REAL ESTATE POLICY: COMMISSION KEEN TO PURCHASE MOST OF ITS PREMISES.

"The Commission's status as a tenant is not compatible with its departments' need for continuity", says the EU executive in a report to the Council and the European Parliament. This involves "frequent negotiations with landlords, who try to take advantage of the fact that the Commission's geographic seat cannot be moved" so as to impose their conditions. Over recent years, the Commission has concluded 18 long-term leasehold contracts with options to purchase representing an annual index-linked charge of about Euro 75 million altogether (estimated for the end of 2002) out of a total budget of Euro 150 million. The area covered by this type of contract now represents 38% of the office space occupied by the Commission, which will increase to 57% of total office space after the Commission has moved back into the Berlaymont.

These contracts governed by Belgian law have the advantages that they run for a long term (minimum of 27 years), thereby allowing the Commission some stability. Moreover, the leasing fee is less than the rent that would be payable under a normal tenancy agreement, although the saving is partly offset by the financial cost of major maintenance work to the buildings. The contracts provide for an option to purchase, which the Commission may further exercise before the end of the leasehold. This would enable the Commission to become the outright owner of the property at no significant extra costs. Until the Commission takes up this option, the landlord retains ownership of the ground. The contracts enable the...