EDITOR’S COMMENT I know it is in my job description to be cynical, but I cannot be alone in thinking that Michael Gove’s latest missive to encourage local authorities to sell off their assets to plug funding gaps is a bit short sighted, right?
Anyone else hear “fire sale”? I’m pretty sure our much under-funded local authorities aren’t going to get “best value” for a site when the whole world knows they are desperate to sell. Vultures love a forced seller.
And while I wholeheartedly agree that the role of a local authority is to ensure growth and prosperity for its people and to deliver “vital services”, I also believe land and property ownership could be part of that “vital” service.
I’m not proposing that local authorities should become developers or property managers, but we do know that it is spaces and places that make communities. We also know that a single ownership or majority ownership – by the right landlord – helps with curation of space.
As owners of land and buildings, surely our local authorities should be encouraged, helped and perhaps even incentivised by central government to work in partnership with investors and the real estate sector.
This could ensure they can create the towns, cities and regions that provide jobs, homes, green space, hospitals, leisure and retail, infrastructure and safe places for people.
Encouraging local authorities to sell off assets that “only” deliver revenue, also seems to undermine the value of real estate, doesn’t it?
No wonder it has proved almost impossible to have constructive conversations with government if its view of real estate is that it is just a dry income-producing vehicle.
And don’t get me started on responsibility. There’s an irony to central government telling local authorities to sell off assets to plug their big funding gaps. Why do they have those big funding gaps? Why did so many of them turn to real estate investment, I wonder?
Sure, the lure of cheap debt through the Public Works Loan Board was strong, but perhaps revenue from some of those assets is helping to keep some of those authorities running.
There is a huge role for real estate to play here. Firstly, not to spy an opportunity to pay less, just because someone is desperate or perhaps even uneducated about the true value of their asset (EG can help with that, FYI local authority leaders).
If the industry really wants to change how it is viewed by the public, we have to do something about the “buy low, sell high” perception. That is not to say that making a profit isn’t important. Of course it is – it’s vital. But how much profit does one really need?
As local authorities look over that £32bn of assets they hold, real estate leaders have an opportunity to lend a helping hand. To not land grab but showcase the expertise that they can bring to the places and spaces.
They can reach out a hand to work in partnership, and find out what those local authorities need to help their communities prosper. What can real estate deliver – aside from just money to buy assets – that helps local authorities provide vital services to their communities?
The answer is so much more than just a short-term cash boost. The industry can provide skills and support, it can deliver expertise and long-term investment in people and places (as well as the planet). Partnership has to be the answer here, not plundering.
With properly thought-out partnership between our public and private sector, surely that one-off £32bn of capital receipts can be turned into a long-term return of tens of billions, maybe hundreds of billions more.
And, as far as I can, see that thinking is only going to come from this industry, not our politicians.
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