The government may be gridlocked over Brexit and the London investment market stuck in the doldrums, but that is not standing in the way of the team charged with rationalising the country’s court and tribunal estate.
Over the course of the current financial year, the team is aiming to bring in more than £100m from asset sales around the country as part of a £350m disposal programme.
The programme, which is itself part of a £1.2bn reform package to modernise and drive efficiency within the UK’s justice system, has been up and running for two years. In that time, 106 freehold sites have been sold for a total of around £120m.
This included 11 legacy assets that were left over from a similar programme in 2010, which have made Her Majesty’s Courts and Tribunals Service around £5m, and sites that have been transferred to Homes England to support the government’s housing target.
In the 2018/19 financial year, the team successfully completed the sale of nine properties: Abergavenny Magistrates’ Court, Bournemouth Magistrates’ Court, Brecon Law Court, Keighley (Bingley) Magistrates’ Court, Lambeth County Court, SE11, Liverpool Dale Street Magistrates’ Court, Lyndhurst Magistrates’ Court, Oswestry Magistrates’ Court and Watford Magistrates’ Court.
Controversial reforms
The money recouped from the sale of assets is not being squirrelled away in the Treasury’s coffers, but ploughed back into the justice system, says Laura Birnbaum, deputy director at the property directorate for Her Majesty’s Courts and Tribunals Service, who heads up the disposals team.
The reforms have proved contentious, however. In July last year, the Public Accounts Committee raised concerns over their deliverability, with the type of reform not having been attempted anywhere else in the world.
This has been followed by the Justice Committee launching a separate inquiry in January into the implications of selling off court buildings and the impact on the public’s access to justice.
Responses to the inquiry so far have included written evidence from the Law Society which, while “broadly supportive” of the modernisation programme, concludes that the proposed reforms “will have an impact on access to justice across the justice system, and particularly on the digitally excluded”.
The Society adds that it does not “believe it is an acceptable position to close courts before the technology that is intended to replace the need for physical hearings has been tested, evaluated and proven to work”.
Phase two
Despite this, Birnbaum’s team is moving to the second phase of the disposal programme.
“The first closures were all done on the basis of inefficiencies within the estate that we could remove and therefore release sites, but now we can only really release sites if we reform the service so that it becomes more streamlined,” she says. “That’s the second phase that we are embarking on now.
“We’ve got some quite high-profile and exciting projects, including Blackfriars Crown Court, which is our crown jewel in the portfolio.”
This second phase is made up of 32 assets spread across the country, of which 24 are freehold and seven long leasehold or optional leases, totalling more than 7.4m sq ft.
Notable properties up for sale in this second tranche include East Berkshire Magistrates’ Court in Maidenhead, Moot Hall in Newcastle and Wandsworth County Court, SW15.
The team is not attaching prices to the assets, although it is hoped that Blackfriars Crown Court (pictured above) will bring in more than £45m.
“We have to get best value if we’re going to take a public building out of use or take a service into a different sphere, like putting it online,” says Birnbaum. “The onus on our team is not just to make money to reinvest in reform but to handle it in a way that keeps our reputation sound, so it helps to have a professional team with both surveying and operational backgrounds. The group of people we have allows us to navigate what could be quite a tricky issue because it is very emotive.”
She adds: “Many people come to court at a vulnerable time in their lives, so we are careful to manage sales appropriately.”
Brexit impact
The programme is ring-fenced and therefore protected from the potential fallout of Brexit for the government, but Birnbaum says there is a challenge for all civil service departments, in terms of keeping teams together as more resources are devoted to dealing with the UK’s possible departure from the European Union.
Her team, though, does have additional help from agents Avison Young and JLL, as well as lawyers Michelmores and Womble Bond Dickinson.
The team is keeping a careful eye on the property market, where in central London investment volumes for the first quarter have fallen by 40% compared with Q1 2018, according to JLL, and in the South East by 38%, according to Knight Frank.
However, in the South Bank area in London, where Blackfriars Crown Court is located, Union Street Partners reports that investment in the first quarter is up by 172% to around £196m, compared with £72m across eight deals in Q1 2018, as developers look to bolster future pipelines.
Birnbaum notes that while they are still seeing good competition for the sites they are bringing forward, there is “a thinner layer of buyers in the market”.
“Commercially, I’m not worried about values as much as I’m worried about the depth of the market,” she says.
How this next tranche of sales offered by Birnbaum and her team fares will be watched closely. But with the likes of the 131,747 sq ft Camberwell Green Magistrates’ Court in Southwark, SE5, recently sold to Criterion Capital for £13.5m, they look set to hit their target for 2019/20, Brexit or no Brexit.
The team
Laura Birnbaum Property deputy director. She has previously worked at JLL and CBRE.
Lynn Brown Acquisitions and disposals manager. She has 25 years of operational courts experience.
Faith Brewer Valuer within the disposals and acquisitions team on secondment from the government’s Valuation Office Agency.
Saira Ahmed Head of acquisitions and disposals for Her Majesty’s Courts and Tribunals Service. Previously spent nearly 14 years at GVA.
Paula Harrison 31 years of operational courts experience and is supporting the acquisitions and disposal project.
To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette
