Members received the report of the Director – Place and Climate Change which gave an update on the Council’s activity in delivery of the Property Investment Strategy (PIS), and commitments against the £35m budget approved in February 2018. 

Since the previous report to the Audit and Standards Committee (A&SC) in April 2022, the Council had been successful in several acquisitions in pursuance of both the PIS and the Council’s Corporate Plan.

The current PIS, adopted by the Council in June 2020, was attached at Appendix 1 to the report.  Its objective was to support and safeguard the economy of the Rother area through the long-term protection of existing and the creation of new employment space, through investment in land and property in the Rother economic area.  The PIS set out the types of property that the Council would seek to acquire and the factors that would be considered when assessing the suitability of potential acquisitions.  It also described how purchases may be funded and how the Council would manage risk.  The process for identifying investments remained the same as outlined previously; identified opportunities were subject to the seven stage acquisition process outlined at Appendix 3 to the report.  

Since the last report, a further three properties had been acquired, namely Sainsburys Foodstore, Buckhurst Place, Bexhill; and 16 and 18 Beeching Park Estate (long leasehold).  Once all completed, these would then take the total value of purchases and commitments to £30,347,001 against the original £35m budget.  Members noted that one further commitment remained against the fund which was yet to be completed and details were set out in Confidential Appendix 4.  Acquisition costs such as stamp duty and professional fees, and the total cost of demolition works at 1-7, Wainwright Road amounted to a further £3,225,222 also met from the original £35m budget. This left a balance of £1,427,777.  In addition, the Council had approved the sum of £10m borrowing for the development of the site at Barnhorn Green, originally intended to be met from the initial £35m PIS budget.  As the PIS budget was now fully committed, further budget approvals would need to be sought from Cabinet in order to facilitate further activity and include the acquisition costs associated with the property referred to in the Confidential Appendix 4.

The Council’s PIS was explicit in referencing local economic benefit as the basis for acquiring properties, which pointed towards properties within the district where the case for local economic benefit could be made.  Rother did not have a significant commercial property market and in general, transactions were small-scale; the opportunities locally for acquisitions that would make a significant contribution to meeting the Council’s income targets were few and far between.    Therefore, focus had shifted towards buying residential properties to accommodate temporary housing needs and this activity was conducted under the Temporary Accommodation Investment Strategy (TAIS); a separate approval and funding framework to the PIS.  The TAIS was recently amended to include commercial elements, such as ground floor shops etc.

Members were given the opportunity to ask questions and the following points were noted during discussions:

•     with rising interest rates, profit margins had narrowed; and

•     the acquisition of residential properties to accommodate temporary housing needs which included commercial elements, created a more secure investment with potentially an increased profit to the Council.

The Council’s interest in acquiring residential properties was now well established and the recent approval to include commercial elements provided further opportunities for rental income, on top of the savings made to the Council’s Temporary Accommodation budget.

RESOLVED: That the report be noted.

(Councillor Courtel declared a Personal Interest in this matter as an Executive Director for the Council’s Housing Company and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillors Drayson declared a Personal Interest in this matter a Member of Bexhill-on-Sea Town Council and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillor Langlands declared a Personal Interest in this matter as an Executive Director for the Council’s Housing Company and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillor Thomas declared a Personal Interest in this matter as Chair and an Executive Director for the Council’s Housing Company and a Member of Bexhill-on-Sea Town Council and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).