Seven years after passing its stock of housing to Freebridge, West Norfolk Council is looking to buy property to rent out privately.
The council is planning to set up a separate business to own and manage the homes to side step restrictive rules over it owning houses, including having to offer right-to-buy to tenants.
A report to the council’s resources and performance panel said: “There are a number of authorities looking at the potential of entering into the residential rental market by promoting house building and through purchasing built units from the private sector.
“In addition to the benefits of increasing supply into the rented sector where there is high demand the council will gain from improved investment returns.”
The plan is being developed to give the council a fall-back plan if the 55 homes it is building in partnership with Norfolk County Council on the Nar Ouse Regeneration Area (NORA), in South Lynn, do not sell. The first of the houses is expected to be ready for sale next month.
The report said: “Although the housing market nationally is showing signs of improvement during 2013 it is considered prudent to set up a contingency should the finished housing units fail to sell within a reasonable period of time.”
It is suggested that spending £1.5 million of the council’s investment cash on 10 homes could reap higher returns. Currently it is getting about 0.8 per cent interest on cash deposits, but could get 6 to 7 per cent return on the houses when they are eventually sold, the report said. It is proposed to sell as soon as the market picks up.
The report said: “An alternative option would be to seek to sell the residual units at cost to a housing association for rental at affordable rents.
“This option was dismissed in light of the impact of increasing the percentage of affordable units on earlier phases of the NORA development which it is believed breached the council’s well defined policy of pepper potting affordable units amongst new housing estates.”
If the proposal is accepted at a meeting of the panel on Monday, a letting agency will oversee the properties.
In 2006-07, West Norfolk transferred 3,000 properties to Freebridge Community Housing. Similar transfers were happening all over the country at the time.