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Council happy with £2m return from property portfolio

Local authority says six figure sum is adequate for £100m spend

Fiona Tomas

Fiona Tomas

fiona.tomas@newburynews.co.uk

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01635 886639

Council tax set to rise by four per cent from April

A £2M-A-YEAR return from a £100m investment in commercial property is adequate, West Berkshire Council has stated.

The council borrowed the nine-figure sum and has already invested around £40m.

The £1.25m-a-year interest from the loan will be paid out of the rental receipts it anticipates it will receive from the properties.  

The council looked at investment in commercial property as a way to generate additional income and offset continued reductions in government funding. 

But questions have been asked about the “speculative” investment.

Speaking at a full West Berkshire Council meeting, Newbury Green Party prospective parliamentary candidate Steve Masters asked whether the local authority should be investing in local housing stock “in order to change the lives of and keep the much-needed younger people in the area to stem the demographic time bomb”.

In response, executive member for finance and property Anthony Chadley (Con, Birch Copse) said the scheme would enable strong, consistent income for the council.

He said: “Once fully invested, West Berkshire will enjoy a net income of £2m per year, so over the next four years we are anticipating an additional £7-8m net income.

“This is a significant amount of money and is essential in ensuring that we set a balanced budget next year and in future years.”

Securing the additional income would allow the council to invest in projects to help young people in the district, he said.  

“Barely a week goes by when Newbury, West Berkshire or the wider Berkshire area isn’t singled out for being a great place to live and to do business,” he said.

He highlighted Newbury being ranked the sixth happiest place to live in the UK and Computer Weekly saying that West Berkshire was the best place outside London to run an IT business.

Mr Chadley said efforts were being made to attract younger people to the district, looking at how it could “foster the creativity of our younger people” through teaching a wider range of qualifications, incubator space for start-ups, particularly in areas where retail space is being underused, and more comprehensive careers advice.

He said: “We will also be looking closely at the barriers to young people choosing West Berkshire as a great place to live. This will require us to focus very closely on our leisure offering as well as the issues of affordable housing.

“Work is currently underway to address those issues.

“In conclusion the answer is not to only do one or the other, but to do both and in securing new income first we have ensured good, solid foundation for implementing the second.”

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Article comments

  • philjay2

    21/12/2018 - 14:02

    £2m return from £100m investment is 2%, then subtract the £1.25m interest leaves £0.75m nett or 0.75%. How many staff are required to manage this? Then factor in the risk to capital values by an uncertain future and it looks a decidedly "iffy" deal. The winner was the previous owner(s) of the property acquired.

    Reply

  • richr

    21/12/2018 - 00:12

    I suppose it's a bit easier to make these sorts of speculative investment decisions when it isn't your money and you you'll be gone before any of the problems start emerging.

    Reply

  • Bombey

    20/12/2018 - 10:10

    That's about half the yield I'd expect.

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  • Justin S

    20/12/2018 - 08:08

    Now, I am not a mathematician, but to me that looks like a very bleak payback by the time you consider the interest charges. Sounds like we need someone who know accountancy to be employed in the council. so, £2 million minus £1.25 million interest makes £750.000 , which doesn't even pay for the shortfall of green bins , let alone anything else that the council have mis-managed and cut back on. So, lets times that by 4 and we actually get £3 million. Correct me if I am wrong on this ?

    Reply