Dover District Council has approved plans to set up a private company to invest in and develop private residential and commercial properties.
The council’s cabinet voted to approve the plans on Monday, which will see the new company – Honeywood Property Services – formed as part of the authority’s property investment strategy.
Council papers stated: “The council’s property investment work has been active since the approval of the strategy, mainly focusing on commercial opportunities; there is now a need to establish an arm’s-length company to manage the construction or purchase of residential properties which will be sold or rented in the private market.
“This activity cannot be performed by the council, as where it is doing something for a commercial purpose, the Localism Act 2011 requires that this is done through a company.
“Once established, the company may also be used for commercial investments within or outside the district if appropriate.”
The council will be the sole shareholder for the company, with profits from investment and development activities either re-invested or returned to its coffers.
The local authority has provided an initial £100,000 loan to the company and plans to invest £2m a year for the first five years into its operation. Further loans for activities will be provided at “commercial rates”, it added.
The council document stated: “Loans made to the company will be charged at market rates, above the level at which the council can borrow from PWLB or other sources, resulting in an income stream for the general fund.
“The general fund will also benefit from any profits generated by the company.”
A spokesperson for the council said the plans for the company “were still at a very early stage”.