The potentially job-creating tenants of industrial and commercial units owned by Scottish Borders Council are to be given the chance to buy them outright at a reduced price.
Councillors heard this week of the need to strike a balance between the long-term viability of the vast portfolio – which currently comprises 227 units and has an asset value of around £10million – and the needs of companies whose business plans “drive them towards owning the properties”.
In 2010, the council adopted a policy whereby the sale price to its commercial tenants was set at a level which would reflect any outstanding loan debt on the property as well as lost rental income to the local authority.
The upshot has been that sale prices have been fixed well above market value.
“Officers are concerned …that this will prevent the sale of commercial buildings to local businesses where there is an overriding economic development case for a sale to proceed,” stated a report by chief economic development officer Bryan McGrath to Tuesday’s meeting of SBC’s executive.
“It has also led to delays in the disposal of property which has limited alternative value to another tenant.”
With the green shoots of economic recovery set to grow faster with the return of the Borders Railway in September, Mr McGrath wanted a change in the policy.
He said examples of “overriding economic development considerations” included the potential for a company to grow, create local jobs and contribute positively to the wider local economy.
Councillors agreed that if these criteria could be met and subject to the approval of Mr McGrath and senior officers, sale prices should be set simply at market value.
Mr McGrath reported that the council’s commercial estate, which generates around £1.2million a year in rental income, was affected by “gradual obsolescence” and that around 10% of the portfolio was currently unlet.
He cited St Mary’s Mill in Selkirk as an example of a large property which the council, despite marketing it for a decade, had been unable to bring back into productive use and which presented “a challenge for any future owner or tenant”.
He said a feasibility study was required to determine its future and “site clearance” was now an option.