Cabinet votes on Wednesday on closing the council's housebuilder. It has lent Cornovii £35.19m and expects to lose at least £4m. All six options cost money.

Shropshire Council’s Cabinet decides on Wednesday 9 September whether to close Cornovii Developments Ltd, the housebuilding company it owns outright. The officer report recommends a structured closure taking at least 18 months.

The council has lent Cornovii £35.19m. It expects to get at least £4m of that back. That is the best of the six options its Section 151 Officer looked at, and the report is blunt that none of them ends well:

On the assumptions set out, none of the options considered have a positive financial outcome for the Council as they are not able to provide a full return of the Council’s loans or its equity interests.

The report to Cabinet, written by interim Section 151 Officer Duncan Whitfield, went to the Finance and Improvement Scrutiny Committee today, Monday 7 September, before Wednesday’s decision. Cabinet meets at 10.30am at the Guildhall in Frankwell.

What Cornovii built

The council set the company up in 2019 to build homes in Shropshire. By March 2026 it had delivered 196 homes, which Appendix A of the report breaks down as:

  • 68 affordable homes
  • 56 homes for open market sale
  • 56 private rented homes
  • 16 rent-to-own homes

Fifty-five of those homes were transferred to Shropshire Council for affordable rent and shared ownership. The report says 75% of purchasers and 96% of private rented customers had a Shropshire connection, that 46% of the rented homes went to key workers and 4% to veterans or Armed Forces households, and that every contractor used was Shropshire-based.

It also records that Cornovii put solar panels on every home, built to enhanced space standards using timber frame, and “successfully progressed complex sites that other developers had not brought forward”. Its external auditors gave unqualified opinions every year from 2019/20 to 2024/25.

None of that is in dispute. The report says the problem is the council’s balance sheet, not the company’s record.

Why the council says it has to stop

Shropshire Council declared a financial emergency in 2025 and has asked government for around £121m in Exceptional Financial Support this year. That support is borrowing, not a grant, and it has to be repaid from future budgets.

The report says this “impacts fundamentally on the ability of the Council to borrow for anything other than to meet statutory or regulated requirements”, so new borrowing to fund Cornovii is “in practical terms, unrealistic in the medium term”. It also points to the recent MHCLG report behind the council’s Non-Statutory Best Value Notice, which found the council can no longer afford to fund the company.

Cornovii’s own draft 2026 business plan projected a modest surplus by 2033. The report does not accept it. It notes that a 5% shortfall in income, or a 4% variance in costs, over the life of the schemes would wipe out that profit, and that the plan assumes interest rates fall by 1 to 1.5% this year alone, which the report calls “highly unlikely at this time”.

Our CIPFA review coverage sets out how the council’s finances got here.

What each option would cost

Six options were tested, where possible against Net Present Value. Option 6, the recommendation, is the cheapest. It means finishing the design and planning work on schemes already well advanced, then transferring or selling the sites.

Estimated cost to Shropshire Council of each Cornovii option Bar chart of the estimated cost to Shropshire Council of four costed options for Cornovii Developments Ltd. Option 6, the recommended structured closure, gives a loan shortfall of about 4 million pounds, with a net present value cost of 3.44 million. Option 2, building out units on site only, gives a shortfall of about 5 million. Option 5, selling the company, gives a likely loss of 7 to 8 million. Option 3, continuing with the draft business plan, has an estimated net present value cost of 10.46 million. Option 1, immediate closure, and option 4, carrying on and reviewing new opportunities, were not costed. Every option loses money. The recommended one loses least Estimated cost to Shropshire Council of each option for Cornovii Developments Ltd £0 £2m £4m £6m £8m £10m £4m Option 6, RECOMMENDED finish planning, then sell or transfer £5m Option 2 build out sites, dispose of the rest £7m to £8m Option 5 sell the company Option 3 carry on with the business plan £10.46m net present value Option 1, immediate closure, and option 4, carrying on and taking new opportunities, were not costed. Option 6's figure is the loan shortfall; its net present value cost is £3.44m. Option 3's figure is a net present value. Source: Cornovii Developments Ltd report to Shropshire Council Cabinet, 9 September 2026, Appendix B. Graphic by Shropshire Today.
The four options officers put a figure on. Two of the six were not costed at all.

The reasoning behind the two that were rejected outright is worth reading. Option 1, shutting the company immediately, would “almost certainly lead to the company going into administration and the Council effectively losing control”, and the report says the council cannot in law take direct responsibility for Cornovii’s private rented homes. Option 5, selling Cornovii, is judged unlikely to attract a price the council would accept, “given the low margin achieved to date”.

Three things in the report that were not in the press release

The borrowing facility was £69m. Quoting Cornovii’s draft 2025/26 accounts, the report records that at 31 March 2026 the committed borrowing facility stood at £69m, up from £49m a year earlier, of which £30m was undrawn. Option 3 would have pushed lending above £51m by 2028.

Four schemes, not two. The council’s press release says the recommendation covers completing planning applications for London Road Phase 2 and SUE West. Recommendation 2.7 in the report says the same. But Appendix B, setting out option 6, prices the outstanding design work at £0.615m and names four schemes: London Road phase 2, Mount Pleasant, Oswestry SUE and Shrewsbury SUE West.

The Shirehall project has a price. One of the financial assumptions behind every option is that work Cornovii did on the Shirehall project is funded at cost by the council, “assumed to be up to £886,000”. If the council does not fund it, the report says, the cost simply increases the loans Cornovii cannot repay.

What happens to tenants

The report is explicit that closure must not fall on residents. Recommendation 2.12 instructs officers, with the Cornovii board, to keep tenants fully informed and to ensure they are “in no way impacted adversely by the closure”. Continuous service to existing tenants, including private rented and shared ownership, is listed among the critical issues.

The private rented homes are the complication. The council cannot operate market rent housing itself, so those homes would have to stay with the company until they can be sold or transferred to a third party. The option 6 costing assumes that happens within two years. Staffing is also unresolved: the report flags possible TUPE implications and the overlap with STaR Housing, the arm’s length body that manages the council’s own housing stock.

What it means for you

  • If you rent from Cornovii or bought a shared ownership home from it, the report says your tenancy and service should be unaffected, and that you must be kept informed. Nothing changes on Wednesday.
  • If you want to watch the decision, Cabinet meets at 10.30am on Wednesday 9 September in the Council Chamber at the Guildhall, Frankwell Quay, Shrewsbury SY3 8HQ. Seats are limited and the council asks you to email democracy@shropshire.gov.uk to reserve one. The meeting is normally live streamed.
  • If you were expecting homes on one of the paused sites, the recommendation is that they are sold on the open market or transferred to the council, not built out by Cornovii.
  • On your council tax, the estimated closure costs are not yet in the budget. The report says provision will be made in the Medium Term Financial Plan going to Cabinet in November. Our council tax bands page has this year’s charges.

The report is careful to say the decision is not a judgement on Cornovii. It notes that other councils have run into the same trouble with trading companies, that “there are clearly lessons to be learned”, and that those lessons will be handled separately through changes to the council’s constitution and financial standing orders on arm’s length companies.

Sources