Nearly a decade after establishing its own housing company to “move from being a passive enabler of housing to a more active developer,” Peterborough City Council is preparing to sell its 50 per cent share in Medesham Homes LLP, the joint venture created with Cross Keys Homes in 2016.
The move will see Cross Keys Homes take full ownership of Medesham, but questions remain about whether the council has recouped its investment—or whether taxpayers may have missed out on potential gains.
A partnership born of ambition
The creation of Medesham Homes was approved by the Conservative controlled city Cabinet in July 2016 with considerable optimism.
A report, titled “Creating a Housing Delivery Company and the Re-Allocation of Corporate Affordable Housing Funds,” highlighted Peterborough’s status as one of the fastest-growing cities in the country and warned that the council needed to take a more active role in the direct delivery of housing.
At the time, the council proposed a joint venture with Cross Keys Homes Development Ltd, the city’s largest social landlord. The goal was ambitious: to deliver new homes of all types and tenures, ranging from affordable rent and shared ownership to market sale and private rent. The venture would also “make more effective use” of the council’s capital receipts from Right to Buy sales.
The Cabinet report committed £14.6 million in Right to Buy receipts for suitable affordable housing schemes. In addition, the council earmarked up to £20 million in its capital programme as potential “invest to save” funding for housing projects, although no specific sum was initially dedicated to Medesham.
Officials at the time emphasised that the partnership would combine the council’s land and investment with Cross Keys’ “expertise in housing management and development,” with both partners sharing risk and reward on a 50:50 basis.
The report concluded: “The creation of a housing joint venture represents a significant shift in the council’s approach to housing delivery… allowing the council to address the city’s acute housing needs while leveraging the expertise and resources of a trusted partner.”
Cabinet minutes: setting the stage
The Cabinet meeting on 25 July 2016 provides further insight into the thinking behind Medesham Homes. Councillors debated the proposal in depth before approving the creation of the joint venture.
Councillor Peter Hiller introduced the report, highlighting that the housing delivery company would move the council from being an enabler to a direct developer of housing, addressing the city’s growing housing needs. The company was envisioned to deliver homes of various types across Peterborough, with the potential to consider projects outside the city as well.
Cabinet members discussed key aspects, including:
- Allocation of £14.6 million in Right to Buy receipts on a case-by-case basis, alongside the £20 million ‘invest to save’ capital allocation.
- Potential development of student accommodation and all housing tenures, subject to financial viability.
- Focus on residential accommodation, distinct from the broader regeneration remit of the Peterborough Investment Partnership, which had been more focused on large-scale mixed-use schemes.
- Flexibility regarding the scale of development, with projects assessed individually based on viability.
Cabinet ultimately approved the establishment of a Limited Liability Partnership (LLP) with Cross Keys Homes, the allocation of operating capital, and amendments to the council’s constitution to allow appointments to the housing joint venture board.
Alternative options, including doing nothing, developing housing wholly through the council, or using the Peterborough Investment Partnership, were rejected. The report emphasised that Cross Keys Homes was the preferred partner due to its focus on affordable housing retention and management.
Early achievements and rising costs
Fast forward to 2025: Medesham Homes has delivered just 94 affordable homes across three schemes—29 at Midland Road, 30 at Belle Vue in Stanground, and 35 at Eye Green. All were completed between 2018 and 2020.
The council retained nomination rights for these properties, allowing it to house families and individuals who might otherwise have needed temporary accommodation. Council officers argue this has provided stable housing for vulnerable residents and generated significant savings.
Yet the financial picture is more complex. According to the council’s latest Medesham Homes LLP update (February 2025), around £15.4 million has already been spent on Medesham schemes and Bretton Court, one of two remaining sites still under development. The total financial commitment across all Medesham projects is estimated at £19.9 million, primarily funded from Right to Buy receipts.
The Bretton Court project alone has a grant funding agreement of £6.3 million, of which only £1.8 million had been spent as of early 2025, leaving roughly £4.5 million in unspent funds tied to the scheme.
The update stresses that these investments were made from the council’s own affordable housing funds and were subject to strict government timescales, a key reason for Medesham’s creation in the first place.
Scaling challenges
While Medesham met its initial objectives, the council admits that the partnership struggled to scale. The 2025 report notes that larger, more complex sites, such as Bretton Court and the Pleasure Fair Car Park, “require more resources than Medesham currently possesses, unless shareholders invest fresh equity.”
Cross Keys Homes, with its larger asset base and access to Homes England Affordable Homes Programme grants, is better positioned to deliver these projects.
By contrast, the council has no immediate plans to inject additional capital, a step described in the report as “not prioritised by the council.” In practice, this means Medesham cannot continue at scale without Cross Keys taking the lead.
Negotiating the exit
Faced with this reality, Cross Keys Homes has offered to buy the council’s share outright. The council has appointed Deloitte to value the assets and advise on the Heads of Terms, which will determine the sale price and ongoing arrangements.
The proposed Heads of Terms include:
- Continued nomination rights for the 94 completed homes.
- New nomination rights for the Bretton Court and Pleasure Fair sites.
- “Overage provisions” to ensure the council benefits if land values or profits rise on future developments.
- Retention of income from commercial rents and car parking at the two remaining sites.
Officers aim to finalise the sale by the end of the financial year, with completion likely in the first quarter of 2025/26.
Financial implications: unclear returns
Whether the council will recover its full investment remains unknown. The 2025 report does not disclose the potential sale value, citing a confidential annex pending Deloitte’s valuation. Council leaders maintain that proceeds will contribute to debt reduction—currently around £0.5 billion—helping lower borrowing costs and support financial sustainability.
Observers have questioned whether taxpayers are seeing the best value after nearly £20 million committed for fewer than 100 homes delivered.
The 2016 Cabinet report had framed Medesham as a mechanism to ensure “value for money and responsiveness to changing market conditions,” but the current update is more cautious. The language acknowledges that larger projects require more resources than Medesham possesses and that further expansion is not a priority.
A changing funding landscape
Part of the rationale for Medesham’s exit lies in national policy changes. At the time of its creation, councils had limited flexibility in using Right to Buy receipts, prompting many—including Peterborough—to establish housing companies or partnerships.
Since then, rules have relaxed, allowing Right to Buy income to be used more directly or via other affordable housing providers.
Simultaneously, Right to Buy receipts have been falling, limiting the council’s ability to fund new developments independently. Officers note that Cross Keys’ scale allows it to leverage grants and assets in a way the council cannot.
The social impact of Medesham
Despite financial ambiguities, the social impact of Medesham is undisputed. The 2025 update concludes: “The partnership has played a significant role in delivering affordable housing in Peterborough, providing stable homes for vulnerable residents and supporting the council’s financial and strategic objectives.”
Both the 2016 and 2025 reports emphasise the commitment of the council and Cross Keys to delivering affordable housing, regardless of ownership structure. Officers argue that Medesham achieved much of what it set out to do, albeit on a smaller scale than originally envisaged.
Assessing the experiment
So, has the council lost money? The answer depends on perspective. Financially, millions of pounds of public investment are being transferred to Cross Keys, with returns still unclear. Strategically, the council may argue it avoided a Treasury clawback of Right to Buy receipts and delivered 94 affordable homes that might not otherwise have been built.
The update insists that value for money has been assessed, taking into account existing housing stock, development sites, and other Medesham assets.
Yet it also concedes that Cross Keys is better placed to deliver larger-scale projects, suggesting that Medesham’s role may have been more of a proof-of-concept than a sustainable long-term model.
Looking ahead: a quiet exit
The formal decision on the sale will be made by Cabinet later this year, with financial details considered in private due to “sensitive financial and business information.”
The report concludes: “The council’s commitment to supporting regeneration and affordable housing remains strong, and the transaction is designed to ensure ongoing benefits for residents, financial sustainability for the council, and alignment with corporate priorities.”
For taxpayers, however, the lingering question is whether nearly £20 million invested for fewer than 100 homes could have yielded more if managed differently—or whether the council’s exit simply returns control to the very landlord it sought to partner with almost a decade ago.
Summary of “Medesham Homes LLP annual report and financial statements for the year ended 31 March 2024”
Financial Performance and Position
For the year ended 31 March 2024, Medesham Homes LLP reported an operating profit of £445,203, up from £399,074 in the previous year. Administrative expenses were £311,787, while other operating income reached £756,990.
The statement of financial position shows total assets of £18.3 million, primarily consisting of investment properties valued at £17.1 million. Current assets include trade and other receivables (£65,118) and cash and cash equivalents (£1,116,712). T
otal liabilities amount to £16.6 million, mainly due to deferred income from government grants, which are amortised over the life of the related assets. Members’ equity stands at £1.76 million, reflecting capital contributions and retained profits.
Related Party Transactions and Commitments
CKH Developments Limited provided services to the LLP totalling £67,500 during the year. The LLP also has operating lease arrangements with Medesham Properties LLP, with total lease commitments receivable of £11.5 million over 22 years. Peterborough City Council receives rental income from the partnership and has agreed to bear part of the cost of an aborted project.
FOOTNOTE: Council minutes note that Councillor John Holdich declared a pecuniary interest in the debate on Medesham in 2016, in that he was appointed to the Cross Keys Board by the council and that he was paid an allowance. He had been granted dispensation by the Monitoring Officer to speak on the item but would not take part in any vote. Councillor Wayne Fitzgerald also declared a pecuniary interest in that he was appointed to the Cross Keys Board by the council and that he was paid an allowance. He had been granted dispensation by the Monitoring Officer to speak on the item but would not take part in any vote.
