Agenda item

Tudor House: Surrender and Re-grant of Lease

That the Committee notes the use of delegated powers to grant a lease of Tudor House on revised terms to trustees of Worcester Municipal Charities CIO.

Minutes:

The Committee received an information report on a decision to use delegated powers to grant a lease of Tudor House on revised terms to trustees of Worcester Municipal Charities CIO.

 

The Corporate Director – Finance and Resources presented the report and explained that the Council’s Cabinet had approved a 125-year lease in 2008, on condition that the property be retained as a facility for public use. Since then, the tenants had established a successful business model, the property was in good repair and the museum well-established.

 

Earlier this year, Council officers were approached by the tenant with a request to terminate the lease and transfer the property freehold to the Trust. The proposal was not supported on the grounds that it would cancel the Council’s ability to specify the future use of the premises.

 

An extension of the existing lease to a period of 999 years was proposed as an alternative, which captured both the Trust’s desire to secure long-term title to the asset and the Council’s aims of retaining it for the current use. Whilst the granting of a lease longer than 125 years was a highly-unusual approach, in this case Officers recognised the value of retaining the existing leaseholder.

 

The Trust had further proposed that the Council’s grant of planning permission and/or listed building consent is deemed to be the landlord’s consent, and no licence is required in respect of internal and external repairs, alterations and new build. This was not accepted by Officers as the Council, as landlord, must retain the right to approve any alterations which may materially affect the condition or future use of the property. However, it was agreed that legal costs incurred in the preparation of the new lease and any future licences to alter would be borne by each party, rather than by the tenant, as at present.

 

The tenant also requested a right of pre-emption on the freehold should the freeholder of the day choose to dispose. Officers concluded that this should be granted, subject to the right not applying on any transfer of title under local government reorganisation or as a consequence of the statutory transfer of powers.

 

Other than the changes set out above, all other terms of the lease would be retained.

 

The Corporate Director highlighted that the leaseholder had invested an estimated £93,500 in the development of the property since 2008. Further investment is proposed by the Trust to repair the heating system and convert external buildings into education space.

 

In the ensuing discussion, a question was raised about the potential for the leaseholder to use the property as security for a loan, and whether this could put the Council in a vulnerable position. The Corporate Director – Planning and Governance advised that, in her view, landlord’s consent to any variations or changes would be the most effective mechanism for dealing with this. She had been in discussion with external lawyers about the terms of the lease, as this is an unusual arrangement, and she was happy to share the advice from them with Members.

 

The Committee acknowledged the point raised and concluded that the advice from the external lawyers should be shared via the regular Corporate Leadership Team meeting with Group Leaders.

 

RESOLVED: That the Committee agree to note the use of delegated powers to grant a lease of Tudor House on revised terms to trustees of Worcester Municipal Charities CIO.

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