Profits of new private division will be ploughed back into itself rather than social housing
Guinness Trust is to launch a private development division, but its profits will not be spent on social housing.

The move is part of a regeneration strategy that will see Guinness invest £150m by 2010.

Chief executive Simon Dow said: "We are not looking to make huge profits from the private development division to plough back into the business. If we make a surplus, we will simply use that to build up the new private arm.

"All the research we have done shows that our residents want to live on mixed-tenure estates and we feel we should be in a position to provide this."

Guinness – which came 39th in Housing Today's development league tables with 574 homes – has been in discussion with two unnamed financial organisations with a view to taking on some of the risk involved in the new venture, in exchange for a share in any profits.

A number of other developing associations have set up separate divisions that build homes for private rent or sale. They include Places for People's Blueroom Properties and the Home Group's Paramount Homes. But these associations principally use their private arms to cross-subsidise their social housebuilding programmes.

The new business, yet to be named, already has a project in line for Islington, north London.

It involves building 24 flats on the site of a former pub. Guinness bought the site for £1m as part of its regeneration of the 250-home Naish Court estate. The new division will purchase the land outright from Guinness and the parent will have no financial responsibility for the smaller branch.

Dow estimates that construction should cost between £1m and £1.5m and that the homes will be sold for a total of at least £2.5m.

The new division has no plans as yet for any other developments.

Under Guinness' broader asset management strategy, it will invest an average of £13m-15m each year until 2010 in about 8000 of its 26,000 homes.

Source

Housing Today