Supplementary Points of clarification

In response to some specific queries on the estimated £142 saving over the remaining loan period

• Proceeds of sale expected to be around £200k after fees, which would need to be applied to redeeming the loans
• Paying off the Shop/ Flat loan eliminates further loan payments for that loan
• Reducing the Pub loan by the remaining balance will leave estimated £53.6 outstanding. The terms of the loan mean this would not reduce loan duration but will reduce the repayments to an estimated. £3700 each 6 months.
• This produces a Total of Loan Repayments till Loans complete of £78,800 as opposed to £329,200 if we retain (ie £250,400 saving)
• Against this is set the estimated rental income lost over the period -amounting to approx. £108,300 (net of agent fees)   
• This results in an effective saving to the community of approx. £142K over the period.

In response to some of the discussion on Facebook.

• The PC originally took the decision to purchase the whole building (shop and flat) solely to secure the shops continuity, and at the time the flat had to be purchased with the shop.
• The shop is available to be used by all residents whereas the flat is only of use to the tenants it is let to.
• The shop and pub are on commercial leases whereas the flat is on an assured shorthold tenancy agreement which naturally means there are more onerous responsibilities on the PC with the flat, hence why the PC originally did not wish to buy the flat originally.
• The finance costs for the shop and pub are in theory covered by the rents on the buildings and not the precept...If there is a period of time without a tenant in the buildings this then requires council reserves to be used to pay the finance costs. This is also potentially the case with building repairs if they equate to more than the rentals.
• The shop/flat loan costs are £10.6k per annum.
• The pub loan costs are £21.3 per annum.
• These combine to total annual loan payments of £31.9k so this is why maintaining full tenancy of the buildings is imperative to avoid using PC reserves, or the PC precept having to be increased to make loan payments.
• The value of the flat is significantly higher than the shop hence the loan amount for the building was much higher in the first place.
• The flat value may be argued at being 3 times the shop value but the flat does not generate anywhere near 3 times the shop rent to cover the higher percentage of loan payments.