06.12.19
Darlington council in £9.5m venture to build on housebuilding success
Darlington Borough Council’s cabinet has approved the borrowing of a further £9.5m to create another housebuilding joint venture, following the success of its current schemes.
The local authority had seen its previous schemes “far outstrip expectations” over their profitability.
In a recent council meeting, councillors unanimously agreed to setting up the latest joint venture company, in partnership with Esh Homes, to create large extra sums for frontline services.
Councillor Charles Johnson, the authority’s resources portfolio holder, said it was forecast that the latest scheme would deliver an average 17 per cent return on capital. The scheme will achieve this by looking to bring forward residential development of homes for private sale and affordable housing.
Pre-tax profits would average at over £1m, according to Cllr Johnson.
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Asked about risks, he accepted there were risks to the enterprise in regard to build costs and sales, but added: “Mechanisms [would be] in place to mitigate the risks as far as possible and safeguard the council’s position.
“This is extremely good business.”
Previously, Darlington Borough Council has formed 50:50 split firms with the housebuilder for developments in the Eastbourne, Middleton St George, Heighington and West Park Garden Village areas of the Borough.
However, the council envisages that future development sites may extend beyond the borough of Darlington – while still remaining within the North East region.
The four aforementioned ventures are projected to provide 388 new homes, an estimated new homes bonus of £2.1m, a post-tax profit of over £3m and a surplus of loan interest payments of £1.1m. That came from a maximum investment of £24.3m.
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