RISKS of investing £100 million in commercial property to fund local public services are “coming home to roost”, councillors have warned. 

West Berkshire Council has borrowed £100 million to buy offices, shops and warehouses across the country, to use rental income to fill some of the gap left by government funding cuts. 

So far, it has spent £62.6 million buying nine properties. But — as returns are less than initially expected and the government is discouraging councils from commercial property investment — councillors have raised their concerns. 

Councillor Jeff Brooks (Lib Dem, Thatcham West) said: “A lot is invested in the retail sector, which isn’t healthy. Some of those risks are coming home to roost.” 

The commercial property investment strategy was discussed at a meeting of the overview and scrutiny management commission on January 14. 

Cllr Alan Law (Con, Basildon) said: “When we’re here in 40 years time trying to get rid of a run down petrol station, that really worries me.”

The strategy was initially supposed to spread risk across sectors — buying a balanced number of properties in retail, offices and warehouses; no more than 40 per cent in a specific sector. 

However, Cllr Law pointed out that so far 54 per cent of the £62.6 million spent so far has been in retail.

The leftover £37.4 million could be spent elsewhere, rather than continuing to buy properties for commercial investment, like on affordable housing. 

Cllr Lee Dillon (Lib Dem, Thatcham North East) said: “Income generation is key but social impact should be included as well. We could use that money for affordable housing, killing two birds with one stone.”

More details should surface in March, as part of the council’s forthcoming housing strategy. 

Cllr Lynne Doherty (Con, Speen), the leader of the council, said some of the leftover £37.4 million could be spent on building affordable homes within West Berkshire instead. 

She said: “We are looking at what those options are. That work is in progress.”

New guidance, from the Chartered Institute of Public Finance and Accountancy, makes it much harder for the council to buy any more properties for commercial investment outside of the district. 

Richard Turner, council property manager, said it would be “quite difficult” to buy real estate in the district without increasing how risky the investments can be. He said it was like “fishing in a smaller pond”. 

One office block in Newbury, 4 The Sector, has been bought by the council. But it has been vacant for almost two years. The previous owner agreed to cover the rent costs, but only until April this year. 

Cllr Dillon suggested using the vacant building for council services.