status and endorsed in February 2015.
 

Planned delivery approach and next steps

Activity

Timeline

Mayoral Decision

August 2015

Agree terms of Agreement for Sale

Summer 2015

Land & properties sold   (transfer to Amicus Horizon)

Summer-2015