The UK government is today under pressure with the recently created NHS Property Services company forced to go cap in hand to the authorities for a £100 million loan. The company was only created a few months ago with assets totalling £3 billion transferred from the NHS. These 4000+ properties consist of an array of assets which are the under-utilised and the UK government is looking to release sufficient property to create 100,000 homes with property to cover 1,000 new homes expected from the NHS Property Services company.
There is growing concern that the reallocation of state assets, in the form of land, will no doubt help to release pressure on the UK property market but could impact the long-term operations of organisations such as the NHS.
While the UK government today announced plans for a further £25 billion of benefit cuts over the next four years, much to the disarray of many people, the fact remains that public sector finances are in a mess. The reason that the NHS property company was forced to go cap in hand to the authorities for a £100 million loan was because 50 of the 211 clinical commissioning groups had failed to pay their rent in full. This does not bode well for the short term with concerns that all is not well below the surface in the NHS.
Quote from PropertyForum.com : “At this moment in time even the most sensible of investors are struggling to obtain finance for many property projects around the world. It is sometimes easy to forget that these are investors who have slowly but surely built up their assets, never over-extended themselves on the financial front yet somehow they are paying the…..”
The £100 million loan from the government is in addition to a £190 million loan made available when the company was created. While it does all look like doom and gloom at the moment, it is worth noting that the central procurement of electricity supplies alone is expected to save about £1.3 million in the first year. When you take into account the variety of other central procurement opportunities, this situation may pan out better in the medium to long term.
Land for housing
The UK government is putting itself under extreme pressure to deliver land to accommodate 100,000 new houses by 2015. This will be done by a mixture of new property guidelines as well as the release of underused public assets. This is where the issues begin to arise from a political point of view because at some point private sector services will be required, land may not always be sold for its potential long-term value and who will be able to afford any of these new homes?
It is common knowledge that first-time buyers in the UK are effectively slowly but surely being priced out of the market place. Indeed a number of first-time buyers are now looking overseas where land and property can be acquired for significantly less than the cost of comparable assets in the UK. In theory the UK government is reacting to a market need, for more land, but whether it is going about this in the correct manner is debatable.
Many people will be furious to see public assets being sold off but if we saw the larger picture, the fact that many of these assets are underutilised and wasted, perhaps the backlash would not be as severe?