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					Agenda Item No. LONDON BOROUGH OF CAMDEN WARD: Cantelowes

REPORT TITLE: House Purchase Grant - 11 Mount Pleasant Road, Saffron Lodge, Saffron Walden (HASC/2006/13)


Director of Housing and Adult Social Care DATE: 11th January 2006



SUMMARY OF REPORT: This report is brought before Executive as the body responsible for controlling the Council’s assets, and formulating and amending Council strategies and policies. This property was acquired in 1975 and let to the present residents. The property is a substantial 3 storey Victorian house, approximately 8 bedrooms and substantial grounds. The property is valued at £950,000, but is not in a good state of repair. It is therefore proposed that the House Purchase Grant (HPG) policy is amended in order to extend the scheme to include 8-bedroom homes, and to ask Executive to declare this property as surplus and authorise its disposal once it is vacant. LOCAL GOVERNMENT ACT 1972 – ACCESS TO INFORMATION No documents which require listing were used to prepare this report. Contact Officer: Catherine Illingworth, Assistant Director of HASC Tel: 020 7974 5816

RECOMMENDATION: The Executive is asked to: 1) Approve the amendment of the existing House Purchase Grant Scheme to include 8bedroom properties which can attract a maximum grant of £66,000. 2) Declare the property surplus to the Council's requirements and authorise the Head of Property Services to dispose of the property on the open market. 3) Agree to ring-fence the resulting capital receipt to the Housing Capital Programme to replace the cost of the grant paid out and to fund other House Purchase Grants/buy backs which are currently short of capital funds.

Signed by Director/Assistant Director: Date: 22 December 2005

Saffron Lodge Saffron Walden Report to Executive

1.0 Background Information 1.1 This property was acquired in 1975 and let to the present resident for the purpose of fostering children. The property is a substantial 3 storey Victorian house, approximately 8 bedrooms, games room, baronial type hallway and substantial grounds. In March 2004, Saffron Lodge was valued by the Head of Property Services at £950,000, with vacant possession. 1.2 The property is not, however, in a good state of repair. The residents confirm that they have spent over £20,000 for alterations to the property, and that Camden have not routinely carried out repairs on the property. 1.3 Since 1999, substantial efforts have been made to find a solution to rehousing the current residents in a way that is acceptable to them. At one stage they were in breach of their tenancy agreement in running a business, a Bed and Breakfast, from the property but this ceased. 1.4 Housing started liaison with District Councils and Local RSLs in order to try and identify whether that was a possible route for rehousing. A meeting took place in July 2000 between the parties and their solicitors when the residents stated they would prefer to be re-housed to the Cambridge area. This meeting failed to resolve the situation. 1.5 We have explored the possibility of securing accommodation in the area via other RSLs but this has not proved successful. Attempts have been made to provide alternative accommodation within Camden but refused by the family upon the grounds they have lived outside of Camden since the 1970’s. 1.6 Since that time, negotiations have been on-going with the residents of Saffron Lodge and their solicitors to find a mutually acceptable conclusion to this situation. 2.0 Proposed solution 2.1 Discussions with the residents of this property and their solicitor have been on-going now for a number of years. After consideration of a number of options, some of which are set out above, the residents have indicated that they would be prepared to accept a payment under the Council’s existing House Purchase Grant Scheme (HPG) to vacate the property. 2.2In order for this to be possible, the existing HPG scheme needs to be amended. At present, the current scheme only extends to properties up to 6 bedrooms. The grant for properties with 6 bedrooms is £56,000. The difference in grant for 5 to 6 bedrooms is £5,000. It is therefore proposed that the existing HPG scheme is extended to include 8-bedroom properties with a maximum grant allowed of 2

£66,000. The Executive are asked to approve this amendment to the scheme. 2.3 Saffron Lodge is a highly valuable property which is in a deteriorated state of repair. Management and maintenance of this property are difficult due to its location so far out of the borough, and if it were sold it would bring in a large capital receipt to the Council. Disposal of this property would resolve a number of issues regarding management and condition and release much-needed funds back to the Council. It is proposed that as soon as the property is vacant that it is disposed of. The Executive are therefore asked to declare this property surplus and agree to its disposal. 2.4 The Head of Property Services is being instructed to prepare to market the property for sale on the open market. As this is an attractive property in a good residential location there is likely to be strong interest from owner occupiers. If an owner occupier purchases then the Council would only be able to retain 25% of the useable capital receipt. Further advice is set out from the Director of Law & Administration in paragraphs 4.4 and 4.5. 3.0 Finance Comments 3.1 A house purchase grant at this level is higher than the maximum amount allowed under the current scheme and therefore requires Executive approval for a variation to the scheme. 3.2 Where an HRA dwelling is sold to a purchaser who intends to occupy the property, 75% of the capital receipt is pooled, and the authority would have a usable receipt of an estimated £237,500 at the 2004 valuation level. This would offset the cost of the £66,000 proposed grant to the current tenants. However, under the Local Authorities (Capital Finance and Accounting) Regulations the disposal of a dwelling can generate 100% usable receipts on the basis that the purchaser does not occupy, or intend to occupy, the property as his only or principal home. It would be in the Council’s overall interest to set this condition on the sale of this property, giving the council a usable receipt of £950,000. In practice it may however be difficult to set this stipulation and achieve market value on the sale. 3.3 Executive are asked for agreement to ring-fence the receipt to the Housing Capital Programme to replace the cost of the grant paid out and to fund other House Purchase Grants/buy backs which are currently short of capital funds. The Executive should note that it is not the Council’s normal practice to ring-fence capital receipts. However, it is proposed in this case for the specific purpose of renewing the House Purchase Grant and buy back fund.

4.0 Legal Comments 4.1The Council's power to give a grant is contained in Section 129 of the Housing Act 1988. That Section gives power to give a grant either for the purchase of another property or for the extension of a property or for a grant that is given for a 3

combination of those purposes. A grant can be given to a Council tenant or licensee. The Council has to have a settled Scheme if it wants to make such grants, but it can decide to change the terms of the Scheme. 4.2If the Executive decides that this property is surplus to the Council's requirements, the Council's power of sale is Section 32 of the Housing Act 1985. This is because this property is held by the Council as Housing Authority under Part II of the Housing Act 1985 and it is therefore an Housing Revenue Account property. 4.3Section 32 empowers the council to sell Housing property and provides that the sale may be effected in any manner. This is to be contrasted with Section 123 of the Local Government Act 1972, which applies to non-housing property, where there is a statutory obligation to obtain best consideration reasonably obtainable for the sale of a freehold interest. 4.4 However, Section 32 requires that any voluntary disposal of Housing property can only take place with the consent of the Secretary of State at the ODPM. The Secretary of State has issued a series of General Consents, but none of those will apply to this sale of housing accommodation on the open market. Therefore, the specific Consent of the ODPM will be required to any sale of this property. 4.5 The Local Authorities (Finance and Accounting) Regulations 2003 introduced the current rules for the Pooling of capital receipts, which replaced the old system of set aside for the repayment of debt. This means that 75 per cent of receipts from certain sales of HRA properties have to be paid to the Secretary of State at the ODPM for distribution to other Local Authorities, as the ODPM decides. This pooling requirement applies to Right to Buy sales or to any sale where the purchaser does as a matter of fact occupy the property as his only or principal home or intends to occupy the property as his only or principal home. Officers in deciding on the precise terms of disposal will consider this issue, in the context of the Council's fiduciary duty to the Council Tax Payers of the Borough.


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