Council privately plans to sell golf club it spent £10m on for just £2m

The Barnham Broom Hotel, Golf and Spa. Picture: DENISE BRADLEY

The Barnham Broom Hotel, Golf and Spa. Picture: DENISE BRADLEY - Credit: Copyright: Archant 2018

Questions are being asked after it emerged a council faces losing millions on a golf club it spent £10m on but is selling for just £2m.

Breckland Council bought Barnham Broom Golf and Country Club in a controversial deal in 2006 for £7m. It then spent another £1.2m on taxes and a further £2m doing it up.

The council first tried to sell the venue in 2018 to the current tenants for £6.5m, but since then its value has collapsed further and according to council papers, it is planning to sell the “asset” in the next financial year for just under £2m.

It is understood that the current tenants are the only business in the running to buy it.

The papers do not name the asset as Barnham Broom and the council has kept all its dealings about the club private, citing “commercial confidentiality”. 

The Terrace at the Barnham Broom Hotel, Golf and Spa. Picture: DENISE BRADLEY

The Terrace at the Barnham Broom Hotel, Golf and Spa. Picture: DENISE BRADLEY - Credit: Copyright: Archant 2018

But several sources have confirmed to this newspaper that the £2m “asset sale” is Barnham Broom.

If the sale goes through it would represent a £8m loss for taxpayers on the initial purchase price and costs. 

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One source said: “They could have stuck that money under a mattress and got a much better return.”

Breckland Council has several commercial buildings which it rents out to generate an income. 

Councillor Paul Hewett, member for property and projects, said commercial rents was the council's third biggest income stream and they got a return on their portfolio of 6pc.

He said: "We regularly review our property portfolio by considering buying and selling different assets to maximise the income the council is able to generate."

However, the council has struggled to collect rent owed from tenants in some of its commercial properties. 

In October last year, it confirmed it was owed £700,000 by tenants across its portfolio.

Leader of the opposition Labour group, Terry Jermy said councils were being forced to “play monopoly” with public money to generate income because of cuts from central government.

Terry Jermy, Labour leader on Breckland Council

Terry Jermy, Labour leader on Breckland Council - Credit: Archant

“I’m very concerned about councils being forced to take risky investments with commercial property to fund council services properly due to cuts in government funding," he said.

Last year, Green Party councillor Tim Birt accused Breckland's leadership of using commercial confidentiality to “save it from embarrassment” over Barnham Broom. 

Timothy Birt, Green candidate for Watton. Pic: Green Party.

Timothy Birt from the Green Party - Credit: Green Party

Speaking this week, Mr Birt said: “I am extremely annoyed that absolutely everything about Barnham Broom is being labelled 'commercially confidential' to avoid any public discussion whatsoever.”

He said this went against the Local Government Transparency Code and has complained to the Information Commissioner’s Office about it. 

But Mr Hewett said: "We’re unable to share more information about ongoing business arrangements as they are commercially confidential and could have a negative impact on a third-party’s business."

The golf venue has been contacted for comment. 

Analysis

As council funding has been cut, many have looked at alternative ways to generate revenue. With interest rates so low for the last decade, one popular strategy has been to borrow millions of pounds from a body called the Public Works Loan Board. 

Councils usually borrow from that board when they need to fund a big project like a new road. But many have instead borrowed to buy commercial property and rent it out. They justify it by saying they get a better return than leaving the cash in a bank. 

The Treasury has now stopped councils doing this, but it comes too late for the billions of pounds already invested by councils across the country in property from gyms, to office blocks. Critics point out that councils have no experience or expertise in commercial property investment and can be taken for a ride.

More worrying is what happens to council budgets when a tenant defaults on their rent or a building remains empty, when that rent money has been earmarked for public services. 

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