The long-term vacancy of two prime retail units in Harrogate’s Royal Baths has cost the taxpayer almost £1 million in lost rent and service charges, the Stray Ferret can reveal.
North Yorkshire County Council paid £9.5 million for the Grade II listed building in 2018. A current council report has valued it at £7 million and forecasts it to generate an investment return of just 1.64%.
But in addition to the £2.5 million decline in property value, the long-term vacancy of both buildings is haemorrhaging lost rental income each month.
A year ago today (December 9, 2022) the council evicted the owners of the Viper Rooms nightclub — one of four commercial units it lets in the Royal Baths.
The venue has stood empty since, despite repeated claims by the council of “significant interest”.
The former Potting Shed bar, which along with the JD Wetherspoon pub and Royal Baths Chinese Restaurant make up the other commercial units, has been empty since the council acquired the historic complex five years ago.
The Stray Ferret asked North Yorkshire Council, which succeeded North Yorkshire County Council in April this year, about the cost of the ongoing vacancies.
A council statement said rent for the Viper Rooms premises “would have been in the region of £90,000 since December last year”.
It added maintenance for the building is covered by a service charge which is approximately £75,000.
The council added no business rates are payable due to an exemption for the premises as a listed asset.
As for the Potting Shed space, the council said the original rent was £125,000 a year when the county council acquired the vacant unit in 2018. That figure represents a loss of £625,000 over five years.
The vacant former Potting Shed unit.
It did not give a figure for the loss of service charge income at the Potting Shed but said no business rates were payable on either premises due to an exemption for them being a listed asset.
The council said “no agent’s fees have been paid at this time” to Savils, which has been marketing the Viper Rooms, adding any fee “will be made when the unit has been let”.
Asked why it was taking so long to find a Viper Rooms tenant, despite the apparent interest, the council said:
“The leisure market continues to be highly variable. Savills has conducted a significant number of viewings, and we do now have offers for both vacant units.
“An offer for the Viper Rooms unit has been accepted while the offer for the Potting Shed is due to be considered shortly.
“The situation of having vacant units is by no means unique and is a widespread issue nationally following the impact of the covid pandemic and the cost of living situation.
“Harrogate’s Royal Baths do, however, cover their costs and the council has not had to use funds from alternative budgets to support the asset.”
Council urged to “get their act together”
Former Conservative councillor Richard Musgrave branded the Royal Baths an “under-performing trophy asset” in 2021 because of the sum paid and returns generated.
The continued loss of rental income since, the depreciation of the value of the asset and its low investment returns has again raised questions about the council’s business acumen.
The Royal Baths forecasted return of 1.64% is by far the lowest in the council’s portfolio.
Cllr Stuart Parsons, leader of the Independent group on Conservative-controlled North Yorkshire Council, said the situation was “extremely concerning”. He said:
“The council really ought to get their act together and get it sorted immediately.
“A 1.64% return on investment is very low. They could have put the money in the bank and got just under 5%.”
Cllr Parsons said the newly formed council was still going through its investment portfolio to decide which assets to keep.
The Royal Baths complex
Tom Gordon, the Liberal Democrat candidate for Harrogate and Knaresborough at the next general election, said:
“North Yorkshire Council’s approach to business and investment in Harrogate is disappointing, and we deserve better.
“The continued cuts to local government from the Conservative government have left local authorities scrambling to buy up investment properties as new revenue streams. Often they do not have the skills of expertise to make a success of such investments, and we can see how that plays out first hand with the Royal Baths as one example.
“Their approach has been shortsighted, resulted in the loss of local businesses, and decreased the value of the assets they purchased. Someone should be accountable for this decision.”
Read more:
- Harrogate’s Royal Baths: the council’s under-performing ‘trophy investment’
- Harrogate nightclub Viper Rooms closes suddenly
- Viper Rooms owner says Harrogate landlords need to ‘get real’ with rent
Asked to respond to claims that it lacks the commercial acumen to run businesses, the council said:
“North Yorkshire Council has a wide range of skills among its own staff, but also recognises that external support is necessary for assets that are more complex. A number of external professionals assist the council in managing this asset is the best interests of local residents and taxpayers.”
Paul Kinsey, who owned the Viper Rooms, has been locked in protracted negotiations with the council over the fixtures and fittings, declined to comment.
