DevDosh Ltd has looked in the time since the last financial crisis the government has looked for more and more ways to introduce austerity measures, many of these measures have resulted in local authorities struggling to maintain services with amount of funding they receive.
In a bid to try and funnel more funding into local authorities the central government has given them greater leeway to raise their own funds through investments.
Many sceptics question whether they have the skill set, knowledge and relevant experience to be able to invest the tax payers money wisely, or if this is just another disaster just waiting to happen.
Local Authorities do own and manage property already and have done for decades now, the fear is owning property with the sole purpose of investment income may lead to abuse of public funds.
Matthew Oakeshott, a Lib Dem Peer and investment manager is of the opinion that local authorities are investing in ‘all sorts of provincial property’ without any ‘coherent investment strategy’ and that this will end in tears.
We have been assured that local councils are taking the advice of professionals and have a solid investment strategy in place.
In DevDosh Ltd opinion, the councils do have the ability to invest into any asset class they so desire be it stocks and shares, bonds or mutual funds, but they have adopted a much more prudent approach of sticking to what the know, limiting risk and investing into UK property, after all it is public money.
The local authorities have chosen to go down the route of borrowing the funds needed for these UK property investments, rather than using the current reserve of cash they have available.
The Public Works Loan Board (PWLB) are providing loans at a rate of 2.5 to 3% compared to the 5% or more than their private sector counter parts would pay, giving them a distinct advantage.
All the UK property that they purchase for investment income will remain separate from operational buildings.
The right investment strategy is paramount for success and diversity is crucial, so investing in a wide range of assets like short term leases for higher yield and longer term leases for added security should be the order of the day, this will also help the portfolio cope with the ebbs and flows of the UK property market and ensure they can always furnish the outstanding loan payments
If there is one thing that the local authorities should know is that due to the shortage of housing in the UK and the current popularity with investors for UK property investments competitions is tough, so they need to tread carefully not to pay too much for these properties.
Many of the councils have decided to employ property professionals in-house so they receive the best information possible in as timely as possible fashion, an approach that has resulted in many of the local authorities property portfolios exceeding expectations
The headaches start when enthusiasm out ways experience and local authorities do not to seek any property advice and think they know best, this is when as Oakeshott terms it the investment will ‘end in tears’.
Now if people agree or disagree with the government’s decision to allow local councils to make their own investments decisions and if they can generate a sufficient income from their portfolio remains to be seen. From a purely investment stand point because of the dependable characteristics of UK property investments it make it not only a feasible idea but a sensible one also.
So if you happen to be from your local authority and reading get yourself onto DevDosh Ltd today and see how we can help you make 10% annual income with an asset backed investment scheme today.