A lot of condemnation faced the councils of England after inappropriate use of funds. The councils were accused of splashing money in commercial property market rather than using them to fund construction of affordable houses for residents. A statement by the land agent, Aston Mead, reveals that approximately £100 is spend each month by the councils in betting on the commercial property market through violation of the rules that were set for the purposes of regulating the activity, which will be of interest to solicitors in Lancashire and around the UK who handle conveyancing issues.
According to Adam Hesse who is the director for planning and firm’s land, the council is ploughing back the revenue that the government deducts by purchasing business centres, offices and shops. Other than placing the money for the tax payers in a risky state, the relevant governing bodies are also investing more money towards assets that are most likely to be expensive than what they are expected to cost.
Aston Mead commented further saying that loans can be borrowed at reduced interest rates from the loans board of the public works by the local authorities but the borrowing limits amounts are not set. These council authorities cannot also provide any proves if they are capable of borrowing money. This results in the councils being more exposed to risk.
Hesse suggested that it could have been better if the council decided to invest the borrowed money in acquiring new lands and building residual houses which they can rent out to tenants who were on their waiting list. Raising a lot of money that is more than investing in betting would be possible provided they used this strategy. The overwhelming number of the waiting tenants could have also gone down.
Statistics show that the amount of money wasted by the council in purchasing irrelevant commercial markets, shops and offices is £1.8 billion. In addition, from the year 2013, over £3 billion have been spend. The government directed the councils in April to take measures and avoid the risks which were expected to happen as a result of warnings in the falling of retail space and stagnation of rents.
Hesse continued to register his disappoint by stating how the local government that lucked knowledge in investment was risking the taxpayer’s money. He said that it was just a matter of time before the councils started to go down by facing losses they never thought of. Buildings that the councils were purchasing could serve no benefit since they were very far from the local area if the residents.
Explaining further, he said that due to lack of knowledge in the investment sector, the councils are bodies which buy the old structures that depreciated in value long time before they were sold. He exclaimed due to the fact that the councils bought the properties at a very high price which they did not deserve to be bought at.
He however suggested that the available land owned by councils could be utilized well by setting up residential houses which are pocket-friendly for the locals that will help generate revenue. He cautioned the council to avoid unnecessary risk by investing in sub-standard facilities.