The Overview & Scrutiny Committee of Southwark Council met on Tuesday 20 October 2015 to receive an update on an independent review of rental and lease arrangements for the council's non-residential properties. The review aims to ensure council policies are consistently applied and to identify any inconsistencies or potential issues, with a particular focus on the transition to market rents for all properties.

Review of Council Property Rental and Lease Arrangements

The committee received an update from Matthew Pahal, Senior Manager for Baker-Killing, who is leading an independent review of rental and lease arrangements for the council's non-residential property portfolio. The primary objective of this review is to ascertain whether the council's policies and procedures are being consistently applied across its approximately 2,000 non-residential properties.

Mr. Pahal outlined the scope of the review, which includes examining existing lease agreements and rental charges to determine if they align with market rates and council policy. The review will also investigate the decision-making processes behind these agreements to ensure transparency. A sample of 10 properties has been selected for an initial in-depth review, with the aim of obtaining all related lease agreements by the end of the week. Mr. Pahal anticipates that a draft report will be ready by 6 November, with the final report to be presented to the committee a week before their next meeting, subject to access to information and officers.

Councillor Adele Morris sought clarification on the purpose of the review, and Mr. Pahal explained that it is to verify if the council's policy of moving towards market rents for all organisations, including voluntary sector groups and charities, is being implemented effectively. He stated that the review will identify any discrepancies and understand the reasons behind them.

Councillor Jasmine Ali, Deputy Leader and Cabinet Member for Children, Education and Refugees, provided context for the review, explaining the council's policy to transition away from subsidised rents towards market-based agreements. She acknowledged that this transition period has created uncertainty due to changing market conditions. The review aims to identify any aberrations, such as commercial businesses potentially paying significantly reduced rents, and ensure these are addressed promptly.

Councillor Ali also raised concerns about fairness and transparency, particularly for independent businesses operating in local shopping areas like Southern Park Road. She highlighted that larger businesses, such as Iceland, Co-op, and Tesco, can often secure longer leases and more favourable rents due to their commitment, while independent shops, unable to commit for such extended periods, may face less advantageous terms. She urged the review to consider the length of leases and how to support fairness beyond simply considering which company has the best legal representation or can sign the longest lease.

Mr. Pahal confirmed that the selection criteria for the sample of properties includes understanding why different rates might be applied to similar properties on the same high street, with the goal of identifying drivers for lease term variations and developing a fairer system. He indicated that recommendations would be made regarding policy amendments if necessary, but clarified that the review's primary scope is to assess the consistent application of the current policy.

The discussion also touched upon the potential for public access to the information gathered. It was noted that the audit report would be a public document, and recommendations to the Cabinet might include changes to council policies to enhance transparency. The possibility of needing legal advice regarding the redaction of certain information for public release was also acknowledged. The committee expressed its anticipation for the next meeting, where a further update on the review is expected.