Southwark Council's cabinet this week agreed to buy the freehold of the authority's office building at 160 Tooley Street in a deal which it says will be cheaper than continuing to rent the premises.
We reported last week that the council had tabled an offer to buy the freehold of the headquarters building it currently rents from a Guernsey-based company. This week the borough's cabinet approved the deal.
"This council has pledged itself to spend every penny as if it was our own," said Cllr Richard Livingstone, cabinet member for resources, in his introduction to the cabinet report.
"We currently pay £7.7 million each year in rent on our council headquarters at 160 Tooley Street, and this figure is likely to increase through rent reviews. The terms of our lease continue to 2033, without a break clause.
"The decision of the owners of the building to sell it has therefore presented the council with a unique opportunity. The choice we have is analogous to someone renting their home being offered the opportunity to buy it for a mortgage that costs less each month than the rent.
"If the council decides to buy the building it will both reduce its annual costs in these difficult financial times and gain ownership of an important asset for the council. Owning the building also increases the flexibility we have in how we use it.
"Whilst the figures currently remain commercially confidential, once the sale is completed we will release these to the public."
Several news reports have put the sale price at £170 million; a £20 million premium on the £150 million asking price. The council will fund the purchase by borrowing from its own reserves.
As the deal had to be done quickly the Labour-run council needed to secure the agreement of the Liberal Democrat chair of the cross-party overview and scrutiny committee so that the cabinet decision could be implemented immediately without any cooling-off period.
"This is an opportunity to acquire the building which will provide us with substantial annual revenue savings over payment of rent; estimated at a minimum level of £1.5 million per annum," wrote the council's acting head of property Jeremy Pilgrim.
"Ownership of the building will provide additional opportunities to reduce building management costs and allow greater flexibility for future uses of the property."