A Corporate Landlord approach to managing Local Authority Property Assets

1. A Corporate Landlord approach to managing Local Authority Property Assets
“He that goes a borrowing goes a sorrowing – unless you can pay it back on
demand!”
John Smallwood 2000
Much has already been written about this subject but there remain many
opportunities to significantly improve the management and performance of Local
Authority property assets.
A Councils land and property portfolio should be a major asset in supporting the
achievement of corporate aims and objectives. More specifically, these assets
have a major role to play in ‘Place Shaping’ including contributing to regeneration
activity and the promotion of affordable housing.
Landowner – Councils are usually major landowners and therefore are ideally
placed to lead and drive strategic regeneration through partnerships with public,
private and third sector partners. It also helps to place a council in the driving seat in
terms of shaping the joint delivery of public sector services within their administrative
area.
Resources – Publicly held assets are a hugely significant
resource. Their accounting value is in the region of
£385bn. Approximately two-thirds of public assets are
held by local authorities, including housing, schools and
leisure facilities. The local government estate – property
and land – accounts for the majority of council held
assets. Generating revenues from these assets could
drive the delivery of green energy, improve infrastructure and fund regeneration.
There is a backlog of maintenance across the public sector estimated to be £40bn
with running costs of approximately £25bn per annum.1
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ONS The Blue Book
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2. Property Market – We are operating in an unprecedented
period of worldwide economic uncertainty, which has had an
impact not only on the property market in which we operate,
but also upon the availability of funding for business
investment and growth. At the same time the Government
has severely restricted provision of development finance.
Councils are therefore increasingly relying on their property
assets to bridge the funding gap and to deliver efficiency savings. Many Council
budgets now rely on capital receipts generated from property sales, associated
property revenue savings and income derived from the portfolio to contribute to
general revenue activity.
Operating Environment/ Government Initiatives – Central Government suggests
that through more effective property management, the public sector can reduce its
space requirements by 30%, cut carbon emissions and save up to £7bn a year in
running costs. Better cooperation between local government and the broader public
sector, alongside the introduction of more commercial working practices, will be
crucial in achieving this. Government initiatives play an important part in shaping the
external environment in which we operate as highlighted below:-
 Audit Commission June 2009: “Room for Improvement”, which seeks to
encourage efficient local government property management.
 Leaner and Greener2
 Partnership working – working in conjunction with other agencies to improve
synergy and efficiency to provide more effective and complete public services.
 Value for Money – increased focus on demonstrating that a Council’s property
portfolio delivers value for money, with increasing emphasis on the disposal of
surplus assets.
Local Authority Asset Management Plans
Asset Management Plans are the framework within which
Councils operate to manage their fixed assets. Most plans
reflect the significant changes that have taken place and
recognise the evolving nature of asset management locally and across the wider
local and central government estates as a whole. Most of these plans offer a
strategic framework to deliver the changes required in response to the changing
financial and economic landscape but many do not start from a fundamental asset
challenge process which fully engages with and challenges service users and
service owners. The need to operate in a leaner and greener way, together with the
need to reduce spending, requires new models of service delivery to ensure we
manage our property assets sustainably and in partnership with public and private
sector partners.
2
http://www.policyconnect.org.uk/sites/default/files/Final%20version%20-%20blacktype%20-
%20Leaner%20and%20Greener.pdf
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3. What is the Corporate Landlord Approach?
The Corporate Landlord approach is designed to enable a local authority landowner
to utilise its assets to deliver better, more efficient services to communities:
 To unlock the value of assets, seek efficiencies through joint arrangements
with public sector partners and maximise private sector investment.
 To support the delivery of the Councils Corporate Plan.
 To integrate thinking about property with financial, regeneration and other
considerations.
Under a Corporate landlord approach the ownership of an asset and the
responsibility for its management; maintenance and funding are transferred from
service department to the Corporate Landlord, which is a centralised corporate body.
The service department has to make a case for the property that they wish to
deliver a service from, which allows for the Corporate Landlord to offer sufficient
space - and no more space than is required – for Council activities, thereby reducing
accommodation requirements. The service departments therefore become corporate
tenants and make use of property or land in delivering a service. This may also
extend to the provision of a range of centralised back office services such as print
services.
There are specific responsibilities that fall to the tenant and the landlord depending
on the nature of the asset and the service. The service department’s priority is
therefore to plan and deliver the service. The landlord’s function is to ensure that the
service is adequately accommodated and to maintain and manage the asset. The
landlord’s responsibility also extends to the acquisition, development, and disposal of
land and property. This means the landlord would be responsible for asset review,
feasibility and options appraisals across all service departments. The roles and
responsibilities can be outlined and clarified under a Service Level Agreement (SLA)
and this approach has been adopted by some local authorities.
The Corporate Landlord is the predominant asset management model in larger
private sector organisations and is increasingly popular within local government.
This is due to the potential scope for efficiencies and the effective delivery of
corporate outcomes including regeneration objectives. The Corporate Landlord
approach can deliver economies of scale in terms of capacity, procurement and
opportunities for co-location across an organisation and with other external
organisations. This can ultimately lead to rationalisation. Where it is most effective
is ensuring that an organisation’s property portfolio drives, supports, and delivers
corporate change and regeneration. This is the preferred delivery model that many
public and private sector organisations have adopted to provide effective strategic
estate management.
What it could potentially achieve is a change in the way property decision making,
financial planning and property management is undertaken within the Council.
Demonstrated benefits have been:-
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4.  Clear focus on using all land and buildings to deliver an organisation’s
priorities
 Enables a single conversation
 Improved customer focus
 Improved value for money
 Improved risk management
 Improved focused investment
 Increased opportunities for disinvestment
 Increased investor confidence in the Council
To date local authorities setting up a corporate landlord have excluded similar
categories of property namely
 Schools because of Local Management of Schools, as a notional landlord and
tenant already exists
 HRA dwellings as an actual landlord and tenant relationship already exists
and the accounting basis is different for those properties (But maintenance
and FM efficiencies should not be discounted across the entire portfolio)
 Highways, including car parks as most of these assets are accounted for as -
infrastructure (But this should be debated as an alternative use for a car park
for example could secure regeneration priorities).
In addition the property budgets coming under central control have also been
carefully considered i.e. security & ground maintenance.
It is also clear that a Corporate Landlord approach varies across organisations and
there are degrees and steps towards the strategic management of property, as
shown in the table below:-
Disaggregated Service Lead Corporate Corporate Strategic
Lead Managed Landlord
Financial Revenue & Revenue in Revenue Revenue As corporate
Capital Service corporately led budget management
managed in but service managed
service managed by
Corporate
landlord
Capital with
Capital Programmed visibility of
Shared corporately costs
All capital
managed
by treasury
Team
Management Property Corporate Property Property Property
support staff property support staff support rationalisation
report to professional managed by staff across services
directorates service led corporate managed sharing
staff property by preferred
function corporate
property
function
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5. and
working
across sites
Governance Decision Planned Decision Decisions Decisions
making is silo’d locally with discussed in made driven by
in service corporate corporate corporately corporate plan
agreement forum through and investment
via budget budget bid board funding
process process addresses
priorities
Improved use of resources and ability to deliver corporate priorities 
From a review of authorities that have gone down the Corporate Landlord route it is
clear that “one size” does not fit all and there are various degrees of adoption of the
model to suit the individual organisation, its size, scale of portfolio and its culture.
For example a proposal to consolidate the strategic functions centrally and leave
delivery to the DLO and/or commissioned services. Whilst in another authority the
whole of the property services have been amalgamated, providing the full range and
delivery of property service. In some cases local authorities have approached the
adoption of a corporate landlord approach on a phased basis.
Case Study - Current Position at a Unitary Council
The Corporate Property Function, the Land
and Asset Management Section within the
Place Directorate has responsibility for
performing a number of property related task
such as commercial leasehold negotiations,
acquisitions and disposals and property
information management, GIS & Terrier and
property energy and environment advice. The
team allocates the planned maintenance
programme for non-school properties. This corporate team provides policy
framework and procedures in which the organisation is to operate.
The foundation to effective management of property is appropriate and accurate
property data and information. This is currently collated and analysed by the Asset
Management Team and informs property related decision including property
investment and disinvestment decisions. The Section maintains and co-ordinates
the Council’s property database.
The facilities management (FM) role and the management of the revenue
maintenance of the portfolio, ensuring necessary health and safety maintenance is
carried out together with traditional FM duties such as security and caretaking, and
accommodation planning, in another Directorate.
Ownership of property currently rests with service departments who are very
involved in property related matters. The day to day management of premises is
undertaken by building managers within service departments. Activities and
decisions are therefore carried out by different groups across the organisation, which
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6. may have varying degrees of property expertise, or lack a wider understanding of the
portfolio and have limited knowledge of the property available across service areas,
other service area’s property needs and the public sector locally.
Professional property expertise is currently available within the Land and Asset
Management section and open to the facilities management team, but the
compulsory introduction of specialised expertise support could potentially add value
within these areas, whilst enabling service departments to focus on delivery of
services.
The management and delivery of projects can take place on a piecemeal basis. A
corporate landlord function could include a projects team, whose role could include
asset review, options appraisals, feasibility, refurbishment and supporting the client
management of major projects. This role has recently been created within the
Capital Projects Team. This role could potentially form the interface between the
corporate landlord and the entire service department. The Capital Projects Team’s
role is developing, but its role could fit with this model. By centralising this function
there will be scope to be more creative in the type of property solution that is
proposed, as there would be a central overview supported by sound property
expertise.
In the crucial area of health and safety it is essential that procedures are seamless,
so there are no risks of “falling between stools”. Many organisations see the
corporate landlord function as the means to reduce this risk.
There is uncertainty regarding the role and responsibilities across the Council and
this could lead to duplication of tasks. The roles of the service departments, FM,
Asset management, and building managers need to be clarified as part of any
operating model (Including identification of who they are within each department
across the Council).
The centralising of the Repairs and Maintenance (R&M) functions and budgets could
place the authority in the driving seat in terms of the centralised commissioning of
consolidated property contracts. There should be few instances in which occupying
departments arrange and negotiate ad-hoc property contracts. In theory centralising
the decision-making over procurement and facilities management contracts should
enhance the economies of scale by increasing the size of the estate being managed
and therefore the scope of the contracts.
Property related budgets are not centralised and deployed on a corporate basis. For
instance R&M revenue budgets have been pooled within another Directorate and are
disaggregated according to need, but the release of budget savings may be better
co-ordinated on a corporate basis. The planned maintenance capital budget is
corporate held by the Place Directorate and the programme is developed by the
Asset Management Team and delivered by FM.
Centralised budgets should also put the Council in a good position to manage the
shift of repairing emphasis from reactive maintenance to in order to achieve ration of
planned/ reactive in line with recommended practice.
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7. The success and ease of a rationalisation programme is dependent upon
establishing central control over property decisions – rather than spreading it
amongst disparate departments. At present properties are perceived to be owned
and controlled by the service department. They are managed in accordance with
priorities within service areas rather than in the wider context of the organisations
priorities across all service areas. This makes opportunities to share facilities or
reconfigure services difficult to achieve. Policies and procedures are in place, but
there is some resistance to releasing control of property. If property is not fully
centralised then consistent decision making across the wider property portfolio is
difficult and clear and transparent governance is harder to achieve, making it harder
to ensure and demonstrate value for money.
Currently without a corporate approach to capturing savings from
property rationalisation there is a real risk that programmed savings
may not be captured and there is a risk that the potential budget
savings will be used elsewhere.
The Council (and public sector) also faces increasing pressure to
lower its carbon emissions. The 2010 buildings regulations
amendments require a 25% decrease in carbon emissions from the
previous 2006 version; a forthcoming update in 2013 will require a further 20%, and
by 2018, all new public sector building will have to be zero carbon. Moreover, the
Carbon Reduction Commitment, introduced in April 2010, will become an additional
driver. Charging £12 per tonne emitted means an additional cost to Councils from
2013. On the other hand, potential environmental efficiency savings should not be
underestimated. Although the energy cost of producing a tonne of carbon emissions
lies within the range of £150 to £200, the introduction of ‘green’ measures for a
standard administrative building, can deliver financial savings in the range of £180 -
£200 per m2 per year from lower energy spending. At present the Asset
Management Section only provides advice and targets across the Councils portfolio
it is unable to enforce a corporate line.
To achieve these changes a new operating model is required. The organisation
needs to change from one where change comes from the top down, to one
where change is driven by the customer, It needs to change from one where the
key responsibility of everybody that works for the Council is to support those staff
that deal with and work directly with citizens to one where the key responsibility of all
staff is to serve the customer. This will have a fundamental effect on how services
are provided and how they are designed.
The key changes required at this Council are encapsulated in the table below:
Away from: Towards:
A traditional structure based on A structure driven by customer needs
directorate and professional silos that that fosters collaborative working
co-operate when necessary across the professions
Providing services, responding to Delivering outcomes and prioritising
demands resources
Hierarchical leadership where Better use of the market
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8. operational decisions are referred to
senior managers and elected members
A stable and predictable environment Empowering leadership encouraging
where staff undertake work with which staff to take responsibility for their
they are familiar and feel comfortable decisions and actions with clear
strategic direction set by elected
members
A traditional office environment shaped A modern and flexible office
by paper-based working practices environment based around customer
needs and up-to-date technologies
What are the potential benefits of Corporate Landlord?
“If property had simple pleasures, we could stand it; but its duties make it
unbearable”.
Oscar Wilde
The overarching vision for a Corporate Landlord approach is to:
“Ensure that the Councils land and property assets are utilised (and
managed), to create more effective and appropriate long-term benefits for the
Council (and Community). More specifically, the model will ensure the delivery
of an integrated professional property service covering: strategic
property/asset management; estates and valuation; design and maintenance;
facilities and contract management. The model will apply to all Council
operational and non-operational property assets managed and maintained by
the Council”.
The ‘Corporate Landlord’ model will help
deliver more effective programme
management of the land and property
portfolio, and will lead to the delivery of
enhanced efficiency savings whilst also
enabling the Council to take a strategic
approach to the use of all assets, and the
Capital Programme.
The Corporate Landlord model seeks to:
 Understand the asset base in its entirety and understand how to optimise its
use for delivery of public services, housing and regeneration.
 Understand the spatial relationship between assets and align policy and
strategy with delivery (e.g. planning).
 Have a constant overview of project delivery and use this to make informed
decisions.
 Create long-term investment opportunities by understanding the timing and
requirements of individual projects and where private sector investment is
required, available and at what level.
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9.  Package projects together, where appropriate, to provide opportunities of
optimum scale to attract the right investment partners.
 Maintain a flexible approach to delivery that is proactive (realising the value)
and reactive (responding to change).
This model will also enable the Council to utilise all of its assets to deliver against
its economic spatial priorities by linking effectively with its regeneration masterplan.
This will become particularly important as the Local Development Framework
emerges.
The adoption of this model will represent a significant step towards the
development, in the medium to longer term, of strategic asset management in a
locality by facilitating a deeper level of co-operation between the Council and its
partners in the public and voluntary sectors.
The adoption of the ‘Corporate Landlord’ would ensure that the Council’s land and
property assets are utilised (and managed), to create more effective and appropriate
long-term benefits for the Borough (and Community). More specifically, the model
will ensure the delivery of an integrated professional property service covering:
strategic property/asset management; estates and valuation; design and
maintenance; facilities and contract management. The model will apply to all Council
operational and non-operational property assets managed and maintained by the
Council.
Under the model, service departments will no longer ‘own’ their operational assets,
which will be held and managed centrally by the Corporate Landlord. The Corporate
Landlord will be responsible for management and all repairs and maintenance,
including interiors, exteriors, structures, common parts, and building services, and for
the payment of running costs, including business rates, utilities and cleaning. This
responsibility will extend to all statutory compliance issues across the asset portfolio.
The prioritisation and funding of repairs and maintenance will take into account
suitability and sufficiency assessments and performance data. The Corporate
Landlord costs could be recovered from occupiers via an annual inclusive charge.
The Corporate Landlord could also be responsible for the management of the
corporate capital programme, covering operational and administrative properties,
and the delivery of the corporate accommodation strategy. An agreement between
the Corporate Landlord and occupiers will set out the obligations of both, the
charging arrangements, and what happens when changes in occupation are
necessary.
The Corporate Landlord will bring together professional and technical property
management and facilities management resources in a single location, reduce
duplication, and offer opportunities to reduce costs. This will enable a corporate
approach and common standards to be established in respect of utilisation, suitability
and sufficiency, quality of accommodation and services, investment, environmental
and energy management, and procurement of construction-related services.
The implementation of a Corporate Landlord approach to asset management will
include the following:
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10.  A single asset register – to be developed with open access to all Council
officers, members and partners. This will include detailed condition and
repairs information.
 The establishment of a simple and robust process for the circulation of
potential surplus assets to directorates and partners, to invite bids for use
prior to a final decision being taken on disposal.
 The development of a minimum repair standard to protect the value of its
assets.
 The application of formal suitability surveys, consistently applied in the Fit for
Purpose assessment process.
 A comprehensive review of all the Council’s operational and non-operational
assets, to identify the functions that these currently support and challenge the
need to retain each against service objectives.
 A system of annually measuring the performance of assets against their
purpose, and introduction of a corporate-wide use of Social Return on
Investment criteria.
 Controlling centrally: centralising the control over the property will enable the
Council to manage its estate more efficiently;
 Making sure property decisions are assessed from a strategic perspective
rather than an isolated view point;
 Clarifying the roles, responsibility and boundaries of the teams across the
property functions to direct property expertise so that it adds value;
 Centralise the financial planning of the property repairs budget
 Exploiting opportunities to procure at a strategic level property
activities/projects.
 Controlling the shift from reactive to planned preventative/planned
maintenance in order to achieve ration of planned/reactive in line with
recommended practice
 Reduced risk of failing to comply with legal duty arising from the ownership of
property;
 Centralising a project team that supports the client management of major
projects. By centralising this function there will be scope to be more creative
in the type of property solution that is proposed, as there would be a central
overview supported by sound property expertise.
 Incentivise services to utilise property efficiently. This could be through the
introduction of Asset Rental Charges
 Using less space: local government have used property data and flexible
working tools to improve the efficiency of space use;
 Cooperating in property; local government should cooperate with other public
sector and voluntary partners to develop property solutions in the locality
 Greening the property; there are various options to strengthen the business
case for improving sustainability and delivering energy and environmental
savings across the portfolio;
 Releasing property to maximise the level of capital receipts and minimise
running costs.
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11. In summary, the model will provide:
 A One-Stop-Shop for all property issues
 Strategic leadership for overall asset strategy including acquisitions and
disposals
 A single point of contact for customers both internally and externally
 A corporate programme management function managing the Capital
programme and all physical/property projects
 Statutory compliance across the asset portfolio
 Strategic leadership for facilities management
What are the potential draw backs of Corporate Landlord?
“Landlords, like all other men, love to reap where they never sowed”.
Karl Marx
There are potential draw backs:
 The Corporate Landlord function could deteriorate into the creation of an
internal artificial market for recharging
 There may be a loss of accountability and service control on the services they
deliver
 The current asset management plans, property policy and procedures and
project management tools should provide sufficient existing structure to
manage the portfolio.
 If we are considering re-structuring our property service we should consider
whether our structure is aligned to our near neighbours, as a post Regional
Improvement and Efficiency Programme is looking at scope for shared
services
 Inadequate resources to effectively deliver a corporate landlord function.
Next Steps
Consider the Corporate Landlord model within your organisation and better
understand the drivers which support the adoption of a corporate landlord approach.
This will require:
 Political and Executive level sponsorship to drive the change and champion
transformation.
 Establishment of a Steering Group to guide the direction of the Corporate
Landlord transformation programme.
 Unrestricted access to full data describing the portfolio and the Asset
Management Service (If it exists)
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12.  Engagement of all staff involved in asset management and establishment of
joint team working
 Consideration for securing support from a suitably experienced interim
manager in a project management/critical friend capacity to help develop and
implement the approach.
Further Details
Chris Gill BSc(Hons) MBA FRICS FCMI
Director
JC Gill and Co Limited
Chartered Management Consultancy Surveyors
Interim Managers
07783 896634
01325 283184
chris@jcgill.co.uk
www.jcgill.co.uk
http://www.linkedin.com/in/chrisgillatjcgillandcoltd
OPTIMISING ASSET EFFICIENCY TRANSFORMING SERVICE DELIVERY
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