2.5.63 NHSScotland bodies have a duty to dispose of property surplus to requirements within three years and should not hold land speculatively. Disposals should be conducted in accordance with the requirements of the NHSScotland Property Transactions Handbook.
2.5.64 Projects 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.
2.5.65 Decisions 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.
2.5.66 The use of appraisal is intended to ensure that NHSScotland bodies acquire assets only where the resulting benefits are greater than or equal to the cost of the asset including any revenue costs. Similarly NHSScotland bodies when considering the disposal of an asset should ensure that the options open to it have been subject to appraisal.
2.5.67 Disposal 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. Appropriately qualified advisers 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.
2.5.68 Strenuous 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.
2.5.69 Suitably qualified advisers can provide NHSScotland bodies with assessments of the open market values of assets in order to ensure that they obtain 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 SGHD Capital Planning & Asset Management, NHSScotland bodies should not:-
(a) propose to acquire assets at a price in excess of open market value notwithstanding the appraisal results;
(b) consider disposal restricted to open market value where the appraisal indicates a higher continuing operational use value to Government.
2.5.70 Under the SGHD Capital Property and Asset Management Policies NHSScotland bodies are now charged with adopting a more active strategy towards disposals. Through the introduction of formal property audits, NHSScotland bodies in future will be required to justify the retention of all property assets.
2.5.71 Use of appraisal in these circumstances will serve to highlight the costs which would be incurred by NHSScotland (and the wider public sector) should the market price prove to be inadequate to fully compensate for net benefits foregone. The amount and depth of analysis required however will of course vary from case to case and will, among other things, depend on the size of the asset to be disposed of.
| Checklist of Typical Capital and Revenue Costs and Benefits Costs and benefits to be covered by an appraisal will typically include: |
| (i) initial capital costs, such as: |
| • purchases of land and buildings, including accommodation for staff, computers, equipment, communications, furniture and vehicles; |
| • purchases of equipment, vehicles, hardware and software; |
| • installation and implementation costs; |
| • development costs including staff costs and consultancy fees; |
| • testing; |
| • training; |
| • infrastructure and works services; and |
| • initial security and contingency costs. |
| (ii) opportunity costs, based on up-to-date market valuations, of capital assets which are already in ownership, such as land, buildings, equipment and vehicles. |
| (iii) replacement costs required during the appraisal period. These may be needed in respect of any of the capital assets employed on the project. |
| (iv) staff costs recurring throughout the appraisal period, including not only salary costs but also the costs of accommodation, superannuation, employers' national insurance contributions, allowances and other overheads. Double counting should be avoided e.g. if the purchase cost of a new building for staff has already been included, then it would be incorrect also to include an allowance for accommodation within annual staff costs. Relevant staff may include those involved in management, operation, support and ongoing training. |
| (v) operating costs recurring over the whole term of the appraisal, such as maintenance, support costs, bureau services, leasing/ rental costs, recurring contingency and security costs, energy costs, rates and cleaning. |
| (vi) residual values of capital assets used in options, either at the end of the appraisal period, or in the year in which they are released from use, whichever is sooner. |
| (vii) any other costs and benefits that can be valued in money terms, such as revenues. |
| (viii) costs and benefits affecting other parts of the public/ private sectors. |
| (ix) Quantified measures, or at least descriptions, of those costs, benefits or impacts which can not be measured in money terms. |