Policy for the acquisition and disposal of land and property

Publication date: 15 January 2024

1.0 Introduction

The purpose of our Acquisition & Disposal Policy is to set out and inform members, officers and other interested parties as to the principles and procedures and a framework by which we will acquire and/or dispose of land and property including the disposal of such assets via lease.

Our valuer in respect of this policy is Land & Property Services (LPS) or an alternative firm of chartered surveyors recommended by LPS. Our Assets Department will obtain any valuations required in this respect.

2.0 Legislative framework

Acquisition

Councils are empowered to acquire land and property to facilitate functions for which they are responsible. We must comply with the Statutory Obligations as contained within Section 96 of the Local Government Act (Northern Ireland) 1972; The Local Government (Miscellaneous Provisions) (Northern Ireland) Order 2002, appropriate extracts of which are cited at on this link at Appendix 1; and the Local Government Act (Northern Ireland) 2014.

Disposal

The disposal of land and property is one of the most sensitive issues which councils have to deal with. Councils are empowered under The Local Government Act (Northern Ireland) 1972 to dispose of land and property but are subject to various constraints, some enshrined in law, (view Appendix 2 on this link) whilst others arise due to the expectation and need for councils to act in a fair and a transparent manner when disposing of such assets.

Councils must also bear in mind the guidance contained in the Disposal of Surplus Public Sector Property in Northern Ireland, issued by the Central Advisory Unit and any relevant circulars and guidance issued through Department of Finance and Department for Communities. This guidance is recognised as best practice by the Northern Ireland Audit Office.

It is therefore clear that we are bound to achieve the “best price or for the best rent or otherwise on the best terms that can be reasonably obtained.

In accordance with Section 7 (3) of the Local Government Act (Northern Ireland) 2014, the acquisition or disposal of land must be our decision and cannot be delegated to any officer. Therefore the decision making process in respect of all such matters is that the acquisition or disposal is referred to the relevant committee with responsibility for decision and then to full council for ratification.

For the purposes of this policy and for the avoidance of doubt, the disposal of land and property via lease is also covered by this policy and procedure. However, the awarding of a licence as a short term agreement in order to execute works by third parties is considered to be an operational matter and thus delegated to the relevant officer for Committee noting.

All references throughout to land equally apply to land, property or buildings. All references to the disposal (of land) should apply equally to the:

sale
leasing, letting or granting in fee farm
exchanging, giving or receiving money for equality of exchange
surrender (leasehold), granting a licence for use for any purpose or for such purposes as are mentioned in the licence
granting (by way of sale, lease, letting or licence) any easement, profit or right

in re of the land (as per section 45 of the Interpretation Act (NI) 1954).

3. Definition of acquisition

For the purposes of the Policy, an acquisition of land or property is considered to be an outright acquisition if it consists of:

a) A transfer of the freehold of the asset
b) A transfer of the leasehold of the asset

The acquisition of any interest, e.g. wayleave, easement, or reversionary lease is still regarded as an acquisition.

4. The Acquisition policy

Prior to us acquiring any land or property and/or any interest in land or property, a business case should be prepared by the relevant Head of Service or Director, setting out the:

purpose for which the asset is being acquired
evidence justifying the need
timescale in which the asset is required

together with a full Business Case Options Appraisal.

This appraisal, including a whole of life costing, should involve an appraisal of all the options for delivery of the final objective.

Consideration should also be given to all other council owned property and its potential suitability to deliver the objective, prior to any acquisition.

Any decision to acquire a land or property asset should be informed by both capital and revenue implications of ownership and the risk associated therewith. This report must be agreed with the Head of Finance and Corporate Management Team prior to presentation to the relevant service home committee to approve the business need and business case and then to Regeneration and Growth Committee to approve the acquisition.

Acquisition criteria

These are:

the acquisition makes a positive contribution to current/future delivery of council services
the proposed acquisition has the potential for future strategic regeneration and development

It is a requirement as part of this policy that the appointed Estates Officer must carry out a due diligence on the asset being proposed to acquire. This includes, but not exclusively, the following:

title including any incumbencies, rights of way, covenants etc.
planning assessment
condition Report if appropriate
adjacencies of land and property interests
overhead and underground infrastructure, wayleaves, existing or planned

5. Procedures for acquisition

5.1 Acquisition of property

Should we require land or property which meet the relevant service criteria the following will be undertaken:

5.1.1 Option appraisal

Completion of an options appraisal which shows the most economic and efficient funding arrangements and demonstrates the benefits and positive outcomes.

5.1.2 Legal consultation

This will form part of the business case.

We will be advised via a report to the designated services committee as to the title to the property together with any rights, obligations or potential hindrances to the acquisition of the property. Where the disposing party intends to include covenants or impose conditions, then legal advice will be sought concerning these prior to the property being acquired.

5.1.3 Ascertain valuation

Upon confirmation of the council decision to acquire, the Assets Unit will appoint and liaise with either Land and Property Services or another firm of chartered valuers recommended by LPS in order to obtain a market value.

The Valuers appointed as our agent will act within the framework of the Acquisition Policy, namely that we should bid within the accepted tolerances of the amount recommended by the professional valuer.

Any valuation report informing the acquisition value should be received within the six month period prior to the acquisition taking place.

5.1.4 Instruct solicitors

Following approval by Corporate Management Team appoint a solicitor from the Corporate Services framework. The Assets Unit will liaise with the solicitor to ensure satisfactory completion of the acquisition.

All acquisitions will be registered through the appointed solicitor as a matter of course within land registry within six months of the acquisition. In addition, our Asset Register will be updated so as to inform the council balance sheet and maintenance schedules.

6. Definition of disposal

For the purposes of the policy, a disposal of land or property is considered to be an outright disposal if it consists of:

a) A transfer of the freehold of the asset
b) A transfer of the leasehold of the asset
c) Lease or sub lease of a council asset or any part thereof

The disposal of any interest, e.g. wayleave, easement, or reversionary lease is still regarded as a ‘disposal’ but, as will be noted below, the disposal of such interests are not necessarily subject to the same requirements of public advertisement etc. Examples of such disposals would include wayleaves to NIE etc.

7. The disposal policy

Any disposal of council owned land and property shall be at the best price or for the best rent or otherwise on the best terms that can be reasonably obtained.

Committee may be asked to weigh up open market value against other influencing factors that may influence that value against community and longer term strategic interests. In such circumstances the Community Asset Transfer policy (see below) should apply for community interest.

Consequently it would be at the discretion of the members to determine the parameters that they wish to apply in influencing the ultimate valuation to be agreed in consideration of a disposal be subject to DfC approval.

Except in exceptional circumstances, (view Appendix 3 on this link), we will publicly advertise any land or property deemed surplus to its requirements or which a Third Party seeks to purchase, in such a manner as to ensure that transparency and cross community coverage are achieved.

The disposal of land and property falls into two distinct categories:

1. Land which has been declared surplus to requirements.

View Appendix 4 on this link

A site will be deemed to be surplus to our requirements if either:

i. It makes no contribution to the delivery of the council’s services.
ii. It has no potential for future strategic or regeneration/redevelopment purposes.
iii. It is not adjacent to a larger area of land or property in the ownership of the council.
iv. It is surplus to requirements or under-utilised by the respective service or those of other council department.
v. An alternative site has been identified which would achieve a more cost effective service delivery.
vi. Its disposal would help facilitate the achievement of our Corporate Plan objectives.
vii. Where all or part of the property or land is vacant and is likely to remain so for the foreseeable future.

2. Requests received from third parties to purchase council land or property

Given the range of requests received from third parties to purchase, access, retain interest in, and the like of a piece of land or property from us, each request should be dealt with on a case by case basis. However the following should be considered in every request:

i. S96 of the Local Government (NI) Act 1972 – Requirement to get best price or best rent.
ii. Any pre-emption rights.
iii. Has or should market testing take place?
iv. Should the land or property be placed on the open market – is it effectively surplus?
v. Consideration of impact on revenue budgets including existing council contractual obligations to third parties
vi. How is the land accessed? Can the applicant gain access to the land without going over council property?
vii. What is the land required for?
viii. Is it a key or ransom strip? (Stokes v Cambridge).
ix. Would disposing of the land have any impact on council operations or services, including maintenance?
x. Are there equality implications?
xi. Would the disposal have a detrimental impact on the remaining land, where only a portion has been requested?
xii. Is there any relevant historical background to the land?
xiii. Should any restrictive covenants or special conditions be attached to the disposal?
xiv. Would the disposal have any impact (positive or negative) on any of the Section 75 groupings or Rural Impact Assessment?
xv. Is the land to be disposed of a revenue generating asset e.g. car parks?
xvi. Existing covenants, incumbencies or other restrictions.
xvii. Is there a requirement for community consultation?
xviii. The extent of our interests/tenure.

8. Procedures for disposal

8.1 When land or property is declared surplus by a council department the following stages in the preparation for disposal will be implemented:

8.1.1 Internal consultation

The matter will be reported to Corporate Management Team in the first instance and following approval, to the relevant committee responsible for that particular council directorate. This report should also include all relevant strategic cross departmental and legal considerations in respect of the asset which will be available from the Assets Unit.

If the committee agrees that the asset is surplus to the directorate requirement, the matter will be referred to the Regeneration and Growth Committee for decision through the Assets team.

If the Regeneration and Growth Committee is satisfied that the asset is surplus to the requirements of any other council departments, then it will make a recommendation to council, prior to a commitment being entered into.

No agreements, arrangements or otherwise, with the exception of licences, in respect of land and property, whether acquisition or disposal, sale or lease, permanent or temporary, should be entered into without prior agreement having been given by the Regeneration and Growth Committee and ratified by full council.

8.1.2 Legal consultation

Full council will be advised via a report to the Regeneration and Growth Committee as to the title to the property together with any rights, obligations or potential hindrances to the disposal of the property and claw-back provisions. Where the third party intends to include covenants or impose conditions, then legal advice will be sought concerning these prior to the property being disposed. This will be completed by the relevant director together with our Central Support section.

8.1.3 Identify development potential

In order to obtain the optimum return to council from any sale, an appraisal will be carried out by the relevant director as to the development potential of the site. This will be completed in consultation with the Assets and Planning teams and will include checking the zoning of the area, where the land or property is situated, against the area plan as well as a development management assessment.

Development obligations and timescales would be contained in the contract. The contract would also contain claw-back provisions.

8.1.4 Ascertain valuation

Upon determination of the potential development uses, the relevant director will instruct Assets Unit to obtain a valuation from either Land and Property Services or another firm of chartered valuers recommended by LPS (for either lease or sale). The sale or lease value should not be below the valuation unless committee agree to tone the valuation against the other factors to be weighed, as outlined above.

In all cases where we propose to dispose of an interest in land or property at ‘less that best price or rent or otherwise on the best terms that can be reasonably obtained’ ministerial approval is required. All applications for such approval must include the following:

full details of the proposed disposal
terms of the sale/disposal
details of any outstanding loans on the property
a current (i.e. within 6 months) open market valuation of the land from the district valuer or other qualified valuer
a map of the area for disposal and its position in relation to other council property within its immediate vicinity

8.1.5 Costs

In cases where a third party has sought to acquire an interest in council land or property, the legal; valuation; and council officer administrative fees will be included in the premium.

8.1.6 Leasing

To ensure a consistent approach to leasing council property to third parties the Assets Unit in consultation with the commissioning Service Unit shall lead on the leasing process. A standard lease format shall be used, which shall be subject to the addition of any special arrangements pertaining to the particular leasing arrangement required.

Negotiations over the lease must be approached in a constructive and collaborative manner. The agreement to the terms of the lease on a vacant possession letting must be recorded in written heads of terms, stating that it is ‘subject to contract’ and summarising, as a minimum, the position on each of the aspects detailed in Appendix 4.

Leases should be considered on a full repairing and insured basis. The amount of rent, should initially be considered on a commercial basis, as assessed by Land and Property Services as best rent whilst taking into consideration potential added benefit to the delivery of relevant council services as a result of the lease e.g. community development or tourism benefits. Where significant community benefit can be established special arrangements may be agreed for example a Community Asset Transfer (CAT).

The Heads of Terms shall be agreed by both parties and approved by the Regeneration and Growth Committee. Following completion the final lease shall be brought to Full Council for signing and sealing.

As a matter of course all lessees will be restricted in the extent to which they can sub-lease the property without prior approval through our committee structure. Any alienation clauses should be included in the original lease and be aligned to the overall considerations of the lease arrangements.

8.1.7 Community asset transfer

The NI Executive’s Community Asset Transfer (CAT) policy was developed to support the commitment in the Programme for Government (2011-2015) to “invest in social enterprise growth to increase sustainability in the broad community sector”.

The policy provides a framework to facilitate community ownership of surplus public sector assets as an option as part of the normal disposal process.

CAT usually involves a transfer at less than market value, either at a reduced cost, or for a nominal consideration. The social, economic or environmental benefits of the proposed Transfer may be taken into account in determining the value.

Community Asset Transfer can take place in different forms including through:

a management agreement
a licence to occupy
a short lease
a long lease
freehold

View our separate policy for Community Asset Transfer considerations on this link.

8.1.8 Method of disposal

The disposal of all land & property will normally be through Land and Property Services Central Advisory Unit. The Northern Ireland Audit Office have stated this to be best practice for councils. View Appendix 5 on this link

LPS will value the property which should and CAU will circulate details of the property to all public bodies in Northern Ireland. If, after a reasonable time no applications of interest are made or negotiations fail to reach agreement, a commercial agent will be appointed to handle the disposal.

The commercial agent will advertise the property sale and it will be disposed of to the best value bidder who meets our conditions as outlined in the property particulars.

There may be exceptions to this e.g. encroachments and in such instances the relevant director will consider the our Encroachment Policy, and following the consideration and recommendation of our legal advisor, prepare a report to the Regeneration and Growth Committee.

However, apart from agreed exceptions, for all disposals the Assets Unit will carry out the following:

appoint LPS and Central Advisory Unit
if necessary appoint a commercial agent to prepare a marketing plan and property particulars
upon agreement of satisfactory terms with a purchaser, appoint a solicitor from the Corporate Services Legal Framework
following council agreement and the requisite call-in period our legal advisor will act on our behalf to complete the disposal

9. General

The relevant director and Assets Unit has responsibility for maintaining records for buildings and land and their disposal.

In order to verify our fixed assets, it is necessary to establish which fixed assets have been acquired/disposed of during the year.

Any disposal of property should be in keeping with legislation pertaining to the disposal of land/property.

Audit trails of all disposals will need to be maintained and accessible by internal/external audit to verify actions/values and giving detail as to how we made the decision to dispose.

Any appointment of a third party consultant must reserve the right of access to their records in relation to the transaction. This will be dealt with by way of appropriate contract conditions.

View our acquisition and disposal processes on this link