Council may sell assets to repay £3.6m Homes England grant

Homes England provided £3,935,000 to Mendip District Council back in February 2020 to decontaminate the brownfield site in Frome town centre, removing asbestos, disconnecting former utilities and removing vegetation.

The grant was also intended to provide additional affordable housing within the site, reducing the financial pressures on any developer who ended up building on the land.

Somerset Council - which replaced the district council in April 2023 - agreed on Wednesday (September 23) to sell off the site to Newcore Capital following a lengthy bidding process, with the London-based firm promising to bring forward initial proposals for developing the site in the near-future.

The council has admitted that £3.6m of the Homes England grant may need to be repaid as a result of this sale - and that the funding to do this would be taken from the ongoing sale of surplus land, property and other assets.

Councillor Shane Collins (Green, Frome East) raised the issue when the council's executive committee met at Frome Town Hall on Wednesday afternoon (September 23).

He said: "The main grey area here is the Homes England funding of £3.6m.

"It looks very much like it may well have to be paid back; whether that's the full £3.6m or a percentage of it is really unclear at the moment.

"I hope I'm not breaking confidentiality by suggesting that £3.6m is more than has been offered by the preferred bidder.

"I'm just really concerned that we're going to get to a point where the council has to pay back more in the Homes England grant than what it gets in from the sale of the site."

Councillor Shane Collins (Green, Frome East) (Image: Somerset Council)

The council did not publicly confirm (either during or after the meeting) how much Newcore Capital had offered for the site, citing commercial sensitivity.

The Mendip Local Plan Part II, which allocates the Saxonvale site for future development, specified that the site could deliver a minimum of 250 new homes (of which 30 per cent must be affordable) along with 6,000 sq m of office space.

Since the site was offered for an unconditional sale, the council no longer has any guarantees that affordable homes can be delivered on this land - leaving it potentially in breach of the original grant funding agreement.

Chris Hall, the council's executive director for climate, place and economy, confirmed during the meeting that Homes England may ask for the funding to be repaid, regardless of who the winning bidder may have been.

He said: "Homes England has confirmed that they are unwilling to have the grant originally provided to Mendip District Council secured through an indemnity, regardless of which bidder is preferred.

The Saxonvale site in Frome in early-2021 (Image: Mayday Saxonvale)

"We have had attempts to negotiate on this matter, but there's been no further response from Homes England.

"We therefore have to consider that their requirement is for Somerset Council to take the appropriate action, which may include repayment of the grant - and as reported in October 2025, that stood at £3.6m. We have to make that assumption at this stage.

"The grant has funded costs previously incurred by the district council, and those costs in the event of repayment would be required to be funded by other means.

"The capital receipts previously received are available to the council's capital resources, so we have the funds available to do so.

"If required, we will utilise those funds to meet that funding requirement, i.e. we have the money available should we be required to repay it.

Councillors at the executive meeting at Frome Town Hall (Image: Somerset Council)

"It is anticipated that Homes England would seek to recover the grant in all circumstances."

Since 2023, the council has been selling off surplus land, property and assets - including all the commercial investments it inherited from the former district councils - and using the proceeds to fund day-to-day services, having obtained permission to do so from central government.

As of late-June, the council has lost nearly £92m on these commercial investments, when measuring the original purchase prices to the amount it managed to generate through sales on the open market.

However, when rental income during this period is taken into account, the council actually saw a positive return of just under £17.2m.

Aerial picture of the Saxonvale site in Frome town centre (Image: Mayday Saxonvale)

Following the executive committee's decision, the council clarified that discussions with Homes England were continuing over the potential repayment of the grant, including any timescale for such repayment.

A spokesperson said: "Discussions with Homes England are ongoing regarding the future management of grant conditions.

"These apply regardless of the outcome of the bidding process."