Significant income generated from our property portfolio has been a key factor in how we protect Council services in the face of rapidly dwindling government funding; it has also enabled us to deliver no increase in our element of the council tax in real terms for the past 15 years.
Our property portfolio will generate an annual surplus of around £9 million for 2018-19; this will fund essential services for residents, while supporting economic development in our borough.
Our property acquisitions ensure there is more income coming to the council than the cost of servicing that debt. A key requirement is that each purchase must provide a financial return at an acceptable risk and provide a cost-effective contribution to achieving community or council priorities, such as investing in businesses likely to create jobs for local people and supporting wider economic and regeneration aims.
A number of important safeguards govern our borrowing and property acquisitions: the government has set out a framework within which all councils must operate which limits the council to only borrow the amount it can afford to repay. Our medium term budget strategy is agreed at full council and goes through a full scrutiny process.
We have focused on buying property with blue chip tenants, with long unexpired lease terms to provide longevity of income. We seek expert advice on all acquisitions, which are based on a thorough financial business case, including a robust risk assessment. They must provide us with a strong financial return and support community investment and economic regeneration. We prioritise risk management - and we always seek the best professional advice on acquisition, valuation, survey and purchase - to support our own in-house expertise.
As our profile in this area has grown, other local authorities have approached Eastleigh Borough Council to learn more about how we prudently generate income from our property portfolio.