Following the election, councils across the UK were urged to make preparations for the ‘extremely challenging combination’ of reduced funds and increased demand for some services.
One way in which councils are attempting to raise capital to cover the effects of government cuts, is to sell off any unwanted commercial property.
Just a few months ago, Bradford Council unveiled a controversial hit list of 28 office buildings it plans to sell off in an effort to save £7.5m and Somerset council has already raised £9.6m by selling off council owned property. However, a vast amount of the £9.6m raised in Somerset comes in the form of farms, with the council selling of 32 of its 62 farms.
Many councils believe, not only will they save money by selling off commercial property, they will also save money on maintenance.
Cardiff City Council recently ordered a survey on all its commercial property, which found that, ‘5% of its buildings are in a good condition, with maintenance work to bring its offices and other commercial property up to scratch.’
Just last week, the Bolton evening news reported that, ‘ the local authority was disposing five of its buildings in a bid to bring in more than £2.1 million and make immediate savings of £535,000 in ongoing costs, such as utility bills and upkeep.’
However, commercial property experts are warning council bosses that selling commercial property isn’t a simple option in the current economic climate and that the potential value of these property’s may not be realized.
Nick Swift, a partner at Lamb and Swift Commercial, warned Bolton Council: “There is a glut of offices on the market in Bolton so the council, if they were to market them exclusively as offices, could struggle to sell them…The council will not be selling these buildings when prices are high and it will be interesting to see if they go down the auction route
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