This report sets out the proposed 2019/20 Annual Property Plan for the council’s property investment portfolio in pursuance of its agreed Property Investment Strategy, in support of the council’s Medium Term Financial Strategy consultation.
Recommendation from the Cabinet Member for Property and Development
1. Note the comments of the Audit and Accounts Committee held on 28 January 2019.
2. Agree the Property Investment Strategy Annual Property Plan 2019-20.
3. Recommend Council to agree that, if necessary, investment funds available for the Property Investment Strategy can be increased by up to £5 million funded from property receipts.
The Cabinet Member for Property and Development introduced the report which set out the proposed 2019/20 Annual Property Plan for the councils property investment portfolio in pursuance of its agreed Property Investment Strategy, in support of the council’s Medium Term Financial Strategy consultation.
He stated that good progress had been made during 2018 with the acquisition of 4 income generating properties using the additional £30 million funding allocated under the strategy. He added that the aim of the strategy was to modernise the property portfolio with enhanced asset management of the portfolio to generate better returns and ensure the assets are good quality and performing well. He further added that to the end of 2018, £16 million had been invested, delivering £1.129 million of additional income per annum through new investment acquisitions and the strategy was on course to deliver the £1.7 million target.
He also highlighted the ongoing work of officers regarding proposals for re-gearing existing ground leases, which was important to enable redevelopment, enhance rental income and deliver new buildings. Furthermore, officers would be bringing forward proposals in relation to a Housing Investment Strategy with the objective of intervention in the housing sector including potential assistance to house buyers. He concluded that £5.1 million remained for investment out of the £30 million allocation and considered it appropriate that there was flexibility should an opportunity for new investment be identified and therefore recommended that the investment allocation be increased by up to £5 million.
He referred to concerns raised by the Audit and Accounts committee who suggested that urgency procedures should be used, if necessary, rather than increasing the investment allocation, however he did not support this view. He also stated that he would speak to the Chair of the Audit and Accounts Committee and would provide a report in relation to concerns regarding residential investment opportunities.
Cabinet discussed the proposals and comments of the Audit and Accounts Committee with regard to residential investment, diversification of the fund and the future proposals for a Housing Investment Strategy and therefore it seemed illogical not to agree to increase the available fund for future investments if an opportunity was identified. Cabinet did not support the view that urgency procedures should be used, and considered that there were robust decision-making procedures in place. The Chief Executive clarified that urgency provisions are for matters which are not reasonably foreseeable and genuinely urgent.
1) Note the comments of the Audit and Accounts Committee held on 28 January 2019.
2) Agree the Property Investment Strategy Annual Property Plan 2019-20.
Recommendation to Council:
That Council agree that, if necessary, investment funds available for the Property Investment Strategy can be increased by up to £5 million funded from property receipts.
Reasons for the decision:
The Annual Property Plan 2019/20 seeks to build on the achievements in 2018/19 to increase the council’s rental income and to work towards ensuring a more balanced & efficient property investment portfolio, providing a stable long term source of income which will contribute to the generation of additional income to meet the council’s Medium Term Financial Strategy.