Edinburgh councillors voice concern over lease deal on former Drumbrae care home

Councillors have voiced concerns over a deal to lease a former care home to the NHS which still leaves the council forking almost £200,000 a year out for the building.

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Drumbrae care home is being turned from a residential care home into a complex clinical care assessment centre as part of a shake-up of care in the Capital.

The council has agreed to transfer the property in Ardshiel Avenue to NHS Lothian on a five-year lease which will see the health board pay £420,000 a year for it.

But a report to the council's finance and resources committee said the council had borrowed money to build the home in 2003 and still had to pay £606,000 a year for the next seven years to clear the loan.

The report noted the council would also save around £100,000 a year on repairs and £70,000 on utilities, both of which would transfer to NHS Lothian.

But Labour councillor Joan Griffiths said: "On the loan, I am concerned we will still be carrying that because my understanding had been that as part of the lease agreement they would take on the loan as well. That's a significant amount of expenditure for the council we will still be carrying."

And committee convener Mandy Watt said: "The council were put in the situation where the NHS were saying they very much needed what was then an active care home.

The former Drumbrae care home is being leased to NHS Lothian for £420,000 a year. Picture: Ian Georgeson

"We feel there was quite a lot of leverage applied to the council over this."

She said the home would need to be leased for ten years to cover the remaining loan costs.

But Peter Watton, the council’s director of sustainable development, said when negotiations with NHS Lothian began, the health board’s view was the property should be leased at a peppercorn rent because the council and the board were partners in the integration joint board (IJB) overseeing health and social care in the city.

He said the rules on such leases meant NHS Lothian had to pay the market value as determined by the district valuer which explained the £420,000 a year.

And he warned that asking a higher figure could have led to a "tit for tat" situation on future transactions with the NHS.

"Whichever way you look at this, today we have costs of over £770,000 associated with this building and the next day we will have a cost of £186,000, so we are still making savings."

He said if the property was not leased the council would soon have to pay non-domestic rates of £102,000 a year on it because it had been vacant since January

And he added the five-year lease worked to the council's advantage because NHS Lothian was likely to want to renew it and the rent could be reviewed at that stage.

Four other council care homes in the Capital – Fords Road, Clovenstone, Jewel House and Ferrylee – were also proposed for closure as part of the same shake-up announcement in June last year, but the plans are effectively on hold until the IJB can stabilise its staffing crisis, caused by Covid and people leaving, which has hit services.