At last week’s Isle of Wight council (IWC) Cabinet meeting, members voted in favour of a proposed strategy for investing in property from an agreed fund of £100,000,000.
Under the administration of the Island Independents – as part of the Medium Term Financial Strategy agreed in October 2016 (by all councilors except Cllr Chris Whitehouse) – it was agreed that £100m would be invested in property purchases.
Deputy leader and Cabinet member for resources, Cllr Stuart Hutchinson, told members that around 15 other councils around the country had been investing in property as a vehicle to raise income.
Update: At 6:45PM this evening, this was voted through at Full Council: 24 in favour, 7 against and 5 abstained.
Rates of return
This government-encouraged strategy of borrowing at very low rates of interest (around 2%) was proving successful, he said, for some councils who’ve seen more revenue from their investments than that collected by council tax.
Cllr Hutchinson said the IWC would look at key property investments to give them a solid rate of return from the tenancies, with an anticipated return of 4.5-5% net each year.
Decision-makers
He went on to explain that decisions on property opportunities would need to be made quickly.
Therefore it was also proposed purchase decisions would be made by the Chief Executive, the Treasurer and himself (as cabinet member for resources).
Recommendations to full council
The subject will be debated at tonight’s full council meeting.
The recommendation to full council reads:
- Approve the commercial property investment strategy as set out in Appendix A and that all purchases of investment properties must comply with this strategy
- That subject to full Council agreeing the commercial property investment strategy, the Cabinet delegates to the chief executive and the section 151 officer, in consultation with the Cabinet member for resources that following proper due diligence, the authority to acquire investment properties in accordance with the approved investment strategy.
- That Cabinet agrees, subject to a waiver to contract standing orders being granted, to enter into a twelve month agreement with Portsmouth City Council to commence the acquisition of a property portfolio.
- That a report be prepared on a six monthly basis for submission to audit committee, setting out the progress of the property investment fund, including the total income that will be accrued by the council on an annual basis as a result of this policy.
Image: James Petts under CC BY 2.0
