Somerset Council considers selling properties amid bankruptcy fears

A council is considering selling £220m of commercial property, potentially making a £70m loss, after it was warned it could face bankruptcy.

Buildings owned and that could be sold by Somerset Council include shops and offices that were mostly bought by former district councils.

It is expected to declare a "financial emergency" next week with a budget gap of £100m forecast for 2024/25.

The council will meet next Wednesday to vote on the next measures.

Selling properties, increasing council tax, and reducing services are among options being considered the help balance the books.

The council is considering selling 48 properties, which range from the M&S building in Yeovil, to offices in Bristol, business parks like Street Retail Park, a TK Maxx in Worcester, and an NCP car park in Bournemouth.

It comes as the budget gap has increased by £20m in the last week.

Liz Leyshon, deputy leader of Somerset Council and who is responsible for finances, said: "The sale of commercial property is one part of our long strategy for the median time to help balance finances.

"We hope to reduce borrowing and make the council more sustainable financially.

"When these properties were brought by the old district councils, they were purchased for yield and were making money for a long time but the market has changed.

"This is not a fire sale, this is a calculated sale of our assets and each premises will be sold at the right time on a case by case basis."

Ms Leyshon said they are also talking to the government to see how they can help support them with their finances.

Somerset Council was formed by the merger of Mendip, Sedgemoor, Somerset West & Taunton, South Somerset District Councils and Somerset County Council.

The former district councils planned to invest money in the properties and achieve a return through rent from tenants, but the general market values of UK commercial investment properties has fallen by over 20% since April 2022.

The portfolio is now worth around £70m less than when all the properties were purchased.