A Devon-based housebuilder is set to close after debts reached £21m.
Set up in 2017 the council-owned 3Rivers Development aimed to delivery high quality homes in Mid Devon, while providing a financial return to Mid Devon Council.
However the council has announced that after six years these long terms aims have not been met and cited a back-drop of high interest rates, high building costs and a changing housing market, contributing to its decision to close the developer.
Since it began 3Rivers has delivered housing projects including the Orchard, Halberton, Threwstones, Tiverton and a development of social housing in Burlescombe. The council decided in March 2023 however, that 3Rivers would not embark on any new projects.
has reported that two projects - George’s Court in Tiverton and Haddon Heights, Bampton – will be completed in the next six months.
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The council's cabinet met on August 16 where it recommended 3Rivers undertake a "soft closure", rather than calling in administrators, as it offers a better financial return.
The council had loaned the company more than £21m but reported an annual sales turnover of around £3-3.5m was needed just to cover overheads. In its 2021/22 and 2022/23 accounts, the council made provision for potential company losses of around £5.3m but it is likely further write-offs would need to be made.
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During the meeting on August 16 councillors were asked to make an urgent decision following a report on the company by accountants Francis Clark.
Cllr Luke Taylor, Leader of Mid Devon District Council, said: “We know there have been concerns raised about the viability of 3Rivers, and the council funding of it, for some time and as a newly appointed Leader I committed to addressing this concern swiftly.
"Building more homes in Mid Devon, which are high quality and in the right location, is something most of us agree needs to happen, but we must make sure the process to build these homes is the right one and that our limited council resources are used in the most efficient way. We are committed to investing in Mid Devon and will now work with our officers to plan future housing delivery across the district in an open and transparent way.”
This recommendation from the cabinet will now be put forward to full council on September 6 for a final decision.
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