The Isle of Wight Council’s mainland commercial property portfolio has drastically dropped in value which means if it sold it now, it would lose money.
The authority owns 4 industrial estates – in Southampton, Salford, Oxford and Kent – which were purchased 5 years ago. However, between 2022 and 2023, the valuation of its properties fell by an average of 15.96%. This compares to last year – between 2021 and 2022 – when the portfolio grew by nearly 18%.
The portfolio’s current market value, as determined by independent experts, is worth £34.75million which represents a £420,000 loss on what the Council bought it for.
Property prices peaked last year, with 1 – Olympic Court in Salford – at almost £13.7 million. It is now worth £12.3 million – a 10% decrease. The most significant drop in value was at the Network Oxford site, which fell 21.97% from £12,175,000 to £9,500,000.
The Council purchased the 4 sites for £35.17million in 2018, including all legal fees and associated costs and it was hoped that it would make money for the Council, which would deliver year on year.
The Council received around £1.78million of rent in the last year from the occupiers of the units — which include In The Style Fashion, Betterstore Self Storage and Stagecoach Group — although 1 is now empty.
Had the Council sold the properties at that point, it would have made a £6.25million profit, less the costs of sales.
A report seen by the Isle of Wight Council’s Audit and Governance committee on Monday (31st July), said the 2nd half of 2022 went from record-breaking highs to quite dramatic lows as the country faced economic challenges.
The Council said the portfolio now provides a significant income stream and the opportunities to do so on the Island ‘cannot be quickly replicated’.
Speaking at the meeting today, Chris Ashman, the authority’s regeneration director, said they have been able to maintain the level of rent coming in but overall it is an issue the cabinet will need to keep under review.
Councils should not be allowed to speculate in this manner with council tax payers’ money. Any “spare” cash should be spent on improving amenities that we paid for in good faith. Alternatively, these properties should be sold and the proceeds refunded to islanders.
It’s not council tax payers money. The council borrowed the entire amount for that specific purpose. It’s not spare cash. The profit made on the rent goes toward council funds. No-one has suffered with the investment so far.
Yet Colin, presumably the repayments FOR the loan, mortgage or whatever is paid for by our Council tax, or is it just spare cash from their overly generous salaries they clubbed together and bought the property portfolio with?
See it as it is.
The loan repayments are covered by the rents for the properties and the surplus goes towards council funds. It has done every year so far. You presume wrong. That was the whole idea behind the scheme which brings in money. This years valuation shows only a paper loss on the properties, much like the paper gain for previous years.
Who services those loans.
It’s the council tax payer.
What! They are gambling with borrowed money. That’s even worse!
This Council is a disgrace.
I am fed up paying them increased council tax every year
from my hard earned cash.
Why do these stories suggest it’s Council money, it’s the money of Island Residents
who can just about afford to Give the Council on average £200+ a month. and increasing annually!!??
Well said totally agree with you
Could be worse, panorama last night Thurrock Council gave Over £650million to a man who totally Over valued the profit from his solar farm’s.
He bought Private Jet,Buggati car,Private yacht and moved abroad with the money.
He wasted the rest.
God alone knows the level of potential and perhaps actual corruption when such massive deals are done with cash of these amounts even IF borrowed as we all are the ones paying off the debt.
No wonder our c.tax is so high as these parasites are gambling it on property and Heaven knows what else.
We will never ever know the truth, and they know it, so it carries on forever.
Any mention of the level of interest payments on the amount they borrowed to buy these industrial estates? I can’t see any reference to it in this article which paints a picture that they receive a steady income steam from the estates that still have occupants, but no indication on how much of that revenue goes on interest payments for thr capital they borrowed of fees to cover administration costs, also what are the profit/loss figures when adjusted for inflation ?
It’s not just interest payments which are a cost. Maintenance and security also. Particularly for unoccupied buildings these can be significant.
really out there suggestion/ question. If its not council tax money, why are you borrowing to invest on the mainland. Why wasnt it borrowed to invest on the island. A farm that produces solely for the island. maybe….Surely that would lower the island carbon foot print…… Only asking ?
This is disgraceful to play business games with other people’s money, make them personally financially responsible, there will be huge losses on this venture, and guess who foots the bill.
Instead of buying property on the mainland why not on the island
As I’ve said on here before, the council should have invested in the ferries, take control, and run them for the benefit of the island, not share holder’s.
Anyone with sense could see this coming. Only the council dosent posses any.
Drop your pants in readiness for another council tax rise violating you soon.
A classic Tory game, use our tax money to over pay for stuff from their mates.
Should of just built more houses on the island and rented them out. Financial investment with monthly returns and help with the lack of housing. 2 birds one stone, or was that just too easy??