A council in Surrey is expected to make less than half of its expected rental income this year.
Spelthorne Borough Council is only likely to make £1.9m from its commercial property instead of the £4m originally planned, a report has found.
Empty offices, stalled lease renewals and rent-free “sweeteners” to tenants have all cut into the council’s income, according to the Local Democracy Reporting Service.
Council leader Joanne Sexton said it was a “very worrying financial position” to be in during the first quarter of the 2025/26 financial year.
The deficit has partly been offset by a £593k recycling grant, but once the extra costs of government commissioners and recovery work are factored in, the council is still left with a £1.9m hole in its budget.
Spelthorne is already proposing to use £6.1m of money set aside to cover risks on commercial property to help balance the books.
At the same time, taxpayers are paying a £450k tax bill for government-appointed commissioners brought in after inspectors raised serious concerns about the council’s finances and governance earlier this year.
The costs could rise further still if consultants are brought in.
Councillor Rebecca Geach told a meeting on Monday she did not feel comfortable waving through such a shortfall with limited information.
Ms Sexton said: “Unless we have all the facts in front of us, it’s very difficult indeed for us to be able to make informed decisions based on limited information.”
Finance officers said the overspend was a projection, rather than a reality, and promised mitigations to plug the gap before March next year.
These included freezing non-essential spending, chasing rents, assessing vacancies and reviewing costly projects like the £1.65m Stockley Park office refurbishment.
But the officer stressed the reserves should only be used as a last resort.
The report states the current financial projection for 2025/26 at the first quarter is not sustainable and poses a risk to the budget planning process for next year.
