Decision Maker: Babergh Cabinet
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: Yes
It was RESOLVED:- That approval was given to begin the process of negotiating a long-term lease arrangement with Orwell Housing Association for the two Extra Care Sheltered Housing Schemes; William Wood House and Sydney Brown Court.
Reason for Decision: The existing contract cannot be extended any further due to the length of time it has been in existence and the extensions historically provided. A decision on the long-term future of the sites is required to give all stakeholders security.
Alternative Options Considered and Rejected:
1.1 Option to Re-tender
The Council could re-tender the contract to provide the services for residents at William Wood House and Sydney Brown Court. This exercise was last carried out in 2004 and the market has not been tested since then. However, this option does not address the fundamental issues pertaining to the increasing costs and resources required to maintain and manage these properties as Extra Care facilities.
1.2 Option to sell
The Council has the option to sell the properties. It is estimated that it would take approximately 12 to 18 months to properly market the properties.
The 2019 report estimates a sale price for each of the properties to be in the order of £2,500,000 to £3,000,000. The report warns that these estimates may need to be adjusted downwards as the rent is capped by the resident’s tenancy agreements.
It was assumed that any sale would take place with sitting tenants and would constitute a stock transfer. The alternative would be to decant the tenants to other accommodation or wait for the schemes to become empty over time in order that vacant buildings could then be sold. Both options would come with significant challenges and risks, and this report has not explored them in detail.
1.3 Option to Lease:
If this option is agreed, then the Council’s objective would be to grant a lease on a Full Repair and Insurance (FRI) basis, whereby the leasee is made responsible for all internal and external repairs and maintenance of the buildings, other structures and grounds, together with the providing adequate insurance for the buildings and their contents.
A commercial rent for the care homes would be in the order of £200,000pa to £250,000pa for each care home. However, this estimate of the rent may need to be adjusted downwards:
· as the rent is capped by the resident’s tenancy agreements; and/or
· if the leasee is to be made responsible for certain planned capital expenditures to upgrade the care homes.
If this option is adopted, then the Council’s Strategic Assets Team has enough expertise to negotiate the terms and conditions of the lease.
Any Declarations of Interest Declared: None
Any Dispensation Granted: None
Publication date: 10/10/2019
Date of decision: 10/10/2019
Decided at meeting: 10/10/2019 - Babergh Cabinet
Effective from: 18/10/2019