Nuneaton and Bedworth Council has become one of the first local authorities in the country to launch a pioneering property business. Profits raised from the venture will go toward funding council services.
Nuneaton Town Hall: The council believes the new property business will generate a sustainable long-term income
Established as NABCEL — Nuneaton and Bedworth Community Enterprises Ltd — the wholly-owned trading arm should become self-financing by 2019 when traditional government grants are set to disappear. During its pilot stage the council hopes to make a profit of at least £50,000 a year.
Last month the authority approved a £1m capital investment from its New Homes Bonus Grant to buy a number of properties, which will then be leased to NABCEL and rented out at market rates. The first batch of acquisitions will all be residential properties to ease the area’s housing shortage, but retail and office units will also be considered.
NABCEL will be managed by a board of five directors made up of councillors and officers, none of whom will receive any additional pay or fees. “The council is taking this brave step to make best use of its resources and generate a longer-term more sustainable income source for the future,” explained council leader and NABCEL board member, Dennis Harvey.
“This is an innovative idea to generate additional income for the council to support the continued financial challenges that local government faces and fits with the aim of protecting our frontline services as far as possible,” he added. Driven by a robust business model, with all its activities considered by the board, the council wants the company to eventually expand and offer a range of services.
Although many UK authorities operate their departments and services on “commercial” lines few have gone as far as running a separate business for profit. Legally, there is nothing to stop them, confirms local government analyst Robert Harbin. “Given the depth of the financial cuts, and how tight the finances of many councils are, it is surprising many others have not gone down this route,” he says.
“Managing a property company as a separate entity, and freed from many of the restrictions binding local authorities, is an excellent way to ease local property shortages, either in the residential or commercial sectors, and if the money is there to bring neglected stock back on to the market,” he says. “If NABCEL is a success, and there is no reason why it should not be, I think we are going to see more and more council’s launching this kind of profit-making initiative.”
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