Examination of Witnesses (Questions 180
- 199)
WEDNESDAY 3 MARCH 2010
MR ROGER
BRIGHT, CB
Q180 Jim Cousins: You provide affordable
housing and you provide key worker housing for a number of specific
organisations, for a number of specific purposes. You have been
doing it for a considerable number of years, not as long as the
Queen has been in Windsor Castle but for quite some time. Have
you cleared with those organisations that you are getting out
of that business?
Mr Bright: We have not cleared
it with them, no, but we have obviously informed them that that
is what is happening.
Q181 Jim Cousins: You have not discussed
it with them or got their approval?
Mr Bright: We have not got their
approval but we have informed them.
Q182 Jim Cousins: Your housing management
function, which so far as we can tell from all the evidence appears
to have been very creditable to you, you have wound up and brought
back to headquarters and changed the nature of its operation.
Mr Bright: That is not entirely
correct. What we have done is consolidate the management of our
estates. There are four estates and the management was divided
up between the four estates. We consolidated that into one central
point on one of the estates about two years ago and we have also
strengthened the links between the management on the estate itself
and also headquarters because that had become a bit attenuated
at the time.
Q183 Jim Cousins: Last year you did
an open market valuation of your property portfolio, on an open
market basis. Did you do that for your residential properties?
What was the outcome? What was its value?
Mr Bright: We did a valuation.
We value the estate every year. The value of this particular group
of properties with a couple of other blocks that are not included
in the sale, as at September last year, was £247 million.
Q184 Jim Cousins: What is its value
on an open market basis?
Mr Bright: We valued it on the
basis of current use and current occupation. We have not done
an open market valuation.[5]
Q185 Jim Cousins: There is no open
market valuation. In answer to our Chairman, you said that the
protection of the existing tenants' rights would be built into
the paperwork in any disposal.
Mr Bright: Yes.
Q186 Jim Cousins: In your discussions
with the various bodies you have been talking to, that has always
been quite clear: that the existing tenants' rights would be protected?
Mr Bright: Yes, that is correct.
Q187 Jim Cousins: It is not correct
that you have withdrawn the tenants' handbook?
Mr Bright: We have withdrawn the
tenants' handbook.
Q188 Jim Cousins: The tenants' handbook
is the expression of those rights from the standpoint of the existing
tenants. That is how they know.
Mr Bright: We have withdrawn it
in the sense that we are not issuing it to any new tenants.
Q189 Mr Todd: Can I go into some
of the figures? Turning to page six of your report which summarises
the urban estate, the property valuation set at the end of 2009
was £4,231,000,000.
Mr Bright: Yes.
Q190 Mr Todd: Elsewhere we find that
15% of that valuation was the housing stock. Am I right in thinking
that?
Mr Bright: I think that may be
the total of our residential stock.
Q191 Mr Todd: That is what I am looking
for first. The total would be, on my reckoning, £635 million
as a valuation of your residential stock?
Mr Bright: Yes, I think that must
be correct. I am sorry. I did not have the figures immediately
to hand.
Q192 Mr Todd: You are proposing to
sell £250 million-worth of your urban stock, the housing
stock valued at £635 million?
Mr Bright: We are considering
it. We have not taken the decision yet.
Q193 Mr Todd: Give me an idea of
how that decision was made as to how to proceed. Obviously not
all stock has exactly the same value or indeed the same rental
characteristics. I am not clear what proportion of your stock
is actually being proposed or suggested for sale. You are obviously
retaining a substantial element. I am not clear whether that is
for a further disposal at a later stage or if it is seen as having
a different purpose. I am not clear as to the strategy really.
Mr Bright: The bulk of the remaining
residential property that we hold is predominantly property let
on long leaseholds in the area in and around Regent's Park and
in Kensington Palace Gardens. There are some other smaller areas
of residential housing but the bulk of the remainder is around
Regent's Park and Kensington Palace Gardens.
Q194 Mr Todd: What one could possibly
conclude is that you are selling the less attractive part of your
residential portfolio. If I just go to the revenue—
Mr Bright: I would not describe
it as the less attractive part of the portfolio.
Q195 Mr Todd: I am just going to
explore what I think you think is less attractive about it. The
revenue by activity on the same page—and this does exclude
service charge income—says that £12 million was achieved
from residential property on a valuation of, as I said, four billion
overall, which would suggest a rate of return on really a trivial
level almost. Could you break that down because I am not clear
how that £12 million equates to the total valuation of the
asset that is here or indeed to the asset that you are suggesting
may be sold?
Mr Bright: In relation to the
property that may be sold, the gross revenue is of the order of
about £7 million and the net is of the order of about £3
million.
Q196 Mr Todd: You have a £3
million net revenue on a valuation of 250 million?
Mr Bright: Yes.
Q197 Mr Todd: If one compares that
to other parts of your portfolio, that is where I meant less attractive
in terms of returns. This is a less attractive asset within the
stock.
Mr Bright: It has a relatively
low return, yes.
Q198 Mr Todd: And also presumably
its return does not change over any long period of time. Turnover
on the estates is lower?
Mr Bright: Yes. Turnover on the
estates is low, that is correct, yes.
Q199 Mr Todd: I am also interested
by the legal framework of the protection of your tenants. You
are not covered by some aspects of the law relating to tenancy.
I believe that the arrangements for buying the freehold, extending
the leasehold, enfranchising, is not the same as shared by any
other tenant. Is that right?
Mr Bright: Perhaps I could just
explain that. As a Crown body, we can be exempt from the law on
leasehold enfranchisement. What in fact happened is that some
years ago we agreed with the Government that we would abide by
the law on leasehold enfranchisement except in certain selected
areas which might be described as—
5 Ev 122 Back
| 
