Spelthorne Borough Council, one of the most high profile local authorities to invest in commercial property, recently published outturn figures which show that its rental income from commercial property in 2018/19 leapt to £41.5 million. After deducting the lending and other property related costs the net property revenue of £7.5 million is only just behind revenue generated from council tax - next year this figure is set to overtake council tax receipts.
Over the last few years local authorities have stepped up to become key investors in commercial property. There has been controversy that this spending has not been limited to property in their own local boundaries, where they could, for example, kick-start regeneration projects in their own town centres. Observers have also expressed concern about the scale of the debts that have accrued.
However, with central government funding drying up the comments by Terry Collier (the deputy chief executive at Spelthorne Borough Council) suggest that he believes the risk in not searching for alternative sources of income is far greater than the risk in investing in commercial property.
Terry Collier, deputy chief executive at Spelthorne, told Room 151: “There are two sides to risk. “One is risk of things going adversely. But sometimes there is a risk that arises from not grabbing an opportunity. “I am aware of some councils that face cutting their staff numbers by up to 20%, and we are not in that position, thanks to the income from our property investments.”