There were no changes to committee membership.

To confirm and sign, as a correct record, the minutes of the meeting of the Committee held on 8 October 2024.

The minutes of the meeting held on 8 October 2024 were confirmed and signed as a correct record.

There were no apologies for absence.

Members are invited to declare any disclosable pecuniary interests or other registrable and non-registrable interests in items on the agenda.

There were no declarations of interest.

The investment portfolio report was presented to the Committee, which included the cost of construction and valuation on the date of purchase in line with the Committee’s request at the previous meeting.

KPIs continued to be reviewed and were broadly unchanged due to the valuations of assets occurring on an annual basis, whilst benchmarking analysis afforded by MSCI allowed the Council to compare the property portfolio against other investors.

It was noted that arrears had increased in the last quarter, which was primarily due to a rent review being settled on a key asset where the tenant had not settled the payback due.  It was acknowledged that the economic climate had affected many tenants, and officers worked closely with those in arrears to try and establish a payment plan that was within their means.

When questioned by a Committee member on measures taken to address rent arrears and improve tenant retention, the Head of Assets and Regeneration advised that upcoming break clauses and expiring leases were kept under constant review, and sometimes it was necessary to incentivise a tenant through a rent-free period or capital contribution to encourage them to remain in situ and ensure that the portfolio remains income producing and provides the best returns.

A member noted that the valuation of some properties had reduced, which was down to the economic climate, limited growth and the south east office market being so depressed along with yield shift and shortened leases that affected value.

A query was raised on whether the poor energy performance of an asset had been cited as a reason for a tenant to vacate a premises, and it was advised that the majority of the Council’s tenants occupy our buildings on a full repair and insuring basis, which meant that the liability would be the responsibility of the tenant for the energy performance and would only be picked up at the end of a lease where a schedule of dilapidation would be served if appropriate.

The mid year treasury management report was presented to the Committee, which revealed that £22.3m of loans was still expected to be repaid by the end of the financial year, £10m of which was the scheduled maturity of the PWLB loan, whilst early repayment of another loan had resulted in a discount.

An interest rate of 5.19% had been achieved on investments during the first half of the financial year, which compared favourably with the benchmark rate.

Further to a query at the previous Committee meeting about benchmarking with data against peers, officers had concluded that this would be an expensive and time-consuming exercise and might not provide an accurate picture due to differing risk appetites, however data on investment activities against other Surrey councils would be collated and included in the annual treasury management report.

In responding to a member question about being able to explain the Council’s financial position to residents, officers advised that this could take the form of balancing its books, generating income or servicing its debt.  One of the factors in the Council being issued with a non-statutory best value notice was concern around the level of borrowing and the Council’s ability to service that debt.

A programme had been put in place to address those concerns that involved looking at savings, managing expenditure and looking out for opportunities to pay back loans and reduce the levels of borrowing. 

Furthermore, the risk management framework recently adopted included a facet on financial risks, with a robust framework in place that followed CIPFA guidelines.  It was added that as far as the liquidity is concerned the Council were in a reasonably healthy position particularly in the context of other Surrey authorities who had come under central government scrutiny.

The committee noted the work programme for the final two meetings of the municipal year. 

A debate took place around the possibility of adding an investigation into housing repairs contractors across the sector to an existing or future work programme, however caution was urged as the performance of this service was being monitored by the Council’s Housing Committee.

The Committee would consider this outside the meeting and return with a proposal to include as a future workstream if it was deemed appropriate.