COLCHESTER Council is hoping to set up a limited company which will allow the authority to build homes despite Government restrictions.

Details of the new company will go before councillors next week.

Documents show it will be called Colchester Commercial (Holdings) Limited (Colchester Commercial).

Some £250,000 of New Homes Bonus money will be used to set the company up.

Council bosses hope the firm will allow the authority to build homes and free it from central Government borrowing restrictions which have been placed on local authorities.

The council has identified four potential sites across the borough which it owns and are suitable for development.

About 70 per cent of the new homes on the sites would be sold at market value, in order to make the scheme financially viable, with 30 per cent being retained as social housing.

Work on the first plot could start next year.