Broxbourne sets up property company with £5m loan
0Broxbourne Borough Council has unveiled plans to create a new arms-length company to develop housing for market rent in order to provide a new income stream.
Budget proposals approved by the council at the end of February contained a proposal to set up the firm, which will be known as Badger BC Investments.
The council will lend the company £5 million from its capital budget over four years to acquire land to build new homes, charging a rate of 5% interest on the loan.
A statement from the council said that the investment vehicle would “ensure a better rate of return for the public’s money than can be achieved from a bank or other investments.
“This vehicle will provide much needed rental properties for key workers, for example teachers working in local schools.”
Sandra Beck, head of financial services at the council told Room 151 that the council had agreed to provide £2 million for the venture in 2014/15.
This money would provide 14 homes on council-owned land, spread across the borough, which would take 18 months to build.
She said that the loan would provide an annual income of £100,000 in interest charges from the company.
She said that the scheme would then be expanded to either build new homes or purchase existing properties for market rent.
The business plan for the new venture is set to be considered at the April meeting of the council’s cabinet. The news comes two weeks after the London Borough of Newham agreed plans to create a council-owned company to build at least 3,000 new homes over the next 13 years. All of these homes will be available for residents at market rent or below, with the council providing subsidies to ensure that a third of the homes are set at 80 per cent of market rates.
