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Acquisition and Disposal of Assets

2.5.70Departments have a duty to dispose of property surplus to requirements within three years and should not hold land speculatively. Departments should seek the advice of the LPS when considering disposal of surplus property.
2.5.71Projects should not use more land than is cost effective. Available plots of land for new developments may not precisely match requirements, but where a plot exceeds requirements the surplus should be disposed of as soon as possible.
2.5.72Decisions involving the acquisition or disposal of assets require the application of appraisal with proportionate effort, including, for example, examination of different options and their associated costs and benefits.The amount and depth of analysis required will vary from case to case and will depend on the size of the asset to be disposed of or acquired.
2.5.73The use of appraisal is intended to ensure that Government acquires an asset only where the resulting benefits are greater than or equal to the cost of the asset including any revenue costs. Similarly Government when considering the disposal of an asset should ensure that the options open to it have been subject to appraisal.
2.5.74The market valuation of the asset will be one of the information requirements of an appraisal involving acquisition/disposal of assets. In rare cases the market value of assets may differ from the economic or resource cost values that should be used in an appraisal. For example the market price of agricultural land may reflect the value of agricultural subsidies in addition to resource costs, and may need to be adjusted downwards accordingly. In such cases it is advisable to seek expert advice in order to make the necessary adjustments.
2.5.75Disposal of property, the sale of freehold property, or the assignment or subletting of leasehold property, will generally involve significant costs, e.g. legal fees, marketing costs and removal costs. In a depressed market the timing of disposal must be appraised. LPS can advise on this. Timing will be critical where there is excess supply in the market for the particular type of accommodation, or where the property is 'over rented'. In such cases it might be possible to dispose of a lease by paying a reverse premium, which will be at least equal to the present value of the difference between the passing rent and the market rent until the market improves or the termination of the lease.
2.5.76Strenuous efforts should be made to dispose of surplus property; but in poor markets it may be necessary to include in an appraisal the costs of holding the property until disposal, or to cover such initiatives as refurbishment to enhance marketability.
2.5.77

The service provided by the LPS is intended to provide Departments with assessments of the open market values of assets in order to ensure that Government obtains the highest possible price for an asset which it decides to sell and pays no more than a reasonable market value for an asset which it decides to purchase. Apart from exceptional circumstances, and then only with the prior approval of DFP, Departments should not:-

  1. propose to acquire assets at a price in excess of open market value notwithstanding the appraisal results; or
  2. consider disposal restricted to open market value where the appraisal indicates a higher continuing operational use value to Government.
2.5.78Since the 1994 "Efficiency Scrutiny into the Management and Disposal of Government owned Property", Departments, together with the LPS's Central Advisory Unit (CAU), have been charged with adopting a more active strategy towards disposals. Through the introduction of formal property audits, Departments in future will be required to justify the retention of all property assets.
2.5.79In March 2010 LPS's CAU published revised general guidance covering a range of issues related to public sector disposals titled "Disposal of Surplus Public Sector Property in Northern Ireland". This supplements Annex 4.8 on Asset Management in Managing Public Money Northern Ireland. Departments should refer to the revised guidance in all cases and ensure it is applied within all business areas including Agencies, NDPBs, Education and Library Boards or their successor organisation(s) and other sponsored bodies

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