Contractor Willmott Dixon is poised to become a developer with a deal to build 1,500 homes for rent with Birmingham council, writes Joey Gardiner.

Willmott Dixon is understood to be leading a consortium, with housing association West Mercia and property consultancy Savills, to build the homes in a joint venture with the council.

Sources say the deal, which is set to be signed in the next few weeks, will be the first large-scale example of a developer building homes for rent without a large public subsidy.

If signed, it will also be Willmott Dixon’s first major move into development since group chief executive Rick Willmott announced in June that he wanted to make the firm a hybrid contractor-housebuilder to counter the expected downturn in public sector building work.

Birmingham council is to approve the plan in principle at a cabinet meeting next week, which will allow the bodies to sign the financial deal.

[This initiative will] kickstart development on a number of council owned sites

John lines, Birmingham council

Under the plan the council and developers aim to put enough land into a joint venture company to develop 750 homes over the next five years. The deal, based on the government’s private rented sector initiative, will guarantee a minimum of 200 homes being built.

The other parties, including an as yet unnamed funder, will then build, manage and market the homes. All parties will share the profits dependent upon the amount invested in the vehicle.

Birmingham council says it is in discussion with other councils in the region to bring forward other sites for a total of 1,500 homes.

Birmingham councillor John Lines, executive member for housing, said: “We see the initiative offering the opportunity to kickstart development on a number of council owned sites, benefit the economy by creating construction jobs and develop 1,000 to 1,500 private rented sector homes over the next five years.”