WEST Oxfordshire District Council has made its first big move into the property market to reap income on behalf of its taxpayers.

The council has paid just under £5.5m to become the owners of a three-storey office block in Between Towns Road, in Oxford.

Despite the property slowdown, it is seen as a better long-term investment than fluctuating money markets for the council's reserves of cash.

Finance director, Frank Wilson, said this week a property portfolio provided a good way for the authority to preserve its record of having one of the lowest council taxes in the country.

West Oxfordshire levies an annual £74.88 charge for an average Band D home. Without a 'cushion' from its reserves, taxpayers would be paying more than twice that.

The office block tenants are Oxfordshire County Council's social services department - effectively providing guaranteed income for years to come.

District council leader, Barry Norton, said: "They are not likely to go bust, so we have ensured we get a regular income for our investment.

"It is going to provide us with a better return than having money in banks, where interest rates are not guaranteed. We have also bought at a time when property prices are lower. It is a good deal for us and our taxpayers."

The council has a reservoir of about £60m, known as balances, which help provide for unexpected emergencies, and also to keep council tax bills down.

For several years, it has been looking to convert some of that cash, spread out in bank accounts, into a property portfolio.

The £5.5m Oxford offices, bought from a property management company, Goodman, is the biggest investment so far. Smaller ones have included property in Witney High Street, where the tenants are bookmakers Ladbrokes, and several industrial estate units in the district. The council has about £10m invested in property.

Mr Wilson said: "The commercial property market is currently in a bit of a gloomy outlook - that's why prices are down.

"But we have a lot of cash, and are looking to the long-term here, propping up the revenues budget with investment income from rents for years to come.

"We needed to diversify. Having all your money in banks, you are likely to get hit by the credit crunch and fluctuating interest rates."

Mr Wilson added that the deal was purely in the interest of local taxpayers. "I have just looked into last year's accounts, and if we had not used our reserves, the average council tax would have been £150, more than double," he said.

Source: Witney Gazette