Following news that the Isle of Wight council’s property investment on the mainland had peaked at £35m with no likelihood of any more of the previously agreed £100m investment going ahead, News OnTheWight takes a look at the current portfolio and hears from local politicians.
According to papers submitted to the full council in September 2020, across four properties there were nine occupational tenants:
- Mettler-Toledo Safeline Limited;
- In the Style Fashion Limited;
- Betterstore Self Storage Properties III Limited;
- Eriks Industrial Services Limited;
- Sunwin Services Group (2010) Limited (vacation, dilapidations and relet in 20/21);
- Go Installations Limited;
- Nedschroef Fasteners Limited;
- Stagecoach Group;
- Metabo UK Ltd (lease renewal in 20/21).
The four properties are:
- Access 4:20, Aylesford, Kent valued at £8,625,000 (2020)
- Olympic Court, Manchester valued at £10,970,000 (2020)
- Network, Oxford valued at £10,000,000 (2020)
- Metabo, Nursling, Southampton valued at £3,500,000 (2020)
Rental income
According to the papers,
The cumulative net income (excluding debt costs) to the council for the year to 31 March 2020 amounts to £1.518 million, this represents income of £1.593m less management costs of £0.075 million, this represents a net yield of 4.32%per cent.
The council incurred debt costs of £0.879 million and contributed £0.5 million towards the commercial property reserve. This reserve will be used to fund potential lost rental income and future property related costs.
The net return (including debt costs) for 2019/20 prior to the reserve transfer was £0.639 million, this represents a net yield of 1.82 per cent.
Labour: £35m could have done some serious good as well as provide income
Richard Quigley, Chair of the Isle of Wight Labour Party told News OnTheWight,
“I’m glad Cllr Hutchinson has updated residents on the £35m investment his administration has made, but I’m not sure which I’m most flabbergasted at. His unwillingness to invest on the Island or his statement that the Island isn’t a property hotspot. Tell that to people trying to get on the property ladder or private renters. The amount of developers queuing up to build here would no doubt disagree too.
“It really is a lost opportunity, that £35m could have done some serious good as well as provide income. It could have been used to buy housing stock to rent out at affordable rates, agricultural land for county farms that would provide quality jobs as well as a decent return on the investment as is the case in Norfolk (a Conservative council). I’d go even further and say that part of the councils pension fund should be invested on Island. Not only would this increase the wealth of the community, but it may improve how future decisions are made.
“We need to stop so much opportunity leaving the Island and create wealth here, that is what the Island Labour party will do. The councils investment strategy has done the exact opposite.”
LibDem: The wrong approach
Nick Stuart, chair of the Isle of Wight Liberal Democrats, told News OnTheWight,
“When the Conservative Council put this scheme to Councillors the Liberal Democrats asked why these borrowed Government monies couldn’t be used to support the Island economy directly. We were all told that no project on the Isle of Wight met their investment criteria. So they invested a borrowed £35 million on the mainland, with a net return of 1.82 per cent.
“Perhaps they could have used this money on the Island say in a working floating bridge, Island training capabilities for business development, the creation of a well resourced business incubator or Science Park, small scale regeneration schemes, a modular lo carbon building system for Island, or even an Island Abattoir.
“Perhaps they could have looked to the expertise on the Island to figure out how this money could have been used to support the local economy while earning a return. Perhaps they should have consulted the Island population rather than relying on a tiny number of decision makers.
“Paid help from Portsmouth Council and an Isle of Wight legal and senior team manage our property portfolio from Kent to Salford, and the professionals are to be congratulated with managing to stay afloat. However the minimal return and capital values are now threatened by pandemic risks, with no additional benefits to Island businesses and residents.
“The policy of buying industrial units and ignoring other possibilities here lies very firmly with this Administration. We believe this was wrong and we look forward to supporting a more Island-centred approach after the next elections.”
Green Party: IWC must invest only in Isle of Wight based projects
The Isle of Wight Green Party challenge the IW Conservatives to “show some real commitment to the Island by pledging to invest only in Isle of Wight based projects for the good of the local community”.
Daniel James, Freshwater North Parish Councillor for the Green Party, said,
“The Conservatives saying that they were correct not to invest in the Island show that they do not understand opportunity cost. Benefits from public investment should not be limited to figures on a spreadsheet. They had the opportunity four years ago to invest in local housing to prevent homelessness and family breakdown on the Isle of Wight.
“They could have invested in sustainable job creation for young Islanders. They could have built a children’s home to prevent the Island’s vulnerable kids being placed on the mainland far from family and friends.
“Instead they chose to play Monopoly with their friends in Portsmouth with a loan for £35million – putting the IW Council into increased debt, and spending that money in Salford, in Southampton, in Kent.
“In the next four years we need a IW Council who will invest in Newport, in East Cowes, in the West Wight. And most importantly in the Isle of Wight people, who deserve new councillors who are determined to improve the lives of residents, and value people and places more than property speculation.”
You can read the full details of the property investments in the document below – most relevant pages are 45-50 and 53-54.
