GovWire

Buying, selling and leasing property

Department For Education

August 7
13:15 2024

You should have a well thought out business case before constructing, buying or leasing more space.

New college space means new running costs, legal responsibilities and some form of capital investment most of the time. You should only develop, buy or lease new space when the facilities you already have are not appropriate.

Find out more about the principles of floor space planning and developing an estate strategy.

Site search and options appraisal

Before buying or leasing new space, you should:

  • find the right premises
  • decide if leasing is an acceptable option - for example, consider the limitations on capital grant support or existing secured borrowing that may apply

To do this, you will need to establish your own search criteria and should carry out a site search. While this is something that can be done in-house, it may be helpful to work with local commercial agents as they:

  • will have a good understanding of the local property market
  • may be aware of other off market opportunities

Effective practice point

The Further Education Commissioner (FEC) team sometimes come across colleges which have committed to new premises without enough research into:

  • accessibility
  • potential competition from other providers

This can undermine the viability and sustainability of the site and become a drain on the colleges financial performance. In some cases these commitments can take time to unwind, so comprehensive research before proceeding is always advisable.

A site search can help you understand:

  • which properties are available within your area
  • whether your requirements can be met

The parameters used for the site search will depend on your requirements but will typically include:

  • details of the type of property you need
  • the approximate size of the property
  • your preferred location

Once you have carried out a thorough investigation of the market, you can produce a list of properties. It should include a description of each property as well as its:

  • address
  • size of the site and any existing buildings
  • terms and costs, including rent, service charge and rateable value
  • current ownership
  • location, including proximity to public transport and use of neighbouring properties
  • site plan
  • existing planning use
  • EPC rating
  • market commentary

Doing this will provide a detailed insight into the market for the type of property in question. At this point you should assess whether the available properties meet your criteria, especially in relation to cost. If they do, you should undertake an options appraisal.

Options appraisal

An options appraisal will allow you to compare several properties against one another, using a set of key evaluation metrics. Each property is then given a score for each metric to show how well it meets the requirements.

This will help you to:

  • see which property is best suited to your needs
  • rank the properties for consideration by governors

The criteria used to assess properties will depend on your specific requirements. They may include consideration of:

Size

Assess whether the property is the right size for your requirements. If it is smaller than planned, can you still operate from the property effectively? If it is too large, is there scope to sub-let additional space?

Location

You should check the suitability and quality of a sites location. How will staff and learners get to the site? Is there good public transport and parking? Are there any neighbouring property uses which could be helpful or problematic?

Cost

Assess the total cost of the property. Is the rent reasonable and affordable? What other costs will you have to incur? For example, consider service charge and rates, modifications and fit-out. What are the anticipated running costs of the property?

Planning risk

Are you able to use the property with its existing planning use designation or will you require a change of use application? Consider both the risk and the costs of this.

Technical risk

Is the property in good condition and suitable for your needs? If you will need to undertake fit-out or refurbishment works, what is the cost of these?

Deliverability

Check how easily the property could be leased and made suitable for your requirements. For example, is the property accessible for learners with a disability?

A property is more likely to be a good choice if it is already being used for what you need it for. A property that requires work and is currently let to a third party would be more difficult to make work.

Flexibility

How long will you commit to the property and how simple will it be to exit the facility if this proves necessary? For example:

  • potential sale for alternative use
  • sub-letting (if a purchased property)
  • risk of dilapidations or reinstatement costs (if a leased property)

Managing public money

If any aspects of the site choice are likely to be novel, contentious or repercussive transaction in terms of the use of public money or reputation of the college and its learners, then refer to Managing public money. If there is any doubt, you should consult with the Department for Education before proceeding.

Case study: Trafford Colleges Group (TCG)

To prepare for the merger with Stockport College, Trafford Colleges Group completed an options appraisal. They did this to test the case for relocation of most provision from the main Stockport campus against 3 alternative options. The options included:

  • do nothing
  • relocate to an alternative site
  • complete major building works on the existing site

This resulted in a change of plan in favour of a solution that avoided a split campus and retained the existing site.

Read more about how Trafford Colleges Group and Stockport College managed their new merged estates.

Buying property

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