Somerset Council has strategically delayed the sale of its commercial assets to avoid appearing as an easy target for opportunistic buyers. Since 2023, the council has been gradually selling surplus land and properties, including commercial investments inherited from former district councils.
Unique government permission allowed Somerset Council to use the proceeds from these sales to fund front-line services, an exception set to expire after April 2027. In light of this, the council opted for a cautious, phased approach rather than a rapid sell-off, which it feared would damage its reputation and reduce overall returns for taxpayers.
Olly Payne, Head of Capital Markets for UK Regions at JLL, updated the council’s property and investments executive sub-committee on June 17 in Taunton. Payne explained that a four-year strategic sale period was recommended due to the unpredictability of the global property market influenced by factors like inflation, interest rates, and geopolitical tensions.
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“This measured approach prevented the sale from being perceived as a fire sale, helping us achieve better valuations for each asset,” Payne said. The ongoing conflict in Iran and other global uncertainties have disrupted expectations of interest rate cuts by the Bank of England, further complicating market forecasts.
Payne noted that while office markets continue to recover from COVID-19 downturns and development costs in the UK remain high, rental prices are increasing due to limited supply and a lack of new development projects.
To date, Somerset Council has sold approximately 60% of its asset portfolio, generating over £125 million—about £8.6 million, or seven percent, above the initial valuations. The largest sale was the Steelite factory in Stoke-on-Trent, sold for £14.4 million. Additionally, five properties are currently under offer with a combined guide price exceeding £24 million.
Most purchasers have been small property firms, a significant French investment company benefiting from UK tax incentives, and wealthy private investors attracted to tangible property assets.
Council leader Bill Revans acknowledged the challenges posed by fluctuating government policies on local government investments and funding. “We were encouraged to invest, then to sell off those investments. It highlights the need for consistent advice from central government,” he said, summarizing the council’s performance as “mid-table” in managing its portfolio responsibly.
Payne emphasized that the steady sales strategy has mitigated risks of undervaluation and reputational harm caused by opportunistic bidders. “When news broke that the council was selling, some buyers offered to purchase assets at half price. Rapid selling would have played into their hands,” he remarked.
By maintaining an orderly and gradual sale process, Somerset Council has sent a clear signal to the market, discouraging ‘cheeky bidders’ and protecting taxpayers’ interests. “The image of a vulnerable ‘weak wildebeest’ has been avoided,” Payne concluded, suggesting this approach will continue to maximize value and uphold the council’s reputation.