Key pieces of real estate in Corby, Kettering and East Northamptonshire have been bought by local authorities keen to invest millions in our area.
Councils around the country have spent about £21m buying property in the north of our county.
According to figures uncovered by the Bureau of Investigative Journalism, councils are taking advantage of relatively low prices for industrial buildings in our area, which may well rise as our county’s growth agenda continues.
Properties bought by other councils over the past few years include:
- A cold storage warehouse in Eismann Way, Corby, currently occupied by Oakland International. Bought by Norwich City Council this year for £7.2m.
- A cavernous distribution centre at 50 Warth Park Way, Raunds, bought for £8.2m by Southampton City Council in March 2017. A logistics hub in a growing industrial site.
- A huge office building at Kettering Venture Park bought by Luton Council for £1.181m in 2015/16. Close to the A14 and in a rapidly-developing area.
- The Marriott House building in Brindley Close, Rushden, bought by Watford Council in July 2016. The asking price was £3.7m although the council did not reveal the final purchase price. The site is a short hop from Rushden Lakes.
A Norwich City Council spokeswoman said it purchased the Oakland International cold store/chilled warehouse on Eismann Way in Corby in March 2018, adding: “The property in Corby came up as being suitable due to the good quality of the building, the lease length and the strength of the lessee covenants.
“The council has engaged specialist surveyors which helps source suitable investment property. All properties the council buys have to undergo a rigorous selection criteria.
“The council has been purchasing investment property to generate returns across the portfolio and from a risk management perspective it is sensible to invest in a variety of sectors and different geographical areas.
“This is in common with many local authorities who have added to their investment portfolio by purchasing outside their administrative area.”
The purchase did not go before that council’s scrutiny committee.
Last month Oakland, which first moved into the building in 2017, confirmed that it would be making a £2.8m investment in revamping in the building and creating new local jobs.
Watford Council bought Marriott House, home to Kier, in Rushden in 2016. The tenant has a 15-year-long lease on the building and pays its landlords a huge £256,000 per year in rent. Despite investing in Rushden, Watford Council in its statement of accounts for the financial year 2016/17 said: “Key capital projects include the acquisition of... investment properties namely Marriott House.
“Capital investment generating better returns and investment within the borough itself continues to be a priority of the council.”
Southampton City Council did not comment on its purchase of the nationwide distribution centre purchase at Warth Park Way, but according to the official house price index for Northamptonshire, its value has risen from the £8.2m it paid 18 months ago to a current value of £9m.
Local people have had an ongoing campaign against the development of the greenfield land which they say is on the site of a historic ‘henge’.
Luton Council’s purchase of 27000 Kettering Parkway, built in 2014, attracts a rent in the region of £192,000 per year.
A spokesman for the council said they authority had used loans to purchase the building, adding: “Local authorities have experienced substantial reductions in central government funding since 2010. “This squeeze on funding is set to continue and this council is facing significant budget pressure mainly driven by increasing social care costs and homelessness.
“We had to focus on generating additional revenue by investing in commercial properties in order to mitigate the loss of government grant, protect vital services and to support the most vulnerable in Luton. We have invested in a number of towns throughout the south-east and counties close to Luton where attractive returns are available for reasonably secure commercial property investments;
The Bureau’s investigation found that the number of local authorities in England buying investment properties - land or buildings bought to generate income - has doubled in the past two years with local authorities spending billions on commercial property and land since April 2014 in an attempt to bring in extra revenue to help balance their books in the face of government cuts.
Northants County Councillor Chris Stanbra said: “It shows how ludicrous local government finance is when councils are doing things like buying shopping centres at the other end of the country.
“If you’re having to do this to get income instead of raising money by investing in your own borough or through business rates, it’s got quite silly.”
Liberal Democrat leader Sir Vince Cable suggested councils were ‘gambling’ with public money” as many of the investments are funded through borrowing, saddling some authorities with debts far beyond their spending power.
In response to government figures highlighting the “unprecedented” amount being spent by some councils, the Chartered Institute of Public Finance and Accountancy plans to publish new guidance setting out the “substantial risks” involved in borrowing to fund property investments, particularly for those councils whose purchases are not proportionate to their spending power.