A COUNCIL is hoping that every little helps by buying supermarkets.
Fareham Borough Council has allocated £8m from its budget to the investment project, which sees the authority buy properties with stable tenants already in them and reap the benefits of being the landlord.
Council leader Sean Woodward said this was a good use of public money as the authority would receive a better return on its investment than simply relying on the current low rate of interest.
He said: ‘This is one of our methods for freezing council tax for a seventh year despite receiving one of the lowest levels of government grant per head and setting almost the lowest council tax of any district council in the country – and of course preserving services and rewarding staff with a 6.2 per cent pay rise.
‘We allocated £8m for this project and if we ever need the money we can sell the properties.
‘We only buy property with tenants with a very good covenant and upward-only rent increases.’
He added: ‘The council has now acquired five properties to maximise value for money by achieving a good return on investment and a regular income stream.
‘The portfolio to date, which includes retail and industrial property, shows an initial yield of 7.3 per cent on a capital investment of £5,895,000.’
However the TaxPayers’ Alliance is not impressed with the strategy.
Andy Silvester from the campaign group said: ‘Where does it stop?
‘I hear Porsches can be quite profitable, so should the council set up a dealership?
‘Local residents pay their council tax for essential services, not so local authorities can play property speculator.
‘This is a risky policy and one that should come to an end.’
The council has so far bought five premises. These are:
- Clifton House, in Segensworth, occupied by Sauflon a contact lens manufacturer, for £1,700,000
- 122-134 Seaside, in Eastbourne, occupied by Sainsbury’s, for £825,000
- 86-88 Mitcham Lane, Streatham, occupied by Sainsbury’s, for £1,300,000
- 83 St Thomas’ Street, Weymouth, occupied by Specsavers, for £810,000
- 470 Ringwood Road, Poole, occupied by Tesco, for £1,260,000