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rdj104

Gloucester - Council to borrow £80m to invest in commercial property to balance the books.

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If your council finances don't add up - just borrow money - invest in property - wait for the rent to roll in - problem solved.

 

http://www.gloucestershirelive.co.uk/news/one-most-reckless-things-ive-225924

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It estimates the £80.25m loan, which includes £5.25million in buying fees, will give them a return of £4.3million from rent a year.

After paying back the annual loan interest bill of £3.25million and other costs it expects to make £711,493 a year profit from the move.

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Defending the proposal, councillor David Organ (Con, Tuffley) said it was better than doing nothing.

“I have been in property most of my life and in development terms this is very little. It does not by us very much,” he said.

We need to have a look at what is available and what opportunities there are.

“They are absolutely right about the risks. But what we must not do is just look at the negatives but look at the positives too.

Quote

However councillor Tom Coole (Lab, Matson) likened the move to gambling with public money.

“This is very alarming to me. What happens when this bubble bursts? The tax-payer will have to pick up the bill,” he said.

“I mean, what’s next? Will we put our money into shares? Will councillor Norman go down to Paddy Power and spend our money there?

 

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“This is one of the most reckless things I have seen this council do. If you get this wrong you could bankrupt us."

“I think they forget not so long ago selling our housing stock to Gloucester City Homes for £65million to clear a debt because it couldn’t borrow anymore. “Now they want to borrow £15m more than that. "

Despite refusal to back the plan from labour and the Lib Dems, the ruling Conservative party pushed through the move....

 

LOL what could go wrong, it's different this time enit!.

 

Edited by DarkHorseWaits-NoMore

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Gloucestershire Council's got form when it comes to reckless financial decisions

 

They lost 12m in "surefire" Icelandic bank investments back in 2008.

 

Wouldn't be surprised if its the same geniuses in charge of investments now

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The speculation and mad decisions keep piling up, its like 2007 on steroids!

I saw something tonight on RT with a panel talking about the forthcoming recession. They highlighted the fact that councils in the UK are borrowing money at high rates from commerical lenders. This is also crazy. The government are printing so could lend it to councils at 0% - why is that not happening?

This panel were making sense on the looming recession until one of them said cancel student fees and have it paid by the taxpayer. They get the problem, but I don't agree with their solution which is to spend their way out of it like in the 1930s USA. No austerity.

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13 hours ago, rdj104 said:

If your council finances don't add up - just borrow money - invest in property - wait for the rent to roll in - problem solved.

 

http://www.gloucestershirelive.co.uk/news/one-most-reckless-things-ive-225924

 

Nope. Commercial property.

Thees quite a few councils doing it.

Its not. AFAICT there's so little demand for commericial property - be it shops oroffices - that its aone way road to bust.

Hal the commercial property in most towns is empy. There's little demand so the tenant can drive the priceing.

The councillors need suing and.or surcharging for this. Its really not in their remit/scope.

 

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Don't worry, the councillor has been in property most of his life....so it's all good here. 

This is a shocking example of speculation using borrowed money to buy what I would consider a very volatile investment (growth and income) by an organisation whose remit is nothing to do with 'investment'. 

£5m fees too....I wonder where that is going? 

Simple basis of property is you make all the money the day you buy ie buy at a massive discount (50/60% of comparables). These guys will buy decent stock but at 105% of value and think they have done well. You buy commercial when the seller is on their knees but the council have put themselves in the market and the sellers will be queuing up for some numpty to pay 'full price'. Only time 100% is paid is when some numpty wants to set up an independent coffee shop in their retirement....which is then sold vacant 2 years later at 50% less. 

Surely this is illegal by the council? 

Edited by Phil321

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So what do we do in these instances?...we don't like the way the government spend out taxes so we make sure we earn just under our tax limit...BUT this is local authority so its council tax...the only way to escape this is move to a different local authority or...give up on the UK and move overseas!

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2 minutes ago, TheCountOfNowhere said:

What is wrong with the people in power in this country !!!!

Greed.

Stupidity.

Access to credit.

 

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