FGN2020/04 COVID-19 - short-term changes to approval process for operational property transactions: April 2020
FGN2020/04 COVID-19 - short-term changes to approval process for operational property transactions: April 2020
The purpose of this note is to confirm temporary guidance in place during the current Covid-19 crisis.
Background
This guidance provides advice on a short-term Property Controls relaxation now in place to allow expiring leases to be extended for up to one year in lieu of submitting formal business cases.
Current arrangement
Supplementary guidance to the Scottish Public Finance Manual (SPFM) makes it clear to public bodies that, in considering future accommodation needs, the presumption should be in favour of suitable solutions from within the Government estate; and that existing expiry and break opportunities on all leases and other property holding arrangements will be exercised unless there is a compelling justification approved by the Cabinet Secretary for Finance. To support this a Property Controls arrangement is in place. A business case is required and is reviewed by the Property Controls team prior to a request for approval to a property transaction being sent up to the Cabinet Secretary and that of the relevant portfolio Minister.
Change to current arrangements
As business cases for property transactions can require a considerable amount of preparatory work, including an options appraisal, property searches and advice on market costs, for many organisations this will be difficult to fulfil during the COVID-19 crisis and will divert critical resources. A short-term relaxation of requirements has therefore been agreed with the Cabinet Secretary for Finance.
Where they are able to do so with their current landlords and where business priority does not require alternative arrangements, Scottish Government and all public bodies covered by the SPFM are permitted to extend their current lease arrangements for up to one year provided all other aspects of the SPFM are met and the proposal is approved by the Chief Surveyor. Business cases for longer term arrangements can then be prepared and submitted at a later date once resource pressures and restrictions on movement are improved.
How to proceed
Consent for the extension or renewal of a lease is still required, in particular to ensure that bodies have been proactive in guarding against the risk of landlords seeking to impose unreasonable cost increases for what will be a short-term extension. The authority to approve temporary lease extensions or renewals for up to one year is delegated to the Chief Surveyor. This should reduce the burden on Sponsor Teams and Ministers.
Please contact propertydivision@gov.scot or propertycontrolsteam@gov.scot
In the first instance with your request for approval. A surveyor will be allocated to support you.
To simplify the process the following should be included in your request:
- Property details – location, type of property (eg office) and the function it performs for your organisation.
- The current lease arrangements – original lease term and expiry date; rent and other outgoings per annum.
- Proposed action and changes to the lease terms eg length of extension, any changes to rent and other outgoings.
- Confirmation of longer-term intent beyond the extended period.
- Confirmation that you have funding in place to continue with the property
- Confirmation that you have appropriate internal authority to proceed.
- Any other information you consider relevant.
Should you require any general related property advice please also contact propertydivision@gov.scot or propertycontrolsteam@gov.scot
Please copy your request to your Sponsor Team.
Future arrangements
This short-term facility will be reviewed prior to the end of 2020-21.