TREASURY AND RESOURCES DEPARTMENT
PROPERTY HOLDINGS
Property Transaction for Ministerial Decision - Minister for Treasury and Resources
Proposed Sale of Medina, 26 Seale Street, St Helier
PG 1484/1
Purpose
To seek approval from the Assistant Minister for Treasury and Resources for the Public to sell Medina 26 Seale Street, St Helier in accordance with the Minister for Housing’s Decision MD-H-2008-0102.
Background
On 17th July 2007 the States approved the Social Housing Property Plan 2007 – 2016. In doing so the States adopted the proposition, part (i) of which required that ‘… a number of non-core, prime location properties, as detailed in Appendix C of the Social Housing Property Plan 2007 – 2016, should be sold on the open market’.
Further at part (ii) the States agreed that ‘the Housing Department should make arrangements to enable States’ rental tenants to apply to buy one of the properties listed in Appendix D of the Plan, according to the 10 year timetable specified, on a shared equity basis or at full value, and with first-time buyer conditions attached ……’.
Financial Implications
The property listed above requires expenditure in order to make the individual units fit for sale to States’ tenants; the Housing Department undertook only to sell homes that meet the decent homes standard to States rental tenants so as not to risk passing on large maintenance commitments to buyers. This is particularly important with flats where parts of the building structure might need to be owned in common or at least have legal processes and Articles of Association in place to take care of long term maintenance. A conservative estimate, undertaken on behalf of the Housing Department, of necessary expenditure for this property might be as much as £75,000. It is unlikely that existing States rental tenants who have expressed a desire to purchase will be able to consider this property. If sold on the open market, the property could be sold in their present condition avoiding the cost of unnecessary refurbishment.
This property has been valued externally both as potentially refurbished homes sold to States’ rental tenants and without any refurbishment for sale on the open market in present condition as follows:
ADDRESS | Value for Shared Equity Sale Assuming Full Refurbishment And 100% paid | Sale on Open Market Assuming no refurbishment | Cost of Refurbishment (estimated) to meet Decent Homes Standard | Difference (benefits of open market sale) |
Medina, Seale Street, St Helier | £430,000 | £360,000 | £75,000 | £5,000 |
Preliminary advice from the Conveyancing Section of the Law Officers’ Department has indicated that the contract contains no restrictions which would create a barrier to open market sale.
Medina has been valued at £360,000 in accordance with the approved valuation policy MD-H-2007-0057. The valuation set is therefore valid until 12th November 2008.
On 23rd May 2008 (MD-H-2008-53) the Minister for Housing recommended that the property be put on the open market for sale at offers in excess of the valuation.
On 1st September 2009 (MD-H-2008-0087) the Minister for Housing recommended the sale of the property to Emma Jane Short and Thomas Muirhead jointly for the sum of £380,000. Miss Short and Mr Muirhead have since indicated that they wish to purchase the property in the name of E.T Developments Ltd. The price remains the same at £380,000 which is £20,000 over the valuation and will be a cash purchase, with no onward chain.
Conclusion
There is appears to be no benefit to the Public in the Housing Department incurring costs in refurbishing this property nor is it likely that any States’ tenant would be in a position to undertake the refurbishment. As such the most viable option is for its sale on the Open Market to allow the units in accommodation to be refurbished and brought back into use. The Minister for Housing seeks the acceptance from the Treasury and Resources Minister to the sale.
Recommendations
It is recommended that the Minister for Treasury and Resources approves:
- The sale of Medina, 26 Seale Street on the open market in accordance with those other properties being sold under appendix C rather than in accordance with P6 2007 appendix D1 “Planned shared equity and outright sales to social housing tenants”;
- the sale of Medina 26 Seale Street for the sum of £380,000 to E.T Developments Ltd;
- and authorises a suitable contract to be passed before the Royal Court
Accordingly it is recommended that the decision of the Minister for Housing is accepted.
Written By: Paul Griffin
Signature …………………………
Authorised By: David Flowers
Signature ………………………… 09 October 2008