Elected Member Briefing Note - 1-5 High Street running costs

About this Briefing Note

Report by: John Beveridge, Strategic Lead - Property Services

Date: 28 January 2026

Subject: 1-5 High Street running costs

Details

Purpose

To provide further detail on the breakdown of the running costs of 1-5 High Street to show what factors have contributed to the costs of the vacant building.

Briefing Information

In the report on 1-5 High Street (Report No. 25/355) presented to Council on 10 December 2025, reference was made to the maintenance of the building costing an estimated £143,000 per annum since it was declared surplus to requirements in 2008. While there was a missing word in the Council report which should have clarified that this amount was an estimated average cost over that time, this was explained in response to question in the pre-briefing/meeting. 

Since then, further work has been undertaken to compile a breakdown of the running costs (PDF, 74 KB), including calculating an updated average of the spend on the building since 2011 to reflect actual spend rather than estimated - a total of £2.059 million, adjusting the average to £137,000 per annum over the past 15 years. 

As you will see from the table the costs have varied over the years reflecting the full range of payments associated with retaining responsibility for a large, vacant property in the city centre. These include non-domestic rates, insurance, security provision, utilities such as gas, water and electricity, as well as both planned and unplanned maintenance. 

While some day to day costs reduced after Registrars moved to 2 High Street - through reducing water, gas and electricity utilities to minimum and stopping daily cleaning and caretaking services - the underlying obligations of owning and managing an empty building remain. Non-domestic rates and the requirements for insurance and security continue, and the need for unplanned maintenance typically increases over time as a vacant building inevitably deteriorates. In these circumstances, unplanned maintenance is generally limited to making areas safe and addressing the immediate issue, rather than reinstating or restoring any affected areas in full. 

You will note that while other costs have decreased insurance costs increased substantially between financial years 2022/2023 and 2023/2024. This is due to the building's status changing from an occupied building to a vacant building with the move of the Registrar's service. Vacant properties present a higher insurance risk, which results in increased insurance costs. 

The further increase in insurance costs between 2023/2024 and 2024/2025 reflects a change in the methodology used to calculate the share of property insurance costs from the Council's insurers. Previously, insurance costs were apportioned based on Gross Internal Area. This has now been replaced with a calculation based on the Property Reinstatement Value, which provides a more accurate and representative basis for allotting insurance costs with the increase recognising the unique features of the 1-5 High Street building. 

While the table of costs indicates a lower than average annual cost in recent years, this would not have changed the recommendation within the December report, as these costs represent public money being spent on a vacant building which is surplus to Council requirements. Progressing with the Council's previous decisions to market the building and appoint a preferred bidder to develop it as a hotel, will deliver better public value and a more positive economic benefit for Perth and Kinross than continuing to pay to retain a vacant building. 

Next steps 

Work is ongoing to collate the detailed timeline of decisions and other information for the briefing requested by Council, this will be shared in due course and will also be made publicly available as directed at the Council meeting on 14 January. 

In the meantime, on Friday (23 January) Serge Merone, Strategic Lead - Economy, Development and Planning met with Mr Wallace who had contacted the Council in 2023 and 2025 to ask about the future of the building. At that meeting Mr Wallace confirmed that he was not interested in developing the property as a hotel and Serge explained that the decisions of Council only allowed for bids for it to be developed as a hotel. Further details on that process will be included in the wider briefing. 

Since the decision of full Council in December to nominate Lock Terrace Ltd as the developer of the hotel development at 1-5 High Street, work has been ongoing with the company to progress finalisation of heads of terms for the development lease to allow them to begin work. However, the directors and their representatives have been on site on a number of occasions already in 2026 to scope the work indicating their commitment and enthusiasm for progressing the project. 

A request to the Perth Common Good Fund to approve the disposal of the section of the building which backs on to Navigate/George Inn Lane (including the garage) to the rear of the property is currently being progressed. The garage was not included in the original disposal decision approved by Perth and Kinross Council and the Perth Common Good Fund. In accordance with the Perth Common Good Fund asset disposal guidelines, a consultation will be undertaken, following which a report will be submitted to the Perth Common Good Fund for consideration.