CORNWALL Council has “cut its losses” and bought 29 empty properties to avoid paying £27 million on them in rent over the next 25 years.
Housing chiefs secured an undisclosed deal with Charles Terence Estates (CTE), which had originally planned to use the buildings to house vulnerable people in the duchy.
The unitary authority had been unwillingly tied into a long-term contract with CTE that lumbered it with an annual rental bill of more than £1 million.
It now intends to release around seven of the properties for social housing, through its arms-length organisation Cornwall Housing, with the remainder being rented privately or sold on the open market.
Geoff Brown, the council’s cabinet member for homes and communities, said: “We paid more than they are worth, but significantly less than if we stayed with the lease for the next 25 to 30 years. It’s no secret that we’ve been paying £90,000 a month in rental charges. We’ve cut our losses.”
The move marks the end of years of legal wrangling, which saw Cornwall Council clash with CTE first in the High Court and then the Court of Appeal.
The saga began in 2007 when two now-defunct borough councils, Restormel and Penwith, entered into a multi-million pound deal with CTE to provide refuges for homeless people, drug addicts and former convicts in 30 properties in Newquay, Penzance, Hayle and St Ives.
Locals protested about the location of the sites, and in 2009 the newly-formed Cornwall Council agreed to scrap the plans and stopped paying rent to CTE.
It was dragged in front of the High Court, but won the case after arguing it had inherited the contract from the two former borough councils, which had failed to meet their statutory duty to provide value for taxpayers’ money.
But in November 2012 CTE emerged victorious from a Court of Appeal hearing, meaning Cornwall Council had to meet the former councils’ contractual obligations, reimbursing the firm for missed rent and paying its legal costs – a combined bill of around £4.5 million.
Mr Brown said: “After the court case they [CTE] held all the cards. Our officers have done a brilliant job negotiating a deal so we can now move forward on a positive note.”
CTE decided to hold onto just one of the 30 properties – Danesbury House on Fore Street in Newquay.
Locals were outraged at the original proposals to accommodate vulnerable people in the building, saying its location opposite a supermarket and family pub was hugely inappropriate.
Mr Brown said: “Dansbury House is now completely refurbished and ready to let. Nothing needs doing to it and CTE didn’t want to let it go. As I understand it they will probably put it on the private market, and it won’t be used for the purpose it was originally intended.”
He could not confirm how much had been paid for the 29 properties, saying the information was “commercially sensitive”.