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New Forest District Council considers residential investment proposal

Cabinet will consider a plan to invest in residential property as part of their approach to generating income to protect key services, at their meeting on 6 December.

Portfolio holder for finance, corporate services and improvement, Councillor Jeremy Heron said, "The face of local government is changing and we look to innovative methods of bridging the funding gap whilst being mindful that we continue with our policy of being prudent when investing.  By a carefully considered investment in residential property we will be able to generate income to support the delivery of council services as well as deliver much needed greater diversity in housing."

The strategy would see the council purchasing residential properties, vacant or with existing tenants, and becoming a private sector landlord with the benefit of a proven track record in rental property management. It would also build homes on sites it owns or would acquire to provide a range of housing types including private rented, shared-ownership and starter homes for sale.

"This is a new venture for us into a type of investment that many other councils have found to be a successful way to generate income to fund services" said Cllr Heron.

"If this is agreed by council members, we will follow the model which has worked well elsewhere of setting up a holding company to allow us to develop a wider range of housing type and tenure than we are able to as a local authority" continued Cllr Heron, "The company would be wholly owned by the council and would buy, build, hold and manage the properties."

With an initial investment of £10 million, the council would gain a significant additional asset, as well as a projected annual income of around £350k. Up to one third of the investment would come from the council's General Fund, while the authority would borrow the remaining two thirds from its internal reserve balances, or at a low rate of interest from the Public Works Loans Board.

"Residential property represents a good investment for the council just now" said Councillor Heron, "because the New Forest has a significant housing shortage and a growing population. Demand for housing in the district continues to increase. The government is also promoting a policy of increasing the build to rent sector, which is reflected in this plan. This investment strategy is entirely separate from the council's Housing Strategy and does not affect our commitment to providing council housing and encouraging developers to build affordable homes to help address the housing need in the district. "

The Draft Residential Property Asset Investment Strategy will go before the council's cabinet on 6 December 2017 and to full council on 11 December 2017. 

 

Published: 29 Nov 2017
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