Advertisement

Brentwood set to double property investment war chest

Brentwood Borough Council looks set to increase the amount of money it can invest in commercial property by £30m.

Councillors are due to meet tomorrow (October 8) to discuss a report to increase the loan drawdown facility for its investment arm, Seven Arches Investments Limited.

Seven Arches was created in 2018 with an initial loan facility of £30m.

According to the report, the council company has used £13.5 million of this facility to buy two properties outside of the borough, leaving £16.5m remaining.

The report states that it has ‘become apparent that this remaining amount drastically restricts’ the council’s ability to fund investments that ‘could make a significant contribution to the economic development of the borough’.

The report therefore recommends increasing the loan facility by a further £30m, bringing the remaining total up to £46.5 million.

It adds that there should be a greater focus on investments in the borough itself.

‘In particular, the investments should look to provide an economic benefit to the area,’ the report states.

‘However, out of borough investments will still be considered where appropriate, as part of the portfolio’s risk management approach.

Many other local authorities have also turned to investing in commercial property to make up the shortfall in central government funding.

In December 2018, Spelthorne Borough Council defended its policy of investing in commercial properties, after a report by the Bureau of Investigative Journalism claimed the local authority in Surrey has borrowed almost £1bn from the Public Works Loan Board to buy a series of commercial properties.

The 2019 State of Local Government Finance Survey by the Local Government Information Unit think tank and the Municipal Journal, which was published in February revealed 55% of councils are considering buying investment properties and using them as a source of income.

‘The additional loan facility will assist the council to achieve its commercial income targets,’ it adds.

‘However, funding of investment properties carries a degree of risk.’

Photo Credit – Stevepb (Pixabay)

Jamie Hailstone
Senior reporter - NewStart

Comments

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
Help us break the news – share your information, opinion or analysis
Back to top