The cost of building council houses in Bath has been slammed as "totally out of whack" as it could cost £3.2m to build on land the council owns with a company the council also owns.

Eight affordable energy efficient apartments for social rent could be completed in summer 2025 on the site of a former highways depot on Lower Bristol Road as part of Bath and North East Somerset Council's £12m B&NES Homes council house building program. Aequus, a construction company wholly owned by the council, is delivering the "Argyle Works" project at cost.

But the cost of the works was questioned when Aequus directors were quizzed by the council's corporate scrutiny panel on January 16.

Independent councillor Colin Blackburn told directors: "Cost price of £3.2m seems — from what I have been advised by other surveyors — seems totally out of whack."

Managing director of Aequus Tim Richens said that the costs had been tendered and it was just a "pass through" of those costs, which he said had also been looked at by the council itself.

He added: "It is the case some of these sites are quite challenging. Some of these sites need a lot of work to get to the point where they are developable, so all of those costs have to be factored in into some of these sites."

But Mr Blackburn insisted: "Argyle Works is not a challenging site. It is a flat level site, full access off Lower Bristol Road." 

He added that there were flats nearby the council could buy for £1m less than that.

The B&NES Home programme sees the council to turn sites and buildings it owns into new council housing.

The first homes in the scheme opened at 117 Newbridge Hill — a Victorian Villa that was formerly council offices — in January 2023. 

Questions were raised at the time about the council's decision to sell the vacant building to Aequus for £308,000 — nearly £500,000 less than market value — to carry out the works. It was then bought back for £2.16 million, a figure determined by a red book valuation.

Profits the company make should come back to the council through an annual £1m dividend it receives as sole shareholder.

But, speaking at the corporate scrutiny panel's next meeting on January 23, chair Robin Moss said: "We are being told we are getting £1m from Aequus, but that £1m has to pay for interest on money that we've given to Aequus — so smoke and mirrors to a degree."

The panel is requesting the council's property services to come back before them on March 12 to ensure the council is getting value for money.