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‘The Council is Not Lending £81 Million’ for Student Housing says Lead Councillor

The lead councillor for housing at Guildford Borough Council, Phillip Brooker, (Con, Merrow) has denied that the council is to lend the University of Surrey or “any organisation” £81 million to build student housing.

Instead, he says, the council is exploring how it, “can potentially deliver some purpose-built student accommodation… to raise income to help fund our services and will also help free up town centre housing.

Only councillors have been given further details of the scheme on “pink sheets” that are classified confidential. It is believed that the lead councillor’s statement indicates the council are considering another form of investment in local student housing.

Cllr Philip Brooker

Cllr Brooker’s statement comes in response to a comment from Guildford Dragon reader Sean Jenkinson who wrote: “I see the Labour representative gave no view, at least in this story, about the £81 million for student accommodation.

“Well done to the others bringing it up as it is an absolute slap in the face to most people telling us they going to put our council tax up and they give the university £81 million of it.’

It has been reported, and widely believed, that GBC were intending to lend the money to the University of Surrey.

Cllr Brooker invited, with James Walsh (Lab, Stoke), to respond said: “The council is not giving or lending any organisation £81 million in connection with the proposed future development of student accommodation.

“This potential project and any possible partnerships are at a very early stage. All councillors are aware of the initial proposals covered in the confidential part of the budget council agenda, and the details and business case will be discussed at future council meetings.

“Exploring how the council can potentially deliver some purpose-built student accommodation is a way to raise income to help fund our services and will also help free up town centre housing. The proposed student accommodation project has no negative impact on council tax and is intended to help reduce pressure on the council’s budget and funding.

“Our borough has a desperate need for housing and the council keeps any receipts from the sale of homes under the government’s Right to Buy policy. This money helps to fund replacement housing, as the council is not allowed to borrow to build social housing. It can also be used to repay our share of the national housing debt.”

Some clues to how the council plans to invest money into student accommodation can be found in a written response from Council Leader Paul Spooner (Con, Ash South & Tongham) to a question from Cllr Bob McShee (Con, Worplesdon).

In the response, it is highlighted that the council’s property investments to date have not included student housing which is identified as a source of a much needed extra income stream and a way of helping deliver much-demanded accommodation for students, numbers of which are expected to increase. It is also hoped that this will prevent yet more pressure on the private housing sector in Guildford.

Cllr Paul Spooner

Cllr Spooner, in his response, wrote: “The council has a diverse investment property portfolio which totals £145 million. From this, we currently generate £7.5 million in net income, which is used to pay for public services to the community. The income from our property portfolio subsidises the council tax; without it, we would have to make significant cuts to public services or seek to significantly increase council tax to maintain the high level of services currently provided.

“…our portfolio performs very well and is currently generating an income return of 6.46% across all sectors, which exceeds the all-sector benchmark of 4.20%….

“However, whilst we currently have holdings in industrial, office, retail and other property sectors, we currently do not have any holdings in the Student Housing Property Sector. Given the recognised demand for student housing within our own borough and that it is recognised as a stable long-term income-generating asset class, there is the potential for the council to increase the level of diversification within its property portfolio by investing in student housing.

“The investment seeks to generate another long-term secure income stream for the council, which can be used to subsidise services to the council tax payer, as well as meet our strategic objective of providing a range of housing to meet local need.

“…the council does not intend on purchasing investment property purely for financial gain. We link our investments to our functions and objectives as a local authority. The government recognises that this type of investment strategy is appropriate and in line with a council’s core objectives of ‘service delivery and place making’.”

See also: Concerns Expressed Over Student Accommodation Loan As GBC Agrees Budget

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One Response to ‘The Council is Not Lending £81 Million’ for Student Housing says Lead Councillor

  1. Valerie Thompson Reply

    February 13, 2018 at 2:47 pm

    GBC should consider the 2,000+ people on its social housing list first. Local government for local people!

    It seems wrong to build homes for temporary residents when there is a need for low-cost housing for families and key-workers.

    If the university cannot afford or is unwilling to build the number of student flats it promised to, on green belt land given to it for this very purpose, then it might think about limiting the number of students it can take each year.

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