Spelthorne Council defends property investments
Spelthorne Borough Council has defended its policy of investing in commercial properties, following reports in the national press.
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.
In September, the council announced the purchase of the Charter Building in Uxbridge, the Porter Building in Slough and Thames Tower in Reading for £285m.
And in September 2016, it bought the BP business park in Sunbury, which is the largest privately-owned business park in the country, for £360m.
The investigation highlighted the growing number of local authority’s investing in commercial properties over the last few years.
In a statement, Spelthorne Borough Council said like almost all local authorities, it has been dealing with continuing central Government funding cuts.
‘This, coupled with rising demand and increased costs means that we have had to develop new ways of doing things,’ the statement added.
‘For almost two years we have pursued a strategy of investing in high quality commercial offices with strong, long-term, secure tenants.
‘Since April 2018, the income has also been used to progress an ambitious housing delivery programme designed to meet the pressing housing needs of our residents and meet Government targets. This includes providing a range of much-needed emergency accommodation, affordable housing and private rental properties.
‘Some of the articles have focussed on the ratio of debt to Council budgets. In Spelthorne’s case, we believe this is the wrong approach as this overlooks the fact that the debt is backed by valuable assets with tenants of highest financial strength such as BP, and that Spelthorne Council is steadily paying off the debt on a year-by-year basis. We also ensure that we identify and model future liabilities associated with acquisitions, for example future refurbishments when tenants move out and covering rent free periods when new tenants move in.’
The leader of Spelthorne Borough Council, Cllr Ian Harvey added: ‘We want to reassure residents that we are not speculating with public money. Our approach is restrained, prudent and risk-averse at all stages. This includes rigorous scenario testing, including looking at worst case scenarios. We believe there is no viable alternative because valuable services, including those that affect the most vulnerable in our communities, would otherwise be under threat.
‘These investments are good news for our residents as they help ensure that we can continue to deliver and enhance the services they need and deserve, as well as address the housing needs of a growing number of people in our communities who struggle to find a suitable home that they can afford.’
