Colchester looks to launch housing company

Colchester Council looks set to become the latest local authority to enter the home building business.

Members of the council’s cabinet are due to meet tomorrow to discuss approving the business case for a new housing development company, which will be wholly owned by the authority.

According to the cabinet report, the council has ‘ambitious plans to bring house building to the forefront’ and is looking to ‘build homes, year-on-year, that meet the needs of local people’.

The report also states that the new company will be able to generate local jobs, increase the supply of affordable homes in the borough and set high standards for house building and efficiency.

‘The model is flexible and adaptable, and able to meet market demands, and the needs of local people with the ability to bring more sites on stream, as the company grows and homes are provided by the community,’ the report states.

It also notes that in 2015, the council delivered its first new council homes for more than 20 years through local contractor, Colchester Borough Homes.

However, plans for a second phase of new homes were put on hold after changes in government policy removed the borrowing headroom within the housing revenue account (HRA).

‘If the council is committed to delivering new homes, the company structure is currently the most effective way to bring forward development and to provide a commercial return on capital borrowed,’ the report adds.

At the same cabinet meeting, councillors will also be asked to approve a grant of up to £1.26m from the council’s reserves to Family Mosaic Housing Association to build 19 affordable rented homes at a site in Butt Road.

The report states Colchester has a ‘severe shortage’ of affordable rented homes, with 204 households in temporary accommodation, as of the end of March.

And 4,941 households are on the council’s housing register, according to the latest figures.

An increasing number of local authorities are starting housing development companies in a bid to create more affordable homes, sources of revenue and develop council-owned land.

In March, the London Borough of Newham announced it had bought 211 properties from the multi-million pound Upton Gardens development, which is being built by Barratt London in Upton Park.

The homes will form part of an independent company set up by the council to enable it to deliver a mixture of affordable homes for residents.

The company will develop further by purchasing properties from schemes and developments in the borough. It will also determine a rent policy that is both fair and affordable for residents on average and low incomes.

‘This company will deliver a new, fairer housing alternative giving people on low and moderate incomes genuine security,’ said Newham mayor, Sir Robin Wales.

‘By paying less rent, residents will have the chance to save for a house deposit, giving them an opportunity to get on the housing ladder,’ he added.

A recent report by APSE found that many councils are moving back into house building in response to the housing cirisis.