WINCHESTER civic chiefs were warned against “playing Zoo Tycoon” with a money-making housing company they could launch to tackle a shortage of affordable homes in the city.

The city council is considering opening a company to compete in the private market which would let it avoid borrowing caps set by the Government on its current affordable homes scheme.

The council, which is set to build around 30 homes per year over the next decade, is looking at ways to cope with increasing demand for housing as 100 applicants join the waiting list every month.

The company could be used to develop private rental and homes for purchase on council land, using any profits to fund more affordable housing projects outside of the official budget, known as the housing revenue account.

Andrew Palmer, head of new homes delivery, said other councils, such as Wokingham, were running similar schemes.

He said: “The rewards reflect the fact that the risk is being taken.

“I won’t name the site, but finders [site scouts] have approached us with very attractive propositions to develop quite large numbers of housing that we cannot do through the constraints of the housing revenue account.

“If we want to take those opportunities ... it has to be done through a housing company.”

Cllr David McLean said: “I think it’s a fantastic idea. It could buy land, build houses, make a profit – dirty word – and then plough said profit straight back into the production of social housing in whatever form we choose to build it.

"It’s a bit of a win-win-win if the controls are in place.”

But some councillors told the cabinet housing committee that entering the property market was too risky.

Cllr Stephen Godfrey said the costs of running the company would be “disproportionately larger” than a commercial equivalent.

He said: “Cllr McLean has clearly been spending too much time playing Zoo Tycoon because he avoids the simple question – if it’s so easy to make money out of building, why isn’t everyone else? We need to take account of all the risks.”

Cllr Caroline Dibden said: “If it could be shown that this was a different way of accessing land of whatever means to provide affordable housing, that’s one thing.

“If we go into it with even the slightest thought that this is going to make a profit, we’re living in cloud cuckoo land.”

A business case for establishing the housing company will be presented to the committee in the next few months.