MONMOUTHSHIRE council is to consider setting up its own trading company to further develop its commercial activity and help meet a lack of affordable housing.

The county council bought the freehold of Newport Leisure Park for £21million last month, saying it would provide "an excellent annual return" to invest in services.

Councillors will now consider an initial appraisal to set up its own development company.

The wholly owned company could undertake residential and commercial developments, potentially helping to meet the shortage of affordable housing in Monmouthshire.

A council report says: "The council is now developing a proven track record in its commercial activities through the recent acquisitions of Castlegate and Newport Leisure Park.

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Newport Leisure Park

"The creation of a wholly owned development company would enable the council to further develop its commercial activity through the lens of a social investor.

"Specifically we could determine our accepted minimum financial return below that of a commercial developer."

Rising house prices mean owning a home is unaffordable for many in the county, while house building on allocated sites has been slow.

A council report says lack of affordability and supply is not 'unique' to Monmouthshire.

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Other local authorities, such as Bristol City Council and Carmarthenshire County Council have tackled the issue through a similar "interventionist approach."

"The current market mechanisms are failing to meet demand and indigenous populations are increasingly being forced to re-locate as housing prices and rental levels become more and more unaffordable," a council report says.

"This is particularly acute for young people and reflected in the outward migration of our younger demographic.

"This proposal would enable the council to undertake development activities designed to speed up supply and meet design parameters that reflect the wider social justice agenda."

The remit of the proposed development company is not yet clear and would need to be developed with the help of specialist advisors.

The development company would be a "revenue burden" to the council in its first years due to the need to buy sites, money required to build the properties and the time lag in getting a return through sales or rentals.

The initial appraisal will be discussed at a full council meeting next Thursday.