South Hams buys supermarket for £5m

South Hams District Council has bought a commercial property in Dartmouth, including a Marks and Spencer foodhall and flats, for around £5m.

A report which goes before the council’s executive on 6 February confirms the local authority has purchased the property for £4.7m, plus £300,000 in costs.

According to the report, the purchase was funded through long term Public Works Loans Board borrowing with both the principal and the interest being repaid fully over the 50-year life of the building.

The building contains a 2,575 square foot M&S Foodhall, plus eight flats.

The report states it will generate a net income of around £60,000 a year for the council.

It also adds that the purchase in line with the council’s commercial investment strategy, which aims to support regeneration in the district and the South West region.

‘An investment opportunity was presented to the council that met the strategy,’ the report states.

‘After initial consideration and assessment by officers, the opportunity was presented to the executive for approval to make an offer for the property, which was given. Following a period of negotiations, terms were agreed for the council to purchase the property,’ it adds.

‘Following confirmation from the leader of the council, chief executive and S151 officer, that they were happy to proceed, contracts were exchanged to purchase the property on the 6 December, with completion on December 20.’

In recent years, local authorities up and down the country have invested in commercial properties in order to make up a shortfall in funding from central government.

In August, Wokingham Borough Council bought a local Waitrose store in Twyford, Berkshire in a deal worth around £15m.

The local authority bought the supermarket site on a 20-year lease with 2% fixed annual increases for £14.87m.

And in November, the Chartered Institute of Public Finance and Accountancy (CIPFA) has published new guidance about what is expected of local authorities who are taking out large loans in order to investment in property.

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