MAJOR commercial property investments made by the council are still generating cash for everyday services in Bracknell Forest despite many companies across the UK not being able to pay rent.
Other local authorities which have also spent millions of pounds on large offices, warehouses and retail centres are said to be taking a “battering” as some rents stop coming in during the coronavirus crisis, something which has concerned the government.
But this is not the case for Bracknell Forest Council (BFC), which spent £81 million on six different properties from 2017 to 2018, according to director Kevin Gibbs.
READ MORE: The six properties the council spent £81 million on
He told the News: “We are receiving rents from the six identified properties and will continue to do so, as agreed with the occupiers.”
Why does the council have six multi-million pound properties miles from Bracknell Forest?
BFC splashed out on six sites in Lincoln, Sheffield, Stowmarket, Redditch, Eastleigh and Northampton in just under two years in order to make money for its everyday services.
Borrowing money from a low-interest, low-risk public funding pot, the council’s aim when it set out on its spending spree was to buy up properties which could generate substantial rent from its tenants.
READ MORE: Three properties the council spent £41 million
This policy was adopted in 2016 after years of cuts in funding from central government, which left local authorities looking for ways to make money to pay for the services used by residents.
How much does BFC make from these properties?
Tenants including Utilita, Wren Kitchens and DSG Retail Ltd contribute to an overall income of £3 million in rent from the six sites.
Director Kevin Gibbs said council bosses are happy with their purchases.
READ MORE: Council approves commercial spending plans
“We remain confident in our investment in the properties, which are performing well as investments.”
How does the council spend this £3 million?
Cash generated can be used to fund the council's revenue budget, which is its spending pot for its everyday services.
Every year, BFC has around £90 million to spend on these services.
This includes social care support for vulnerable people, running libraries, paying staff salaries, bin collections and more.
Why is the government concerned about this?
According to the Financial Times, the Treasury is set to ban councils from splashing out on investment properties after local authorities spent almost £7 billion in three years.
This has left councils “exposed” to a struggling real estate sector as retailers find it hard to pay rents.
A Treasury spokesman quoted in the FT said: “Our starting point is that local authorities should invest public money in regeneration, housing and delivering services, not in speculative commercial investments which can put local and national taxpayers at risk.”
So, is it a bad thing for Bracknell if it can't spend any more money on properties?
Perhaps, but back in November 2019, BFC said it had no plans to spend any more money on properties miles away from Bracknell Forest anyway.
Kevin Gibbs added: “We are not looking to invest in more commercial property at this time.”
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