The Role Of Valuation In The Effective Management Of Public Property - A Uk Case Study

Local Authority Property Management is going through significant changes. Decreasing capital allocations from central government, changes in the population demographics, moves toward service delivery by non-traditional suppliers and local government reorganisation are just a few influences affecting all local authorities. Good management of all local authority owned property assets is of equal importance as the management of other resources within the council. For the effective, efficient and economic delivery of services, it is vital that all property holdings are utilised to the best advantage. This requires that the property provider and the property user are both fully conversant with the value of the property holding and that a rent/charge is made accordingly. The Audit Commission stated that 'good property management' is not an end in itself. It must clearly respond to the policies and objectives of the service areas. These, in turn, will relate to the policies of the council as a whole'. Good property management should also ensure that by identifying the value in use of an asset it will be possible to determine if that property is being used effectively. Properties that are too large for their required use are inefficient, both in terms of annual running costs and, more importantly, in terms of the opportunity cost of capital for the areas which are not used to their full capacity. In addition, there may be further repercussion in other resource areas apart from the property itself: for example; an under-occupied school may still require a fixed number of teachers to deliver an acceptable balance of subjects under the national curriculum, resulting in a staff/pupil ratio lower than the council's standard. Similarly, the physical characteristics of a building might adversely affect the effective delivery of a particular service. For example, a library in a traditional 1930s library building might not be suitable for the new demands placed on the library service due to advances in information technology and a lower quality service might result. This paper looks at the interrelationship between capital valuations and the asset management plan linking together pro-active management with the efficient use of space. Historically, local authorities have adopted a largely passive approach to property management which resulted in a concentration on service delivery whilst ignoring the resource implications. Utilising a cross sectional survey of Local Authorities in England and Wales, the paper identifies areas of concern and conjecture and offers a practical good practice guide to help local authority property professionals manage their property holdings effectively.