Committee Report Checklist
Please submit the completed checklists with your report. If final draft report does not include all the information/sign offs required, your item will be delayed until the next meeting cycle.
Stage 1
Report checklist – responsibility of report owner
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ITEM |
Yes / No |
Date |
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Councillor engagement / input from Chair prior to briefing |
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Relevant Group Head review |
N/A |
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MAT+ review (to have been circulated at least 5 working days before Stage 2) |
Yes |
11/9 |
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This item is on the Forward Plan for the relevant committee |
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Reviewed by |
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Finance comments (circulate to Finance) |
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Risk comments (circulate to Lee O’Neil) |
LO |
11/09/26 |
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Legal comments (circulate to legal@spelthorne.gov.uk) |
JC |
11/09/26 |
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HR comments (if applicable) |
N/A |
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For reports with material financial or legal implications the author should engage with the respective teams at the outset and receive input to their reports prior to asking for MO or s151 comments.
Do not forward to stage 2 unless all the above have been completed.
Stage 2
Report checklist – responsibility of report owner
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ITEM |
Completed by |
Date rec’d |
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Monitoring Officer commentary – at least 5 working days before MAT |
L Heron |
15/09/26 |
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S151 Officer commentary – at least 5 working days before MAT |
T.Collier |
11/09/26 |
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Commissioner engagement |
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Delete as applicable: |
No issues |
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Comments in S. 7 |
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Relevant MAT member sign-off |
PM |
15/09/26 |
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Report reviewed by Management Team |
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Title |
Disposal of Communications House, Staines |
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Purpose of the report |
To make a recommendation to Council |
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Report Author |
Coralie Holman – Group Head Assets |
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Ward(s) Affected |
All Wards |
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Exempt |
Report – No Appendices 1-5 (inclusive) - Yes |
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Exemption Reason |
Appendices 1-5 (inclusive) contain exempt information within the meaning of Part 1 of Schedule 12A to the Local Government Act 1972, as amended by the Local Government (Access to Information) Act 1985 and by the Local Government (Access to Information) (Variation) Order 2006 Paragraph 3 – Information relating to the financial or business affairs of any particular person (including the authority holding that information) and in all circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information because, disclosure to the public would prejudice the financial position of the authority in any contract or other type of negotiation with a prospective purchaser who could then know the position of the Council. |
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Corporate Priority |
Resilience |
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Recommendations
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Committee is asked to: 1) Consider the proposed disposal terms as set out in this report (summarised in Appendix 1); and
2) Recommend that the Council:
2.1 Approve the disposal terms set out in this report
2.2 Delegate authority to the Chief Finance Officer and Group Head of Assets, in consultation with Chair and Vice Chair of Corporate Policy and Resources Committee to agree minor variations to the Heads of Terms and adjustments to the sale price; and
2.3 Delegate authority to Group Head of Corporate Governance to enter into a transfer to complete the disposal and any ancillary legal documentation required in relation to the proposed disposal.
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Reason for Recommendation |
Agreement to the recommendations in this report will enable the approved Asset Rationalisation plan to be progressed towards achieving the agreed target level of capital receipts by 31st March 2027. |
1. Executive summary of the report
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What is the situation |
Why we want to do something |
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• The Council approved an asset rationalisation programme in December 2025. |
• The recommendation in this report implements relevant work required to further asset rationalisation. |
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This is what we want to do about it |
These are the next steps |
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• To progress the disposal of Communications House and generate a capital receipt. |
• Report to be considered at Full Council on 22nd October 2026. • Enter into a contract to sell Communications House |
2. Key issues
Background
2.1 Following the Council’s decision in December 2025 to implement a commercial asset rationalisation plan, Knight Frank, a leading real estate agency, were appointed following a procurement exercise, to advise the Council on its asset rationalisation proposals and undertake the marketing of selected assets for disposal.
2.2 Knight Frank undertook a comprehensive review of all the Council’s commercial assets and provided advice centred around a phased disposal programme to ensure best consideration (which is the requirement under s.123 of the Local Government Act 1972) would be achieved for each disposal. Consideration was given to the property specifics of each asset in terms of tenant profiles, security of income, forthcoming lease expiries and the level of vacant space within a building. These criteria were used and considered against the property market conditions and current investor preferences and risk, which in turn identified suitable assets for inclusion in the phase 1 disposals. As anticipated, phase 1 disposals have been marketed during the first half of the financial year 2026/27.
3. Asset Performance
2.3 Communications House was acquired in July 2018 as part of the Council’s commercial property assets acquisition programme, which intended to realise additional income for the Council to fund discretionary front-line services.
2.4 Communications House has been identified as an underperforming asset. In the financial year to 31 March 2026, it negatively contributed to the revenue budget with the property income insufficient to cover the operating and financing costs. This asset has seen a significant fall in value since acquisition in 2018 (see confidential Appendix 4).
2.4 Communications House has remained partially vacant for a significant period, and it has been anticipated for several years the longer-term use for the site would be some form of residential conversion. Whilst 4 full floors and part of the 4th floor of the building are currently let, (81% of the building) there are only 2 tenants occupying the building on leases expiring or with a mutual break option in January 2029. The challenges of securing tenants previously and current reduced office take up more widely within this area of Staines all point to there being no realistic prospects of the asset’s value returning to its purchase price as an office investment.
Marketing and Bids
2.5 A targeted marketing approach was adopted for this asset, as known residential to office developers had previously approached both the Council and Knight Frank regarding an ‘off market’ purchase. This approach was considered carefully before being progressed as it is essential that the disposal achieved best consideration in line with statutory requirements.
2.6 Two parties with a strong reputation for ‘performing’ and being able to offer top level pricing, were approached. Neither party partake in competitive tendering processes. On this basis it was concluded if the targeted parties were prepared to offer more than the top end of the target price range, this would achieve best consideration which could be substantiated via an independent Red Book Valuation.
2.7 The target pricing range suggested by Knight Frank for Communications House was ‘sense checked’ against bids received for the sale of the Council owned Thameside House, located adjacent to Communications House, which was also sold for residential conversion. Thameside House was openly marketed.
2.8 As with other disposals progressed in order that all interest could be progressed without conditionality a virtual data room, which contained all relevant information about the asset, was set up fully populated for parties to be able to view.
2.10 Both parties made offers, which are set out within the confidential Appendix 2 of this report, together with a summary of the price and terms of the disposal to assist the elected members. Knight Frank’s recommendation regarding this disposal is included within Appendix 5. The recommended purchaser was selected on the basis of the highest financial offer. This was the only material difference between each offer. Heads of Terms can be found in confidential Appendix 1
Office Real Estate
2.11 The marketing focus of Communications House was targeted to residential developers as set out above, this was considered the approach to achieve the highest sale price.
2.12 The office investment market has experienced a significant decline since the asset was purchased in 2018. There has been a reduction in office asset sales and a huge drop in office asset values not just within the locality of this asset, but nationally due to structural shift in how people work, with many people now working on a hybrid basis with less emphasis on the requirement for 5 day a week office working, lowering demand for office space.
2.13 In addition, a rise in inflation and higher interest costs are impacting property returns and capital values. Sector data indicates that the overall share of the office sector as part of commercial property investment has fallen by 39% since 2019.
2.14 There remains a lot of uncertainty in how the office sector will perform over the next 12 months. Whilst there remains some optimism the key regional cities i.e. Central London will continue to see some improvement, any recovery will take time to filter into the regional areas. This, together with the reducing unexpired term of the occupational lease, is likely to negatively affect the asset’s attractiveness in the market and the Council will continue to feel the impact of financing costs that exceed income levels.
2.15 The uncertainty within the office sector and demand from office occupiers for strong office locations, Category Grade A space has resulted in many secondary office locations like the town centre in Staines experiencing a huge decline in office take up, with buildings remaining unlet for a long period of time. Owners have therefore looked for alternative uses to convert offices to. Whilst conversion can be expensive, it can provide an economically viable solution and conversion of former offices to residential uses is now a common practice.
2.15 The calculation of the bid for the disposal of this asset will have been based on different valuation methodology than the valuations the Council undertakes for its year end valuations. The Council’s value at 31st March 2026, was based on an office investment and income, whereas the bid will be based on a residential residual method of valuation. A residual method of valuation considers what a piece of land or a building which is beyond its useful economic life is worth by taking its final finished value, subtracting all the conversion costs plus the developer's profit.
2.16 The disposal will reduce this Council’s exposure to commercial property risk and future vacant premises costs.
3 Options appraisal and proposal
3.1 Option 1 –Recommend the asset’s disposal to Council for approval (recommended)
On occasions a targeted approach to marketing of an asset is the best way to determine its realisable value, therefore based on the circumstances set out above, the disposal price is expected to be the highest price the Council will achieve for the asset. This is supported by the recommendation from Knight Frank and the Independent Red Book Valuation from Allsop & Co. (see Appendix 3).
The sale will save the Council substantial revenue budget costs in 2026/27 (and MRP financing costs from 2027/28) which is currently having a negative impact on the Council’s financial position.
3.2 Option 2 – Decline the offer and progress to market the property
Full marketing is not expected to achieve a higher sale price, due to the level of bids already received. There is no evidence to support a higher sale price if undertake full marketing. This option is not recommended.
4 Risk implications
4.1 The Council’s appointed advisers, Knight Frank and Clyde & Co, will undertake the mandatory money laundering checks on the company and any person of significant control within the company. The buyer has been professionally advised and has a UK based solicitor. We have no concerns over the intention or commitment of the buyer, however, until contracts are exchanged, as with any disposal the legal process proceeds at risk of going abortive. To mitigate this risk the sale process will be monitored by the Asset Management Team and Knight Frank.
4.2 The sale is subject to the legal due diligence process, a satisfactory report on title and an agreed contract. The Council’s external legal advisers Clyde & Co will draft the sale contract and ensure all legal compliance. It is possible that an issue of concern to the purchaser is raised during the legal process which may result in the purchaser reducing their offer or withdrawing completely.
4.3 Even though the asset will no longer be within the Council’s control once sold, the anticipated future use of residential conversion fits with the emerging Staines Masterplan proposals and will deliver much needed housing to the town centre.
5 Financial implications
5.1 Disposing of the asset for the sale price will generate a capital receipt in 2026/27. This will be used to reduce the Council’s Capital Financing Requirement (CFR) and thus reduce the MRP charge to the Revenue Budget in 2027/28 and beyond. This is in line with the Statutory Direction to reduce debt. It will also avoid the likelihood future decline in the value of the asset and the ongoing annual loss.
5.2 Financial analysis, relating to the terms of the disposal, can be found in confidential Appendix 4 of this report.
5.3 Not disposing of this asset in 2026/27 would have financial implications for the new West Surrey Council in terms of not reducing its Minimum Revenue Provision (MRP) in line with the current Medium-Term Financial Strategy (MTFS) projections and thereby increasing revenue budget costs because of higher financing costs.
6 Legal comments
6.1 Further to sections 120-123 of the Local Government Act 1972, the Council has the powers to acquire and dispose land and property subject to complying with the certain statutory requirements, one of which is securing the best consideration that can reasonably be obtained. To satisfy the best consideration requirement, an independent valuation and advice are strongly advisable.
6.2 Any disposal will be subject to the terms of the contract, transfer and any other necessary legal documentation. The Council’s in-house Legal Services will support the sale with external legal advice.
6.3 Failure to obtain best consideration from the proposed disposal may expose the Council to risk of legal challenge by way of a judicial review which will result in substantial legal costs and reputational damage.
6.4 In accordance with part 3 (b) of the Constitution decisions on freehold disposal of investment assets are within the remit of Corporate Policy and Resources Committee. In view of the wider budgetary implications and the impact of each capital receipt on the Council’s Treasury Management Strategy, this disposal is referred to Council for final approval.
Corporate Implications
7 Commissioners’ comments
7.1 Commissioners strongly support the recommendations of this report, as they
· align with the directions issued to the Council by the Secretary of State on 8 May 2025;
· align with the principle of asset rationalisation agreed by Council on 17 November 2025;
· enable the council to deliver on the 26/27 budget and reduce the risk of a need to make further savings during the current financial year; and
· support the delivery of the MTFS over subsequent years and the sustainability of West Surrey Council and therefore reduce the risk to West Surrey residents of future cuts to services
8. S151 Officer comments
8.1 The Section 151 Officer confirms that all relevant financial implications have been identified and evaluated. The offer is at the top end of the anticipated offer range. The S151 Officer strongly supports the recommendation for disposal at the proposed price, as this is consistent with the approved decision of the Council in December 2025 to undertake an investment asset rationalisation programme in compliance with the statutory Best Value Direction and is consistent with improving the Medium-Term financial sustainability of Spelthorne/West Surrey Councils, both by bringing to an end the ongoing net holding cost of the asset and by reducing future MRP.
9. Monitoring Officer comments
9.1 The Monitoring Officer has been consulted on this report and confirms that subject to the matters set out in the report, and provided that all applicable statutory requirements (including Best Value Directions of May 2025) have been addressed and proper process is followed, the proposal can be considered legally compliant. [CH1]
10. Procurement comments
10.1 There are no procurement implications arising directly from the recommendations in this report.
11 Equality and Diversity
11.1 There are no direct equality and diversity issues arising from a property disposal as the sale doesn’t impact the current operation of or occupiers of the asset. The marketing, viewing and bidding process was undertaken ensuring there was no discrimination against prospective buyers.
12. Sustainability/Climate Change Implications
12.1 Communications House has a valid EPC rating of B this complies with The Energy Performance of Buildings (England and Wales) Regulations 2012.
13. LGR / other considerations
13.1 Not disposing of this asset in 2026/27 would have significant financial implications for the new West Surrey Council in terms of not reducing its MRP in line with the current MTFS projections and thereby increasing revenue budget costs because of higher financing costs. In turn this will mean the reserves Spelthorne will be passing across to West Surrey will be used up more rapidly. This would prejudice the financial resilience of West Surrey Council and would have a significant impact on West Surrey’s budget setting. Consequently, this is very likely to adversely affect their ability to continue to maintain services currently provided by Spelthorne Borough Council.
13.2 This property is anticipated to provide a negative contribution to the Council’s/West Surrey Council’s revenue budget over the next six years, if it is not disposed of.
14. Timetable for implementation
14.1 Following consideration by this Committee, this proposed disposal will be presented to Council on 22nd October 2026 for final decision.
15. Contact
15.1 Coralie Holman Group Head Assets c.holman@spelthorne.gov.uk
Appendices
Appendix 1 – Heads of Terms – Exempt
Appendix 2 – Schedule of Bids received - Exempt
Appendix 3 - Redbook Valuation - Exempt
Appendix 4 – Summary financial information – Exempt
Appendix 5 – Knight Frank Disposal Recommendation - Exempt
[CH1]@Heron, Linda please review/amend when you are content - thx