Sandwell picks Riverside for UK's first new-build PFI council housing

After four years of preparation, Sandwell council has selected Riverside Housing Association as its preferred bidder for the £240m project, which includes 283 homes.

Provided Riverside accepts Sandwell's invitation and no problems arise over the deal's financial terms, the contracts will be signed next March.

Steve Gregory, executive director of urban form at Sandwell council, said: "The project is over the last fence and is headed towards the finish. When completed it will mark a significant addition to the council's stock."

The deal is unusual as it involves PFI funding for new council housing. To date, only two of the 16 round one and two PFI housing schemes have been signed, for projects in Manchester and north London. Manchester's scheme will include new-build housing but the costs will not be funded through the PFI system.

Despite the news from Sandwell, specialists do not view PFI as a way of significantly boosting the country's flagging housebuilding rate. Steve Trueman, director of PFI advisory body 4Ps, said: "The third wave of PFI housing projects will probably involve more new-build housing than the 14 schemes in procurement at present.

Housing PFI is not intended for developing new sites and won’t usher in a golden age of housebuilding

Steve Trueman, 4Ps

"But the ODPM will only support new build when it is part of a strategy for meeting the decent homes target. Housing PFI is not intended for developing new sites and won't usher in a golden age of housebuilding."

Sandwell's project will include 1400 homes in total. The majority will be refurbished to the decent homes standard; 113 will be demolished to make way for new homes.

Title to the properties will remain with the council, but Riverside will be guaranteed an income for managing the homes for a minimum of 30 years.

Riverside was given preferred bidder status ahead of a consortium including Equion, Black Country Housing and Accord Housing Association.