Building joint ventures will boost council funds

8 Nov 07
Councils could stand to generate substantial financial surpluses by setting up local housing companies with developers and registered social landlords, it emerged this week.

09 November 2007

Councils could stand to generate substantial financial surpluses by setting up local housing companies with developers and registered social landlords, it emerged this week.

Government guidance on the scheme, first floated in July's housing green paper, shows that councils providing sites through the new companies will benefit financially once land values rise after homes are built by either a developer or an RSL.


Fourteen local authorities that offered to pilot the scheme on behalf of regeneration agency English Partnerships are due to set up companies during the next six months.


Duncan Innes, a director at EP, said precise models will vary between authorities but in each case councils will commission homes, either from a company partner or an outside contractor, while retaining an equity stake in the development.


Properties will include shared ownership housing as well as private market homes. 'Over ten to 15 years, a council will make much more money than if it had sold the land up front,' he told Public Finance.


Each company is expected to provide about 1,000 homes and in some cases, said Innes, the numbers built will be far higher. More councils are expected to come on board once the pilot is completed next spring.


Launching the guidance on November 5, housing minister Yvette Cooper said the companies represent a radical new partnership between councils and the private sector. 'This is a new way to help councils to do their bit to support new homes for key workers and families in their areas,' she said.


Most councils contacted said they were still waiting to see details of how they would set up their companies. In Sheffield, where the council plans to launch 'Neighbourhoods Co' shortly, director of housing Karl Tupling said it should allow it to accelerate house building. 'The company will be able to capture increases in land values for the public sector while the local authority steers it towards what it wants to do in each neighbourhood,' he added.

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