SW soaks up property cash in wave of sales

Published on Tuesday 16 August 2005 12:21

SCOTTISH Water today said it has been cashing in on a clamour for unusual properties, sparked by a glut of television property makeover programmes.

In the three years since the organisation became Scotland's single water authority, it has sold 20.2 million worth of disused or unwanted properties and assets - including staff houses, redundant water treatment works, pumping stations and reservoirs.

SW even includes a 12-metre square patch of concreted ground that used to be home to a pumping station near Edinburgh's Braid Hills Hotel among the 233 assets it has sold off. It went for 3500, when expectations had been for just 1000.

"People see residential opportunities in many of the assests," says Peter Cook, general manager of property and facilities at SW.

"Makeover programmes have given people a flavour for their potential - it gives them an opportunity to do something different and possibly tuck something away in their pension fund."

Most of the properties and assets sold fetch between 20,000 and 30,000, with the majority sold through auction by Edinburgh-based Scottish Property Auctions.

But bigger assets, such as woodland recently sold in Stirling or a house in Inverness, pulled in seven-figure sums.

Mr Cook said all money from these sales gets re-invested in SW's water and sewerage estate to help keep a lid on costs to its five million customers.

As a public body, SW - the fourth largest water and waste water services provider in the UK - has a responsibility under the Scottish Public Finance Manual (SPFM) to sell off any assets that are no longer of use to core operations, while maximising the returns for the taxpayer.

The SPFM quotes: "Once surplus assets have been identified, they should be sold as quickly as possible subject to value for money considerations."

Mr Cook said: "We are not property developers, so when a property becomes surplus to requirements we have to go through the process of disposing of it."

And he added: "The money goes towards our ongoing 1.8 billion capital investment programme and other areas such as routine projects that have been delayed due to lack of funding."

Across the Edinburgh and Lothians area, 17 properties have been sold off since SW was formed in April 2002, raising a total of 990,000.

The biggest single sale in the area was a former works cottage near Penicuik which went for 181,050 in May 2004.

Other notable sales include the Barnton Service Reservoir in Edinburgh, which raised 152,000, after being initially valued at just 30,000.

Due to data protection restrictions, SW cannot reveal too much detail on what its sold-off assets are to be used for.

But a small number of staff who have been tenants of SW - or its three predecessor water boards - have bought water authority houses under right to buy legislation.

Other assets, such as reservoirs, can be turned into leisure facilities.

Once a property is considered to be surplus to requirements by SW, Mr Cook's department decide the best route for disposal, which is normally through a public auction, particularly for assets that are difficult to value, such as a partially submerged water storage tank.

By the end of the 2005 financial year, Mr Cook hopes to have clocked up sales of around 30m.

Half this year's haul is expected to come from the sale of a 13-acre site in North Lanarkshire which is earmarked for residential development. "We're hoping to achieve 5m for it," noted Mr Cook. "And we expect to raise another 5m across the rest of Scotland. We're looking to get to around 30m this year."

By way of boosting returns on more valuable assets, such as the North Lanarkshire site, SW looks to secure planning permission before a sale.

"If there's an asset with a significant development potential that's fairly obvious, then we will want to look at maximising that potential development value by obtaining planning permission," said Mr Cook.

"We recently got 2.5m from the sale of woodland near Stirling because we got full planning permission."