The multi-coloured wooden beach huts lining the golden sands of Bournemouth and Poole were in full use again this weekend as adults lounged in deckchairs and children built sandcastles.
These simple structures on this famous stretch of the Dorset coast are highly sought after, with typical waiting times for long-term rental ranging from five to 20 years. However, some users are now worried about council bosses’ plans to cash in on the huts by selling them to a ‘special purpose vehicle’ (SPV) to boost their budget with a £54m windfall.
The financial plan proposed by the Tory-led Bournemouth, Christchurch and Poole (BCP) council is to sell the huts to a company controlled by the authority. It will generate a large capital inflow for the council for new investments.
The proposed arrangements are coming under increasing scrutiny, with questions being raised in parliament over the program and local backlash.
Mike Cox, a local Liberal Democrat councilor, said: “It’s the worst kind of casino capitalism and people are appalled by it.” He described it as the type of scheme that would be devised by Gordon Gekko, the 1987 film’s antihero. Wall Street.
The value of many UK beach huts has risen sharply in recent years. The council has already built 131 larger ‘super huts’ over the past decade which have sold for around £40,000 each, raising over £5million.
Some of the most expensive beach huts in the UK are located at Mudeford Sandbank in Christchurch. The Observer has learned that one recently sold for over £500,000. It is about a 20 minute walk from the road, with an equipped kitchen, a lounge area convertible into two double beds, and a mezzanine.
Lizzie Manetta, 60, who pays £2,700 a year to rent a hut in Poole, is among long-term beach hut users worried about the proposed scheme. She said: “I’m worried because it’s already expensive to have a beach hut and it’s going to limit who can rent them if they raise the prices.”
She added that the huts needed to be maintained and were a valuable asset to the local community. She said: ‘One night this week I went down to the beach, swam, cooked supper, then watched the sky change from that pretty blue to pale pink. It’s incredible.”
Under the plan, the 3,605 beach cabins in Poole, Bournemouth and Christchurch would be transferred to the new company under a deal mainly funded by third-party debt.
The huts are rented from the town hall or private with an annual ground rent.
The new structure would provide a scheme under which the council could swap annual rental income – worth around £5million a year – for a large one-off payment. The council did not disclose the finance and consultancy fees involved or the proposed rent increases.
The program, designed with support from professional services firm KPMG, was approved in principle at a board budget meeting in February. Detailed proposals will be discussed later this month.
A board document describing the program states: “As the SPV is owned by the board, and once the senior debt is paid off, this means that at the end of the 20-year period, the board could dissolve the entity and return the assets. control of the board or could choose to refinance the assets again. The project is described as a “bold and non-traditional approach to local government funding”.
It is proposed that the money will be used for services for adults and children, and for the council’s ‘transformation programme’, which increases the digitalisation of services.
A “save our beach shacks” group has been launched on social media in response to the plans. Campaigners want to see KPMG’s report on the scheme, two independent appraisals of the beach huts and a comprehensive business plan for the proposed SPV.
Sir Christopher Chope, the Conservative MP for Christchurch, last week raised questions in Parliament about the proposal. He wants it to be reviewed by officials to check if it complies with local authority guidelines on inflows.
Chope said, “This seems an extraordinary way to behave because it seems at odds with the principles of local government to protect the interests of municipal ratepayers.”
He said the concern would be the quality of services provided to users of the beach huts by the new company and possible increases in rent.
The BCP board said: “The proposal to explore a [SPV] making our beach cabins more commercial was approved under budget 22/23. No formal decision has been made.
“We are working on the details of how we could use a special purpose vehicle and a report should be sent to cabinet [this month]. This includes any impact on rents and investment opportunities.
KPMG declined to comment.
