Making Public Property Work Harder. Rethinking Asset Management in Local Government

Introduction. Why Asset Management Matters Now

Local government is clearly under more pressure than at any point in recent memory. Funding is tightening, service demands are increasing, and Section 151 officers are left carrying the unenviable responsibility of keeping the books balanced while still delivering for local residents.

In that context, property can feel like both a blessing and a curse. On one hand, local authorities often sit on vast portfolios of land and buildings, from civic centres and libraries to industrial estates and retail holdings. On the other, many of these assets might be poorly utilised, politically sensitive, or simply under-managed.

I’m a Chartered Surveyor, and have worked in commercial property for over 15 years.  I’ve been client side and client facing, and I’ve worked in both the public and private sectors.  I’ve worked with local authorities now for 6 years (as an Asset Management Surveyor), which includes working alongside Surveyors with very similar experience to me.  It appears the consensus is that local authorities might have some work to do. 

There are some recurring themes (which I’ll come to) which suggest institutionally poor understanding of commercial real estate within local councils.  Property is my 2^nd career, and I entered the profession out of a genuine passion for property, and how it fits in with economic needs.  So when I see a portfolio that is failing, it frustrates me. 

I would be delighted if I knew my local authority was actively managing its property, reviewing leases and rents, challenging underperformance, and ensuring every pound of value was captured. Instead, I’ve realised the ‘path of least resistance’ is often followed.  Unfortunately, there is inevitably some short-term pain involved in revising systems to re-align a portfolio to generate the returns and fulfil the requirements it should.  The rewards though, are substantial.

Clearly local authorities have to contend with the political cycle, and I have observed that this sometimes appears to be justification to put off difficult commercial decisions regarding property.  Residents don’t live in political cycles. They live in communities where every pound NOT collected in arrears, or maintaining an underperforming property is a pound that could have gone into services, infrastructure, or regeneration. Property is not just a line on the balance sheet; it is a resource that should be working hard for the people who ultimately own it, the taxpayers.

This is why I believe local authorities need to rethink their approach to asset management. Not in terms of simply maintaining buildings or complying with statutory requirements, but in terms of genuinely treating property as an asset class that can generate financial and social returns. That means asking tough questions, being willing to dispose of assets that no longer serve their purpose, and adopting frameworks that encourage proactive management.

The Dual Mandate of Councils

 At this stage, it might be prudent for me to define ‘asset management’ in this context, as local authorities often apply different ideas to this term. Asset Management is an extension of property management (i.e. managing routine lease events and the landlord-tenant relationship) and looks upon a property and portfolio as an income-returning asset class.  The aim is to maximise return, value and minimise risk wherever possible.

To be fair, local authorities cannot (and should not) behave like purely commercial landlords. Their mandate is wider. They have a dual responsibly:

1.      Financial stewardship.  Maximising value, efficiency, and return for taxpayers.

2.      Community outcomes.  Ensuring property decisions align with social needs, regeneration goals, and long-term local priorities.

It is this dual role that makes asset management for local authorities a somewhat challenging prospect.  A private investor might look at a struggling retail parade and simply sell it, crystallising capital for reinvestment elsewhere. A council, however, may see that parade as part of the social fabric of a community.  It might be a source of local jobs, services, and identity. The decision to sell or repurpose cannot be taken on financial grounds alone.

Failing to maximise the utility and returns from a portfolio is not stewardship; it is avoidance. And unfortunately it creates a credibility gap between councils and the communities they serve. Residents expect their assets to be looked after responsibly. They may not always agree with every decision, but they will respect councils that show they are acting decisively, transparently, and in the long-term interest of the area.

The Current Reality

Regrettably, I understand some councils don’t have a true asset management strategy. Property teams manage and maintain buildings, finance teams account for them, and service teams use them, but sometimes there is a lack of a joined-up approach to treat property as a strategic resource.

The result can be:

 ·  Underused offices that drain resources but remain too politically sensitive to close.

·  Leased-out properties where rent reviews and lease renewals are missed, or where arrears quietly build up.

·  Surplus land that sits idle for years, awaiting a conclusive decision to dispose or utilise.

I recently heard an anecdotal estimate of a local authority missing out on around £1 million a year in rent, service charge, insurance premiums and utility charges.  This was simply because billing systems were incomplete and inaccurate, arrears weren’t chased, and rent reviews and lease expiries weren’t monitored properly. From my understanding, this is not unusual. And it’s taxpayers who ultimately pay the price.

Two ‘simple’ exercises that can demonstrate an authority’s approach to a high standard of management are to ask:

1. Can an Estates Manager obtain the annual rent roll of the portfolio, to an accuracy of 1%, in 30 seconds?  It’s not the result that’s the measurement, it’s the speed and accuracy of obtaining the information.  If this is not possible, the chances are that the portfolio is not being regularly looked at or managed efficiently.

2.  When was the last time your Estates and Finance teams carried out a full rent and arrears audit?  If the answer isn’t ‘recently’ then the chances are that income is not what it should be.

This is definitely not about criticising hard-working officers.  Many council property teams are under-resourced and over-stretched. It’s about recognising that the system itself is reactive rather than proactive. Property is treated as something to store, maintain, and avoid controversy over, rather than something to actively manage for return. Councils sometimes confuse stewardship with storage. They hold on to assets for the sake of holding on; but holding is not managing.

The Culture and Governance Problem

I’ve found a particular challenge in local authority asset and property management is not technical, it’s cultural. In many councils, it is the Legal and Finance teams that effectively set property policy. That’s not to dismiss their role; compliance, governance, and fiduciary oversight are all vital. But it means that strategy is often framed around risk-aversion and process rather than value creation.  Processes are tools, not a means of making decisions. 

I have known of some councils that recruit Chartered Surveyors with years of professional experience, exactly the people best placed to advise on property value, leasing structures, and asset strategy only to have their advice diluted and ignored. They are told to fit into policy frameworks written by those who see property only as a legal or accounting entry.

The result can be professionally demoralising. Surveyors are reduced to ‘doing as they’re told’ and responding to instructions rather than being empowered to advise. When day-to-day work is dominated by Freedom of Information requests, compliance forms, chasing long-outdated arrears and endless internal reporting, there is little time left to think strategically about the portfolio.

That position is lethal for a property portfolio. When professional challenge and proactive management disappear, assets slowly slip into underperformance. Rent reviews are missed. Lease events are allowed to drift. Vacant properties linger because nobody has the time to look at re-letting them or push forward with a disposal. Over time, the portfolio enters what can only be described as a slow performance death.  Not from any single catastrophic mistake, but simply by the lack of application and opportunity to stop it. 

The irony is that councils often have the right people in place. They often just don’t empower them. Asset management should be a core skill of estates managers, and their input should be central to strategic decision-making. Instead, their expertise is too often buried beneath layers of process, historic problem rectification, risk-avoidance and short-term political considerations.

If councils genuinely want to unlock value from their property, they need to let the professionals they hire do the job they were trained to do. That means listening to Chartered Surveyors when they point out risks and opportunities. It means giving estates teams the time and headspace to manage proactively, not just reactively. And it means ensuring that strategy is driven not solely by legal compliance or financial caution, but by an integrated view of property as both a financial and community resource.

Should Councils Own Property at All?

Maybe this leads us to the provocative but necessary question: should councils own property at all if they cannot or will not manage it properly? 

For the record, I believe the answer is ‘yes’ but consider this: if a pension fund manager left assets underperforming year after year, or failed to collect income that was due, they would face serious questions and consequences. Why should councils, handling public money, be held to a lower standard?

This is not an argument for a wholesale sell-off or putting simple financial gain over community benefit. Some assets are critical to delivering services; others are essential to local identity and regeneration. But if an asset is neither core to delivery nor actively generating value, then should it be kept? A vacant office block or poorly-let retail unit is not just wasted potential, it is wasted public money.

Disposals can be politically difficult, yes. But in many cases, selling or redeveloping underperforming assets is the responsible choice. Capital released can be used to pay down existing debt or reinvested in frontline services, infrastructure, or targeted regeneration. At the very least, poor-performing assets can be transferred to owners who are better placed to put them to productive use. For councils to earn the trust of their communities, they need to demonstrate that they are not simply passively holding property, but managing it with clear purpose.

Learning from the Private Sector

It’s clear that councils cannot act like a private landlord, but that does not mean they can’t learn from them. In fact, the best asset management practice already exists in the private sector. Institutional investors, property companies, and pension funds all face the same basic challenge: how to maximise utility from a finite pool of assets.  This is ‘strategy’ by definition.

What do they do differently?

· They track lease events meticulously and never miss a rent review.

· They actively manage tenants, building relationships to retain good occupiers and dealing quickly and decisively with arrears or breaches.

· They benchmark performance, asking not just whether an asset is paying its way, but whether it could be performing better.

· And above all, they reinvest in optimisation by refurbishing, repurposing, and repositioning assets to keep them competitive.

These are not radical or complex ideas. They are the bread-and-butter of commercial property management. Councils can adopt the same principles while layering in their social and community responsibilities. In fact, councils have a unique advantage: they can align financial stewardship with regeneration goals, achieving outcomes that the private sector alone could never hope to deliver. By demonstrating their own portfolios are well-managed and future-focused, councils also send a powerful message to private investors: that this is an authority worth partnering with, because it understands how to make property work for both return and regeneration.

Overcoming the Political Cycle

Perhaps the greatest challenge of all for local authority asset management is the political cycle. Elected members serve four-year terms but property decisions often span decades. The temptation is always to delay the difficult choice: to defer the disposal or stall the redevelopment until ‘after the next election’.

Taxpayers however, live in the reality of council tax bills that rise while assets underperform. Every year of drift is another year of lost income, another year of wasted opportunity.

I believe the solution is to depoliticise property strategy as far as possible. Councils should adopt asset management frameworks (for example the BCG matrix ,which can be applied to property as an investment class) that endure beyond political terms and provide consistency of approach. Elected members should be encouraged to sign off strategic principles, not become involved in every sensitive disposal or lease negotiation. And estates teams should be empowered to act professionally within that framework, free from unnecessary political interference.

This does not remove accountability. It strengthens it. Taxpayers can see the logic, the process, and the results. They can hold councils to account for outcomes, not for whether an awkward decision was avoided.

Conclusion.  Property as a Public Trust

Local government faces financial challenges that will not go away. But one of its greatest untapped resources lies in plain sight: its property portfolio. Managed badly, these assets drain money and credibility. Managed well, they can underpin financial resilience, regenerate communities, and maintain public trust. The choice is simple. Councils can continue to treat property as something to hold, waiting, drifting, and excusing inaction through the political cycle. Or they can step up, manage actively, and lead by example.

As a taxpayer, I know which I would prefer. I want to see my council sweating its assets, optimising performance, and making difficult but necessary decisions. I want to know that property is not just sitting on a balance sheet, but working hard for the community it ultimately belongs to.

Asset management is not a technical detail. It is not an optional extra. It’s not even particularly difficult.  It is a fundamental responsibility of stewardship. The tools exist. The expertise exists. The need is urgent. The only question left is: will local authorities seize the opportunity?

Author: Douglas Parker

Commercial Property Asset Manager and Chartered Surveyor at Optimise CRE.