Land Bill could hand £50m Princes Mall to David Murray for just £2.60

Published on Tuesday 28 December 2010 11:05

A MAJOR city centre site owned by the taxpayer and said to be worth at least £50 million could be lost to Rangers tycoon Sir David Murray for £2.60 because of radical land reforms being proposed by the Scottish Government.

IT'S A STEAL: Sir David Murray's firm PPG currently pays rent of 1 p per annum for Princes Mall. Picture: JULIE BULL

The area formerly known as Waverley Market now the Princes Mall shopping centre is owned by the city council and leased to Rangers tycoon Sir David Murray's Premier Property Group (PPG) on a long-term lease.

But under the Long Leases (Scotland) Bill, proposed at Holyrood last month, ownership of the site would automatically pass from the city council to PPG because the lease has more than 175 years to run meaning a multi-million-pound piece of real estate could be lost for next to nothing.

PPG, which bought out the lease from a previous owner for 37m in 2004, only pays the council 1p a year in rent under a deal struck between council chiefs and the original developers in 1982. Under that deal the leaseholder paid 14.25m for the development of the site in return for 1p per annum rent.

Any compensation is likely to be based on the value of the lease which is expected to result in the council only receiving a maximum of 2.60.

Green councillor Alison Johnstone, whose motion proposing that Waverley Market and other "common good" assets of the city should be exempted from the new Bill was approved by full council, said: "If the Scottish Government's long-lease proposal affects that land, the current leaseholder will get this prime piece of real estate probably for about the 2.60 value of the lease."

Campaigners have been fighting the council's rental deal with PPG, where it pays only 1p a year for a site that is thought to bring in more than 2m a year in rental for the firm. But they fear that ownership passing to PPG will mean the land will never return to public ownership.

Land reform expert Andy Wightman, who claims the land is part of the council's "common good" fund, said: "On an ongoing basis for the next 200 years, the common good fund should be receiving half the income and profits on the site, but instead it is getting 1p a year."

The current long-term lease was originally signed in 1982 and runs until 2188. PPG bought the lease from property investment group in Haslemere for 37m in 2004.

However, the land remains under council ownership and council legal experts are currently investigating whether it remains part of the "common good" fund before responding to the Scottish Parliament's justice committee.

If it is, it is thought there is a greater chance of it being exempted from the new reforms.

A Scottish Government spokesman said: "The Bill is about converting ultra-long leases to ownership to clarify the law generally. It is about modernising land reform law, not rewarding landowners."