A new council-owned housing company, delivering private rented houses in Lincoln, is set to be introduced.
City of Lincoln Council has revealed plans for the new company, which would act in effect as a private sector landlord.
It would be tasked with providing “market rent properties” as well as a lesser proportion of low cost home ownership properties.
A business case has been prepared, based on building 200 new properties over the first five years, 160 of which would be as rented accommodation, and 40 to be sold at a “low cost”, marginally below market levels.
All rented properties would be let at full or close to market rent, anticipated to be between £500 and £600 per month.
The housing company would be fully financed by the council through a combination of loan and equity funding.
The council has said that “significant” loans would be taken out of the general fund to initially finance the project, with on-lending to the company at a premium.
A sizeable cost will be incurred by the council in the first years of the scheme, but the authority expects to make a return on the loans.
The council may also benefit from any future dividends (profits after tax) from the company, any capital growth in the value of the property portfolio, and a percentage of both council tax and New Homes Bonus income generated by the new stock.
City of Lincoln Council has said that the proposal is designed to “complement” other housebuilding initiatives by the authority in the city.
There are nearly 2,800 separate applications for housing on the council’s waiting list.
Only around 600 applicants are fortunate enough to get a property from that waiting list each year.
Bob Ledger, Strategic Director for Housing and Regeneration at the council, said: “The company will be like any other private company in that it will need to be financially viable, operate in line with an agreed business plan and meet all its statutory obligations.
“To achieve the financial viability of the housing company most of the properties will need to be let at full market rent to ensure the company is viable and can cover its costs/liabilities and without a cost to the general fund.
“The council will hold 100% of the shares in the housing company and as such will have full ownership.
“This has the advantage of allowing the council to retain ultimate control of the company and therefore the allocations, selection of properties and the rents.”
The Executive has been recommended to approve the establishment of the new housing company.
Final approval of the project is expected in the summer.