Mendip council to stop buying commercial property following change in borrowing rules

By Susie Watkins

9th Dec 2021 | Local News

Cox And Cox In Frome. Mendip District Council has purchased its base as part of its commercial strategy. CREDIT: Google Maps
Cox And Cox In Frome. Mendip District Council has purchased its base as part of its commercial strategy. CREDIT: Google Maps

Mendip council is to stop buying up commercial property following changes in borrowing regulations.

Like many other local authorities, Mendip District Council has been using taxpayers' money to make commercial investments, using the rental income to provide long-term funding for front-line services.

The council currently has nine such properties in its investment portfolio worth £45m, and had committed funding for further purchases in its capital programme.

But recent changes in rules surrounding local government borrowing mean it is "no longer possible" for the council to invest in further property.

Decisions surrounding commercial investments are made by the council's asset management group, which meets in confidential session due to commercial sensitivity.

Of the council's nine commercial investments, only two lie within its own district – namely Cox & Cox's base in Frome and the leased Film Centre on Princes Road in Wells.

Details of the council's commercial programme were published ahead of a cabinet meeting held in Shepton Mallet on Monday evening (December 6).

The complete list of commercial investments the council holds are as follows:

The Fermentation Buildings, Finzels Reach, Bristol – £11,443,000

Newhouse Park, Chepstow – £7,940,000

DFS store, Wootton Bassett Road, Swindon – £7,178,000

Bristol Business Park, The Crescent, Stoke Gifford – £6,191,000

Cox & Cox, Marshall Way, Commerce Park, Frome – £4,703,000

Boots store, 94 Pydar Street, Truro – £3,599,000

Unit 1, Barnwood Industrial Estate, Gloucester – £2,044,000

Unit 2, Barnwood Industrial Estate, Gloucester – £1,943,000

The Film Centre, Princes Road, Wells (leased) – £145,000

The total amount spent on the investments totals £45,186,000 – more than £2m lower than the council had originally estimated it would spend. Councillor Barry O'Leary, portfolio holder for enterprise and finance, said changes in the Prudential Code – which governs how local authorities can borrow money – meant further borrowing for commercial investments was no longer a viable option. He said in his written report: "Since it is now no longer possible for us to further purchase commercial investment property, the extension to the authorised limit and operational boundary is not needed. "The cessation of the commercial investment programme, due to the changes to the Prudential Code and the local government reorganisation, mean that the forecast capital financing requirement will be significantly lower than the original forecast for 2021-22." A formal proposal to reduce the council's borrowing limits will come before the full council in February 2022 as part of its annual budget setting.

     

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