Canada Life acquires Dundee Council HQ in leaseback arrangement

The local Evening Telegraph newspaper has reported that the authority is handing Dundee House over to the insurance heavyweight in an arrangement that it says is likely to cost six-figure sums in rental payments for 40 years.

According to the newspaper, the sale has been pushed through in order to balance the council’s books for this financial year.

However, Dundee City Council corporate services boss Greg Colgan said the cost of renting will be “substantially less” – around £1m – than paying construction debts linked to the site. It has been able to pay those debts off with the proceeds of the sale.

And while the saving this year is £433,000, Mr Colgan has admitted savings will reduce by around £20,000 each year because of an annual rent hike and mean savings will be cancelled out 22 years into the arrangement.

Under the deal, Canada Life will return Dundee House to public ownership at the end of the lease for a nominal sum of £1, although the agreement includes the option to buy the building back part-way through if the council chooses.

Dundee City Council has not declared how much it will pay the insurance firm in rent but a spokeswoman insisted an independent evaluation found the deal was the “best value” option.

She added: “The sale of Dundee House was the most prudent financial option for years to come.”