Local authority investment property – a virtual reality? Available to Purchase

The total capital value of the tenanted non‐residential property of English and Welsh local authorities is immense, more even than the total holdings of the top eight, UK‐based, property companies. However, while property investment companies own tenanted property for financial returns, the primary reason for its ownership by local authorities is far from clear. A survey of councils revealed that while many considered much of their tenanted non‐residential property was held for investment,it rarely formed part of wider financial investment aims. Moreover,investment objectives and management strategies were not clearly stated,prioritized, effected, or measurable. These failings were true of both individual properties and overall portfolios. Where property does not primarily meet a function of a statutory local authority, it must at least be regarded as non‐operational. The opportunity for a council to create a credible investment property portfolio is markedly restricted by the absence of the statutory objective of “property investment”. If, after review, property remains unsuited for assisting any real function of local government, it should be classed as surplus. It is proposed that local authority investment property may therefore justifiably be considered surplus to the functional objectives and requirements of a statutory local authority. If also unsuitable for operational use, such property should be programmed for disposal.