Trailblazing scheme aims to capitalise on assets, including bomb shelters, to construct 2,000 homes

Portsmouth council is set to launch a company to build £300m of houses over three years.

Portsmouth Social Housing, which is likely to be established in the next few weeks, is one of two council-owned companies that are able to receive social housing grant from the Homes and Communities Agency (HCA). The agency is trying to use these vehicles to offset the collapse in private housebuilding.

The grant will be supplemented by land and other assets to fund the construction of more than 2,000 homes from 2010 to 2013 including 1,796 social housing units.

In the first year, about £5-10m of assets could be used, including land and car parks that could be built on. The council may also utilise more unusual possessions, including two-bed bomb shelters built into cliffs that can accommodate 5,000 people. They have been sealed for several years, but are about to be unblocked.

Lance Morgan, the council’s housing development manager, said: “It just shows the sort of assets the council has that could be put to good use.”

He added that because the company would be a charitable trust, it would not have to pay stamp duty or land tax. He also pointed out that the assets would increase in value when taken over by the company because they would not be subject to a tenants’ right to buy.

In future the company may extend its operations to undertake commercial schemes and a marina. Profit from these schemes could be used to pay for more homes.

Meanwhile, the council is putting the finishing touches to a social housing framework that will provide contractors and consultants for its small and medium-sized schemes. The names of the successful firms will be announced in the next week.