REF: PCC/D/2024/08
EXECUTIVE SUMMARY
As part of the Police and Crime Commissioner’s (PCC) wider Estates Strategy, the asset known as Malvern Police House, located on 42 Albert Rd North, Malvern, WR14 2TP has been identified as surplus to requirements and marked for disposal. Since 2019 the property has either been void or occupied by guardians.
The property was marketed via local Estate Agents at offers in the region of £275k and an unconditional offer to purchase the property for £268k has been received.
Following consideration at the Estates Governance Board on 13th May 2024, the disposal was supported in principle, as documented in the minutes of the meeting.
It is therefore proposed that the PCC confirm the sale of the property for the agreed price, and authorise the payment of commission to the selling agent at 1% of the market value.
PROPOSAL
For the PCC to:
- Approve the sale of the former police house 42 Albert Rd North, Malvern to the interested party for £268k subject to contract only.
- Approve the Marketing Agents commission of 1% of the achieved price of £268k. This equates to £2.68k.
APPROVAL OF
West Mercia Police and Crime Commissioner
I hereby approve the above proposal.
PART 1 – NON-CONFIDENTIAL/EXEMPT FACTS AND FIGURES
SUPPORTING REPORT
The asset at 42 Albert Road is a 1960’s 3-bedroom house built for police staff accommodation. In the 1990s, 7 of the 8 police houses (34, 36, 38, 40, 44, 46 and 48 Albert Rd North) at Malvern were disposed of. This asset, owned by the PCC, is the last of those original 8 police dwellings. The property sits on a generous plot with outbuildings but provides no parking. The ground floor comprises of a hallway, kitchen, a living and a dining room. The first floor has three large bedrooms and a bathroom.
The property became void in early 2019 after the serving officer living on site retired and vacated the house. Since then, the premises have not been required for operational policing and surveys of the condition of the building fabric and services show it ranging from ‘average to poor’. Combined annual operating revenue repairs and planned maintenance costs are estimated at circa £10k per annum for the next 2 -3 years as a minimum. In order to prevent the property from falling into disrepair, and to provide a physical deterrent against vandalism and to generate income (£2,160 per annum) the property has been occupied by appointed ‘guardians’ since July 2021.
The PCC has invested funds to ensure they fulfil their obligations in respect of statutory compliance , repairs and maintenance as well as to maintain security and to prevent further building dilapidation. However the anticipated levels of investment of circa £30k over the next 3 years are not sustainable or justifiable to the public purse on an asset that is surplus to requirements.
Initial in-house valuations of the asset ranged between £180k – £220k. However, to evaluate and determine the best market rate, the PCC’s estates function obtained 3 valuations from independent estate agents. Based on the highest valuation, they then procured and appointed that agent to market the property.
Upon inspections, the agent advised that the building needs substantial investment to undertake refurbishment and modernisation, but it would attract a lot of interest on the open market due to the size of the plot, desirable location, proximity to the town centre and size of the rooms in the building. The agent advised that a future owner would continue to use the premises as a dwelling and therefore recommended the property was advertised on the open market asking for offers in the region of £275k. This marketplace valuation is £55k more than the top of the initial in-house valuation.
The property was released to the market in December 2023. Since then 14 viewings were conducted. This brought forward two substantive formal offers worthy of consideration.
The first offer was declined as it was deemed to be too far from the market valuation.
A second interested party submitted an offer of £266k. After negotiations, the offer was raised to £268k. They are a cash buyer and are seeking to complete the conveyance as soon as reasonably practicable.
This second offer is seen as the best value offer, given only two offers were anywhere near the sought after figure of £275k. Whilst it is £7k below, the interested party is a cash buyer, and the conveyance can be completed without any additional costs associated with a protracted conveyance i.e. legal and marketing agent fees.
In addition, there is a believed risk that if the second offer is not considered and approved, the interested party will withdraw their offer and the PCC will be required to put the asset back on the market, incurring additional marketing costs and legal fees.
It is therefore recommended that the cash offer of £268k represents best value to the public for the asset.
STRATEGIC CONSIDERATIONS
This decision supports the following element(s) of the Safer West Mercia Plan:
☐ Putting Victims and Survivors First ☐ Building a More Secure West Mercia
☒ Reforming West Mercia ☒ Reassuring West Mercia’s Communities
The decision supports the above listed objectives through the following:
• As there is no operational policing requirement or demand for this asset, its disposal demonstrates West Mercia manages its resources to maximise value, effectiveness, and efficiency
• Savings from annual revenue repairs, maintenance and future maintenance costs of circa £30k will be avoided, thereby demonstrating that financial resources will be prioritised towards front-line services to the public
• Sale conducted via competitive, open process and maximum possible price negotiated, demonstrating commitment to achieving best value for the public purse.
BENEFITS AND THEIR REALISATION
Benefits include:
• Maximised capital receipt income to reinvest funds to support delivery of policing services
• Realisation of asset disposal income targets and timeframes as part of the West Mercia Estates Strategy 2012-26 and Estates Annual Savings Plan
• Mitigation of risk from unbudgeted annual and future maintenance costs – This asset is in poor condition and the building fabric and utility services infrastructures are quickly deteriorating, requiring significant investment and funding, not provisioned in current or future budgets
• Mitigations and removal of risks to the PCC in respect of their Landlords legal requirements to ensure property specific statutory and regulatory compliance duties and obligations are adhered to and fulfilled.
FINANCIAL AND TREASURER COMMENTS
The property has been placed on the open market, with no restrictions placed on the sale. A reasonable number of interested parties have viewed the property which has generated 2 offers. Although the initial projection was that the property will obtain a sale price of more than £275k the current unconditional offer at £268k is the highest one received. The Agents appointed to market the asset have recommended the offer is accepted.
Given the lack of investment in the property, and limited data on recent sale of similar properties in the area it is difficult to make direct comparisons in the market. The guide sale price was based on the highest valuation provided from 3 different estate agents.
If the property is sold, the PCC will not only obtain the capital receipt, but will also make annual revenue saving on the running costs for the premises (including council tax, compliance, planned and reactive maintenance) as well as avoiding future and potentially significant capital costs to improve and modernise the asset.
Whilst we could continue to market the property or invest in renovation to try and realise an increased return, both come with risk and uncertainty that they will result in a better sale value.
On that basis the recommendation is that the sale value represents a reasonable return.
Treasurer
signed
07/06/24
LEGAL CONSIDERATIONS
By virtue of schedule 11, paragraph 14 of the Police Reform and Social Responsibility Act 2011 the Police and Crime Commissioner may do anything which is calculated to facilitate, or is conducive or incidental to, the exercise of the functions of commissioner. That includes entering into contracts and other agreements (whether legally binding or not) and acquiring and disposing of property (including land).
PUBLIC ACCESS TO INFORMATION
Information in this form is subject to the Freedom of Information Act 2000 (FOI Act) and other legislation. Part 1 of this form will be made available on the West Mercia Commissioner’s website. Any facts and advice that should not be made automatically available on request are not included in Part 1 but instead in a separate Part 2 report.
OFFICER APPROVAL
Chief Executive Officer
Signed
07/06/24
