EAST HAMPSHIRE District Council is set to sell a loss-making and empty hotel it controversially bought to make money.

The Metro Inn Hotel on the A3 near Liphook cost the council £1.2 million in November 2014 and has been empty virtually ever since, and has cost – or lost – the council more than £250,000.

This includes £100,000 in vandalism, holding costs of about £34,000 a year, and about £50,000 a year in lost business rates income.

On top of that the council hasn’t had any rental income from the two-storey Travelodge-style building.

And the authority refuses to say how much that loss might be, claiming revealing the figure might jeopardise a future sale.

Included in the original deal, once described as a “safe long-term investment” by East Hants council leader Richard Millard, was a Starbucks café next to the hotel on the A3 at Liphook.

A council spokesman said: “Throughout our possession of the site we have enjoyed a regular rental income from the successful Starbucks cafe on site. But we have not been able to find a financially-viable solution for the remainder of the plot (hotel) and as a result it makes sense to sell it.

“Building a balanced and profitable portfolio is a dynamic process and sales and acquisitions are a part of property management.”

Speaking about the acquisition in 2014, Cllr Millard said: “We are identifying commercial properties which are safe long-term investments. The Starbucks coffee shop and Metro Inn hotel near Liphook fits the bill perfectly and is a great addition to our property portfolio.”

The setback follows news that repayments on future loans from the government’s Public Works Loans Board may cost more.

The council agreed the loan facility so it could invest in more income-generating properties. So far it’s thought more than £100 million has been borrowed from the board.

The council couldn’t give an exact figure as the Herald went to press – but it is believed the rate hike could cost the council an extra £1m in repayments if it borrows the estimated £100m remaining from the £200m loan facility.

The council spokesman added: “The Public Works Loan Board has increased its interest rates from 1.81 per cent to 2.82 per cent for all new loans. This means that money borrowed at the old interest rate will continue to be paid back under those terms. The council still has plans to increase its property portfolio. However, the interest rate rise will require us to review how we fund future acquisitions.”