Laura Sharman 11 September 2020

Councils warned about 'risky' investment in commercial property

Councils warned about risky investment in commercial property image

Councils have been warned that some investments in commercial property are delivering yields millions below forecasts by the TaxPayers' Alliance.

New analysis by the campaign group reveals a 'mixed picture' for investments even before the pandemic. It found that Leeds, Shropshire, Buckinghamshire, Surrey, Runnymede and Woking councils all reported that rental income was less than expected.

Spelthorne council was the only selected local authority that reported all investments were returning income in line with forecasts.

Harry Fone, grassroots campaign manager of the TaxPayers' Alliance, said: 'While it can see some success, including keeping council tax down, there are no guarantees with any investment and ultimately it’s ratepayers that will end up footing the bill for underperforming portfolios.'

In response, Cllr Richard Watts, chair of the Local Government Association’s Resources Board, said: 'When making investments, councils need to follow strict rules and assessments to ensure they invest wisely and manage the risk of their investments appropriately. Investments are not only made to try and plug funding shortfalls but also to help contribute to local economies.

'Councils continue to face significant extra cost pressures and huge income losses as a result of the pandemic. The Government’s commitment to fund a portion of lost income from fees and charges is a step in the right direction but does not cover full losses, nor does it extend to commercial income losses.'

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