A council has made its first big move into the Oxford property market to reap income on behalf of its taxpayers.

West Oxfordshire District Council has paid out just under £5.5m to become the owner of a three-storey office block, in Between Towns Road, Cowley.

Despite the property slowdown, the deal is seen as a better long-term investment than the fluctuating money markets for the council's reserves of cash.

Finance director Frank Wilson said a property portfolio provided a good way for the authority to preserve its record of having one of the lowest council taxes in the country.

West Oxfordshire currently levies an annual £74.88 charge for an average Band D home. Without a "cushion" from its reserves, Mr Wilson said residents would be paying more than twice that.

The office block's tenant is Oxfordshire County Council's social services department - effectively providing guaranteed income for years to come.

District council leader Barry Norton said: "They're not likely to go bust, so we have ensured we get a regular income for our investment.

"It's going to provide us with a better return than having money in banks, where interest rates aren't guaranteed. We have also bought at a time when property prices are lower. It's a good deal for us and our taxpayers."

The council has a reserve of about £60m, known as balances, which help provide for unexpected emergencies, and also to keep council tax bills down.

For several years the authority has been looking to convert some of the money into a property portfolio.

The £5.5m Oxford office block, bought from a property management company, Goodman, is the biggest investment so far. Smaller ones include property in Witney High Street, leased by bookmaker Ladbrokes, and several industrial units. The council now has about £10m invested in property.

Mr Wilson said: "The commercial property market is currently in a bit of a gloomy outlook - that's why prices are down.

"But we have a lot of cash and are looking to the long term here, propping up the revenues budget with investment income from rents for years to come.

"We needed to diversify. Having all your money in banks, you're likely to get hit by the credit crunch and fluctuating interest rates."

Mr Wilson added: "I have just looked into last year's accounts and, if we had not used our reserves, the average council tax would have been £150, more than double."