Central Beds Council housing company costing £600k a year mothballed - because no homes have been built

A council-owned housing company “consuming £600,000 of public money a year” has been mothballed by the local authority’s Independent administration because no homes have been built.

New Vista Homes was established as a council-owned private housing company by the previous Conservative administration of Central Bedfordshire Council in 2020.

Independent councillors claimed in 2022 that the council was planning to invest more than £40m in its housing company.

CBC had lent it £1.1m at that stage, a meeting of its audit committee was told. This amount of £1m per year was expected to continue “until its expiry date of March 31, 2026, at which point it’s required to be fully repaid”, according to a social media post from several Independent CBC councillors in 2022.

A council spokesman said: “New Vista Homes was a proactive initiative by the local authority to ensure our residents have a choice of new homes for a variety of needs, which the housing market wasn’t delivering.

“Since the company was set up, housing market conditions have changed and this is affecting the whole industry.

“CBC has agreed not to progress any new development sites through the company to reduce the cost to the council.”

The intention was for New Vista Homes to provide housing, with some of it “affordable” and some at market rate, said Independent Aspley and Woburn councillor John Baker in a newsletter to residents.

“We raised several concerns at the time, including the agreement to loan £40m of public money to the firm, the lack of a clear business plan and a number of high profile failures of council-owned housing companies.

“I questioned the funding and the lack of scrutiny of New Vista Homes in 2022, given a private company couldn’t be analysed by councillors in the same way as other council operations.

“Councils have different priorities and decision-making processes to a private company and, by acting as a housing developer, conflict of interests can occur.

“Equally, there are plenty of private housing companies from small to large, so why would the council need to intervene with its own company supported by public money?”

The Independent CBC administration agreed to mothball its housing company, which “was consuming £600,000 of public money each year, but hadn’t yet built any houses” explained councillor Baker.

“The original intention of New Vista Homes was for it to develop public land owned by CBC. This would provide social housing, accessible homes, accommodation for older people and low carbon properties, alongside market housing for sale and to generate funds to reinvest.

“While political priorities, it didn’t prove economically possible to deliver them all. The firm has suffered labour shortages and rising supply costs. This has meant progress has been slower than hoped.

“I discovered that the running costs of the company were in excess of £50,000 per month. With long-standing monthly administration costs reaching this level and a slow build rate, it was essential to reduce these costs as far as possible.

“A formal decision has been made that CBC and the board of the company have agreed not to progress any further new development sites through the company until further notice, and that no further land transfers will be made.

“This will have the immediate effect of drastically reducing administration overheads and will help bring costs under control. We believe in ensuring public money is carefully spent,” he added.

“This is another example of taking a difficult but necessary decision to protect public money given the council’s well documented current financial challenges.”