A mainland commercial property portfolio owned by the Isle of Wight Council will make the authority more than £1.8 million a year.
Figures revealed to the authority’s audit committee on Monday provided an update on the Isle of Wight Council’s £35.1million commercial property holdings — stretching from Southampton up to Manchester.
Some of the council’s tenants are big-name brands like Stagecoach and online fashion retailer In The Style.
Going by current market estimations, the council says, should the 4 properties be sold now, they would make a profit of £6.25million, less the costs of sales.
The commercial property acquisition fund — the authority’s name for its mainland property portfolio — increased by nearly 18% in the year between 31st March 2021 and 31st March 31 2022. The council has its properties valued at the end of every financial year and sees how much their worth has grown.
With current leases in place, the council can make £1,821,560 a year from the rent of all the units but that could increase as contract negotiations for a couple of businesses are due later this year.
In the 2021/22 financial year, the Isle of Wight Council earnt £1.64million from rent but had to pay debt costs of £738,000 meaning the authority pocketed £902,000.
The authority was able to borrow up to £100million to buy property but the government funding has since stopped, and the government is now cracking down on local authorities further investing in commercial properties as it is seen as taking risks with the public money.
Demand for industrial space, however, has hit a record high, the council reports, following from a growing trend last year and has led to unprecedented rates of retail growth over the past 12 months.
The investment strategy has now settled into a management phase, the council says and is not looking to acquire any more properties on the mainland.
The council says the mainland portfolio provides a significant income stream that cannot be quickly replicated on the Island but Island-based opportunities are evaluated to ensure investment is not done at the expense of the Island.
Have I missed something,if they make this from property rent,carparks etc over and above what the Government gives how come we pay higher council tax than other counties and receive a poor service ,poor roads and pavements, failing schools, high crime etcetc, where is all the money going?
The authority was able to borrow up to £100million to buy property but the government funding has since stopped, and the government is now cracking down on local authorities further investing in commercial properties as it is seen as taking risks with the public money.
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so, our council went on a wild debt fueled spending binge at the height of the property market and here we are, shortly afterwards heading into recession, residents struggling to buy food and pay bills, roads with holes, healthcare failing and taxes up – these geniuses couldn’t be trusted to sit the right way round on a toilet seat.
You would be partially correct if they had borrowed the full £100m – Unlike some Councils they didn’t though. They borrowed £35m and currently receive an annual income of £902,000 after expenses. Nearly 25% of the Council’s total income
Seems good at this then, but faced with the challenge of setting up its own company to build affordable housing, it can’t get off the ground. Obviously council is in the wrong game, don’t think public services are for them.
so they sell of the isle of Wight to invest in England , where is the logic , investments should be on the isle of Wight that is where there job is & there paid representation is , I guess it is closer to home than there Russian Gazprom investments , but is it really acting like a council to be doing such things in the first place
Are these properties owned outright by the council or is our council tax servicing loan repayments on them.
If the council can afford to invest in this way then they must be making a profit on the council tax and therefore charging to much in the first place.
They are using money borrowed from the Government to purchase the properties.
The big problem all councils have is that in the past 12 years the direct funding that the Government gave Councils each year has been cut and cut and cut – hence Council Tax rises and Councils take a gamble on property investments
Why don’t sale then off and provide proper council housing on the island
Doesn’t seem to mention how much they borrowed or how much the repayments are , and for how long.
Councils should not be using taxpayers money in this way. It should be focusing on the job of service provision on the Island.
They are gambling with our money
The comment that contract negotiations this year could increase the income further is worrying. The council are clearly unaware of the financial crisis the country faces. Most lease negotiations result in a significant rent reduction at the moment.
So a likely fall in income and a certain rise in interest rates can only spell disaster.
Another financial bail out is looming , we foot the bill.
It should be remembered that the profit from these property investments after expenses are just under 25% of the Council’s annual budget.
The Domestic Council Tax income is also just under 25% of the budget.
Somebody would have to come up with a realistic way of making that property income up if it didn’t exist.
Double Council Tax?
Slash as many services as they legally can and also ramp up parking charges and all other charges they can make the residents pay – and increase Council Tax?
The Property Portfolio is modest when compared to a lot of other councils up and down the country and is sustainable, even in hard times.
Wotawally says it should be remembered that the profit from these property investments after expenses are just under 25% of the Council’s annual budget.
drivel – from the councils website….In 2022/23, the Isle of Wight Council plans to spend £368.9 million on providing services for the Island.
they made about £900k from this property gambling – which is practically a rounding error on the full budget
You obviously went to a different skool to me and paid attention during your sums lessons.
Of course you are correct, and my error was made by looking at one set of figures where the amounts were shown as actual amounts and another set where they were shown as hundred thousands – and then totally confusing myself.
My apologies for giving totally the wrong information here.