Agenda item

To provide the Investment Board with an opportunity to consider investing in impaired residential property as part of the Commercial and Investment Strategy.

Members considered the Residential Property Investment report presented by Peter Catchpole. 

Members made comments, asked questions and received responses as follows:

·         Councillor Benney said there is a reason why many impaired properties are not in use so how would we secure them if we do want to buy them, particularly where we have struggled to find the owners of various dilapidated properties. Furthermore, apart from the purchase cost, there will be a great cost to bring the bad ones back into use and this then falls under regeneration rather than investment. We cannot make people sell so, short of compulsory purchase, what approach would be taken to acquire such properties as they would already be on the market if their owners did want to sell them.

·       Councillor Boden responded that potentially there are a number of properties within the scope of this policy which need either renovation or significant repairs and renewal. He agreed with Councillor Benney that the only purpose to purchase any of these will be to generate revenue, therefore we need to concentrate upon their revenue generation potential. Some of the properties are on the open market or available at auction. He agreed that there would have to be a view towards the total costs involved and the revenue to be gained from it and that is why the protocol established is key. There is also the prospect of opportunities with leasehold enfranchisement. More properties are available on the market now with 60 years or more left to run because so many with 99-year leases were available in the 1980s, but once a lease starts running down it becomes more difficult to obtain a mortgage. However, the process is not complicated, and we may be in a stronger position to move forward on these and can take a longer-term view than private investors or individuals. A third source of impaired properties is through contact with the owners of properties that have been empty for some time. A levy of significant multiples of council tax on such properties provides a financial incentive to encourage owners to bring them back into use. Therefore, there are properties out there for potential investment.

·       Councillor Benney stated that he was still concerned about renovation costs and reiterated that we are an Investment Board but the business of bringing derelict properties back into good repair is regeneration, which is a Council responsibility. Furthermore, although there may be an option to extend a lease, buying a property on a short lease means you are buying a depreciating asset. Therefore, in the strong position we are in, having cash ready to buy, then buying freehold seems the better option. However, each case needs to be looked at on its own merit and he would like to see some early results to ensure that it is worth the effort.

·         Councillor Boden said that he understood Councillor Benney’s concerns and agreed this is not meant to be a regeneration project, but it is an investment project and will be evaluated as such. 

·         Councillor Boden said he knew that Cambs County Council had received agreement to substantial funding from the Public Works Loan Board (PWLB) for future schemes yet to be decided and asked Peter Catchpole if there is the facility for a council of our size to approach the PWLB for potential agreement to funding for this project and other future qualifying schemes. Peter Catchpole said there are lot of challenges to the rules being made in respect of the PWLB and officers are keeping a watching brief on it, but he will contact County and follow up on that.

The Investment Board AGREED to:

·         Maintain a watching brief to identify such opportunities if this direction is followed;

·         Establish an Outline Business Case process to evaluate any such opportunities;

·         Request a full business case on each potential acquisition when identified;

 and AGREED

·         That this should be delivered through Fenland Future Ltd and ask the Board of Directors to update their Business Plan accordingly.