A ambitious plan between three Suffolk councils to set up a new housing company could see nearly 200 new homes built in the west of the county in the coming years.
St Edmundsbury Borough, Forest Heath District and Suffolk County Councils are proposing to set up and fund a housing development company to oversee the building of 186 new homes, with four sites already identified around West Suffolk.
The development of homes for sale, rent and shared ownership could provide more affordable homes and generate income for the councils.
Despite reservations, St Edmundsbury borough councillor Julia Wakelam believes forming the housing company is ‘the only way forward’.
“I was part of the housing strategy group which drafted it so in principle I’m in favour, but have some concerns with the idea as it has been brought forward,” she said.
“The councils must address the real issue, the lack of affordable houses for people to rent or buy.
“If this is a company with properly commercial aims, it will not be providing affordable housing because that is not profitable.”
The company would be set up with an initial £500,000 loan from the councils. St Edmundsbury and Forest Heath will fund their equal shares of £125,000 from their cash reserves.
The councils plan to generate money from the ‘primarily commercial’ company by selling council-owned land to it, from rental income and property sales and through interest on their loans.
Around 84 homes will be sold on the open market or through shared ownership arrangements, generating income for the company with which it can repay its loans.
Of the remaining homes, 46 will be privately rented and 56 will be affordable homes.
By the seventh year of the scheme, planned to start in 2016, the district councils anticipate no further investment in the company and an average annual income of £147,000 from the retained properties.
Borough and county councillor David Nettleton questioned whether making profit from housing should be a motivation for the authorities.
“Local councillors and council employees are not entrepreneurs,” he said. “Councils are here to represent the people, not make money.
“This is about providing for the social need, which is what the developers and housing associations are doing.
“I think we are going down the wrong route. We are going to spend a lot of money setting it up and the return, if there is any, will be many years down the line.”
While it would be owned by the councils, with Suffolk County having a 50 per cent share and St Edmundsbury and Forest Heath owning 25 per cent each, the housing company could feature people from other parties on its directorial board.
Exploring the setting up of a housing company was an objective set out in the West Suffolk Housing Strategy 2015-18.