10 May 2018 Last updated at 18:00

New properties give income boost

An extra £700,000 a year is set to be generated for Island residents following the first two investments for the Isle of Wight Council’s new property portfolio.

The surplus income will come from letting the two properties in Salford, Manchester and Aylesford, Kent - and the money will go towards protecting key services for Islanders.
 
The properties have been bought by the council for £19.5 million borrowed from the government’s Public Works Loans Board. The annual rents will bring an income of £700,000-plus after borrowing costs are taken out. 
 
“We pledged that these investments would be thoroughly researched and undertaken in accordance with strict risk-based criteria. This has happened – and with these first two properties we will begin to see real benefits for our residents,” said Councillor Stuart Hutchinson, Cabinet member for resources.
 
“These purchases are part of our £100 million property investment strategy approved in September last year – designed to generate extra income for the council while minimising risk.
 
“All the extra money will go towards our savings targets and helping to avoid cutbacks to services.”
 
Factors including capital protection, rental return, market sector, location, lease length, building structure, transport links and accessibility have all been built into the planning.
 
“We are acting prudently and responsibly on behalf of Island residents with these investments, and will continue to look at further acquisitions subject  to the relevant government guidance,” said Councillor Hutchinson.

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The properties will bring extra money for council services
The properties will bring extra money for council services
Factfile
  • The council’s property investment strategy has a budget provision of up to £100 million borrowed from the Public Works Loans Board.
  • The first two acquisitions total £19.5 million, and any further purchases will continue to be within a strict framework to minimise the risk to public funds.
  • All borrowings will be paid for by income generated from the property rents.
  • For reasons of commercial confidentiality, there are aspects of the property agreements which cannot be published.
  • The property income will be managed prudently and some of the money will be set aside to guard against potential ‘void periods’ and any ‘dilapidations’.
 
Isle of Wight, UK