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spyguy

Councils build a credit bubble

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Ft feature on LAs buying commercial property.

https://www.ft.com/content/84892c56-1a17-11e7-bcac-6d03d067f81f

You know, the stuff noone wants. Aprt from the counil who, due to being geniuses, can see profit where noone elese can. Not really. They are borrow low and expecting higher returns. What could go wrong?

Warning ratepayers might not want to read the link.

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So whilst councils pay for school buildings with baked in profits on PFI contracts, councils buy commercial real estate ignoring the long term risk of voids making them very costly when that happens. Only eyes for the short term "rent guarantee"-style contract of a 20-year lease ... only worth a bean if the guarantor can continue to pay.

But hey all the middle men are getting their cuts so it's all good? How clever and wonderful our financial services industry is.

I despair.

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Maybe the government should do something to encourage councils to buy up commercial property and convert it into flats for housing benefit recipients?

As far as I can tell councils do not have much incentive to do this currently because of the way housing benefit is administered. 

https://www.gov.uk/government/publications/housing-benefit-subsidy-guidance-manual-2016-to-2017

Instead of borrowing money to invest in commercial developments like retail parks, perhaps it would be prudent to require councils to limit the number of housing benefit recipients in private accommodation and penalise them if they don't make efforts to reduce these numbers by adding new housing stock.

https://www.ft.com/content/f5224ae4-947d-11e6-a1dc-bdf38d484582

Edited by spacedin
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7 hours ago, spacedin said:

Maybe the government should do something to encourage councils to buy up commercial property and convert it into flats for housing benefit recipients?

As far as I can tell councils do not have much incentive to do this currently because of the way housing benefit is administered. 

https://www.gov.uk/government/publications/housing-benefit-subsidy-guidance-manual-2016-to-2017

Instead of borrowing money to invest in commercial developments like retail parks, perhaps it would be prudent to require councils to limit the number of housing benefit recipients in private accommodation and penalise them if they don't make efforts to reduce these numbers by adding new housing stock.

https://www.ft.com/content/f5224ae4-947d-11e6-a1dc-bdf38d484582

 Councils will soon have a legal duty to prevent homelessness. What can they do?

https://www.theguardian.com/housing-network/2017/apr/25/councils-legal-duty-homelessness-reduction-bill

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1 hour ago, Saving For a Space Ship said:

 Councils will soon have a legal duty to prevent homelessness. What can they do?

https://www.theguardian.com/housing-network/2017/apr/25/councils-legal-duty-homelessness-reduction-bill

Redefine homelessness?

Although how do you enforce rent arrears as to evict you make them homeless.

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 It also sounds like some councillors/council workers are looking to their future jobs if they lose their council job - a bit like some MPs and Ministers.

Edited by billybong

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