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 committee discussed the scope and progress of the review, with a particular focus on ensuring fairness and transparency in rental agreements.

Review of Rental and Lease Arrangements for Non-Residential Property

Matthew Pahal, Senior Manager for Baker-Killing, provided an update on the independent review of rental and lease arrangements for the council's non-residential property portfolio. The review aims to ensure that the council's policies and procedures are consistently applied and to identify any inconsistencies. The scope of the review includes examining lease agreements and rental charges to determine if they align with market rates and council policy.

The review process has involved meetings with the committee chair and the head of property services to understand current issues and procedures. A key output has been obtaining a list of lock-up units and industrial units, and the team is now in the process of finalising a sample of properties for a more in-depth review of lease agreements. The draft report is anticipated by 6 November, with a final version to be presented to the committee a week before its next meeting.

Councillor Adele Morris sought clarification on the purpose of the review, asking what would be done with the information gathered. Mr. Pahal explained that the review would assess whether lease agreements and rentals are determined by market rates and how decisions are made, with a focus on transparency. He noted that an initial sample of 10 properties has been selected for detailed examination.

The Chair provided context for the review, explaining that the council has over 2,000 non-residential properties and is transitioning to a market rent basis for all agreements, moving away from subsidised rents for organisations like charities. The review aims to ensure this transition is managed fairly and to identify any aberrations, such as commercial businesses potentially paying significantly below market rates.

Councillor Morris expressed a broader concern about transparency, stating, we need a system where, to make sure that the system's being done fairly, you don't have to employ somebody to go and look at it and come back and tell you. She highlighted the issue of businesses in areas like Southern Park Road feeling treated unfairly compared to larger chains like Iceland, Co-op, or Tesco, who can secure longer leases and potentially lower rents. She urged the review to consider the length of leases and how to support fairness beyond just the financial terms.

Mr. Pahal confirmed that the review's criteria include understanding why different rates might be charged for similar properties and that recommendations will be made regarding policy if necessary. He clarified that while the audit itself is technical, the committee will ultimately debate and make recommendations based on the findings, including issues of transparency and fairness. The committee also discussed the potential need for legal advice regarding the publication of the review's findings to ensure openness. Mr. Pahal assured the committee that the report would be written as a public document, and recommendations might include policy changes to enhance transparency.