Tories prepare to sell Smith Square HQ after counting cost of general election

The Conservative Party is preparing to sell the London headquarters which it has occupied since the 1920s. It is testing the market to gauge interest in the historic building in Smith Square, paving the way for a move to smaller and cheaper premises nearby.

London-based organisations have been discreetly approached about buying the elegant building, which is held by the Tories on a 230-year lease.

Property sources said that the Conservatives were "testing the market"and that private approaches to potential buyers were being made before it is formally put on the market.

The Conservatives own a long lease on 32 Smith Square and rent number 34 next door, and the two buildings have been knocked through to create a larger headquarters building.

Iain Duncan Smith, the Conservative leader, was recently advised by Rick Nye, the party's head of research, that a sale would be advisable to raise funds after the costly general election campaign.

His confidential report said that the party could raise at least £10m by selling its leases and that a move to more modern premises would help to refresh the party's image.

The Tories have already given up parts of their Central Office site. In 1999, offices in Tufton Street, behind the Smith Square building, were turned over to property developers who have converted them into flats worth up to £800,000 each.

The sale of the historic building, which has often been the backdrop for Conservative election-night celebrations is sure to prove controversial with the Tory rank-and-file because of its historical symbolism. But it is unpopular with many Central Office staff due to its "rabbit warren" network of corridors.

Many staff were laid off after the general election and some believethere is too much space in Smith Square, and that a move to a more modern building would be in keeping with the new image of the Tory party.

A senior Conservative source said last night that "no decision had yet been made" about selling the building.

But the sale has been discussed in meetings at the highest level and a Tory source said it "was clearly on the agenda".

The Labour party is also about to move from its Millbank headquarters after the landlord put up the rent, and is seeking other Westminster premises.