Another local council is looking to get aboard the UK property “gravy train” even if they do not have the fare.
Lately DevDosh Ltd heard Councillors from South Hams are locked in negotiations about investing 80 million GBP into property, a decision that in the worst case scenario could see the council destitute.
They are currently mulling over the idea of investing the amount of 80 million pounds in putting together their very own UK property portfolio using borrowed funds, this is proportionate to 1000 GBP from each and every person living in the South Hams area.
Their plan is to invest in retail, office, leisure, health, energy and industrial assets from all corners of the United Kingdom and used the profits generated to keep the council’s coffers full and stay in the black.
In a meeting that took place last week, the council’s overview panel and the executive committee reached a verdict to move ahead with the proposal, regardless of the risks.
DevDosh Ltd also sees both the overview panel and the executive committee gave their blessing and proposed that when the full council convinced they should also give the go ahead, a surge forward with putting in place a procurement process and go ahead and borrow the first installment (26.75m) of the 80 million.
The approval was given undeterred by warnings that the retail property market was notoriously fickle; other local authorities already currently involved in similar activities were creating a financial “bubble” in the property market; and there were also concerns on whether the council was even permitted to borrow cash from the Government for this kind of investment.
In DevDosh Ltd opinion, this is also despite recommendations for the council to put the funds into much needed affordable housing.
Liberal Democrat councilor John Birch, who spoke against the proposals, said: “This is a gamble. It is high risk and it is something that we as a council should not participate in.”
And he warned if the council borrowed the cash and then found that they and all the other investing councils had to suddenly repay it because of changes to government borrowing rules “we would have to sell this property as the bottom falls out of the market”. He was supported by Conservative councilor Rufus Gilbert who warned it was a “very, very, very high-risk area to go into.”.
And he said the council should consider “more fully” the returns it could get “on building affordable homes for local people”.
But the council’s Tory leader John Tucker told the executive: “There are lots of ifs and buts but sometimes you have got to take risks.”
Liberal Democrat councilor Julian Brazil said: “The idea of investing in an office block in Birmingham to get some extra money is just not what this council is about.”
But Cllr Keith Wingate said: “I am very much aware of the risk but I think that it can be handled.”
He said some people might look at it as lumbering residents with a “millstone around their necks for the next 40 years. However, he said, “we might be giving them a golden handshake”.
Visit DevDosh Ltd today for more detail regarding the property investment.