Through effective strategic asset management planning, local authorities can harness property portfolios to drive efficiencies and net revenue savings. These funds can then be reallocated to enhance communities.
map marker United Kingdom | 05 December 2024
Reading Time : 5 minutes

Property is a big issue in local government: for many councils it represents their second-largest corporate revenue cost after people, whilst property is usually the largest asset class on their balance sheets. In addition, council-led property projects can play a pivotal role in regenerating communities. 

Local authorities’ portfolios are often complex. They consist of both operational assets, such as libraries and leisure centres, and investment assets, such as commercial buildings that are rented out. 

To make the most of these portfolios, local authorities must manage both the capital and the revenue aspects effectively, and balance different objectives. This is where strategic asset management planning (SAMP) comes in.

Property is the second largest corporate cost for councils
2nd
Acres of land owned by local authorities in May 2024 (Savills)
900,000
Deadline to upgrade EPC rating on commercial leasehold properties
April 2027
Sian Waldron
Sian Waldron
Associate Director, Development Consultancy
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A diagram highlighting four perspectives on council owned property combined with different objectives for their management

Aligning a portfolio with corporate objectives and priorities

SAMP is the process of aligning an organisation’s property portfolio to support its corporate priorities. For most councils, this means ensuring they have the right buildings in the right places, increasing efficiency and generating revenue that can be invested in creating better places for people. 

Imagine if a council could avoid closing a library by unlocking net revenue from elsewhere in its property portfolio. Or perhaps it could liberate brownfield land for housing by rationalising under-used assets that don’t support frontline services.

These are the type of outcomes SAMP can produce for communities if the process is done thoroughly and not treated as a tick-box exercise. 

Proposed changes to the Energy Performance Certificates provide another reason to undertake a SAMP process. If these are adopted, then from 1 April 2027, a commercial property cannot be let unless it has an EPC rating of C or above (rising to B from 2030). With around 50% of a typical local authority investment estate currently failing to reach grade C and 75% falling short of grade B, this is a ticking time bomb that can’t be ignored. 

Councils need to know now which of their investment assets will make the grade. They need to understand what it would cost to upgrade the ones that won’t, and whether this would be a worthwhile investment. And they need to consider their options now to avoid having to sell below market value later or incur heavy last-minute retrofitting costs.

This planning forms part of effective SAMP, which aligns assets to service priorities, improves investment estate performance, manages whole-life costs and shapes regeneration programmes. It’s a process that can help a council transform a sprawling estate that doesn’t support core services and has an insurmountable maintenance backlog into a right-sized estate that delivers services more effectively and efficiently.

More than bricks and mortar: assessing the property function

Achieving this sort of outcome requires looking beyond the buildings themselves to the way in which the organisation manages them. This is because the performance of a council’s estate is underpinned by the effectiveness of the council’s property function. So any comprehensive review of performance must measure the quality of the property function as well as the effectiveness of the estate. Organisational change can be as important as reconfiguring an estate.

The strategic asset management planning cycle is a good basis for developing a structured review to optimise performance. It requires time and effort – at WSP we recommend that councils start the process four years before they’re required to have their next plan in place – but it can reap huge rewards.

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A diagram highlighting the process of ensuring a property portfolio is outlined to a council’s corporate objectives and priorities

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A diagram highlighting the process of ensuring a property portfolio is outlined to a council’s corporate objectives and priorities

At WSP, we partner with local authorities around the country – assisting them with everything from highways to regeneration. We understand the immense challenges they face in delivering vital services with constrained budgets. 

Yet we remain excited about the potential that lies in many councils’ property portfolios, potential that the SAMP process can unlock to enable wider change and benefit local communities. 

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