I was delighted to see Green Party spokesman Ian James raising the subject of EHDC’s property portfolio in his column last week as it affords me another opportunity to highlight the huge benefits it has brought to the council and its services – it’s one of my favourite subjects, in fact!
Mr James talks about a ‘triple whammy’ for the council as the country moves into recession, with low council tax income and interest repayments on our loans that bought the investment properties.
It’s true we are facing financially-uncertain times, but that would be the case with or without our property portfolio.
Far from making our financial position worse, I am confident our investment property income will support and help us through these difficult times. As it has done for the past four years.
The portfolio started in 2018 when government funding for councils was falling every year; Whitehall made it clear it was up to innovative councils to find the money themselves.
EHDC took the bold decision to invest in property and generate income through rent. Around £130m was invested in a varied portfolio that today, yields around £9m gross a year.
That is more than enough to cover the interest, maintain the portfolio and provide vital funds for crucial council services.
Even with a two-year pandemic, as serious a financial hazard as you can imagine, we are collecting around 98 per cent of rent and have very few vacancies.
And because of this we have been able to keep council tax low – something Mr James is evidently conflicted about as he complains about low taxes locally and high taxes nationally.
And it is thanks to our investment strategy in 2019 we launched a £1m grant fund for welfare projects and refilled it with a further £1m this year.
Without our successful investments we would not be able to do that. But perhaps Mr James would rather we didn’t support our most vulnerable residents?
Of course, any property portfolio is a risk.
But the risks can be managed and mitigated. We are constantly reviewing our approach and we will be strengthening our governance and kick-starting a new asset management strategy.
Much has changed since 2018; the government has changed the rules on borrowing to invest and we face a national financial downturn.
It may be the market turns against some of our assets, but if it does, we will be ready.
Our performance throughout the pandemic has shown we can manage the portfolio effectively. It has safeguarded us against falling government support, allowed us to keep council tax levels low, and enabled us to fund welfare projects that bring assistance to some of the most vulnerable people in East Hampshire.
Far from the triple whammy Mr James foresees, I believe the portfolio has been a triple win.
If Mr James is unhappy about a strategy that achieves all these positive benefits for the council and our residents, perhaps he can suggest a strategy to replace it? I look forward to hearing about it.
Author: EHDC leader Richard Millard