Harrogate Borough Council said the council-owned housing company, which will build properties available to buy and rent, will allow the council to manoeuvre with greater freedom in the local property market as a private business – including allowing the authority to operate as a private sector landlord.

Ahead of approving the proposal, cabinet members said the move would allow more flexibility with building housing, including affordable homes, and would provide the council with additional revenue streams.

Cabinet member for housing and safer communities, Councillor Mike Chambers, said he was confident the company would be a “profitable venture” for the authority.

He told the Harrogate Advertiser: “We virtually have now a housing company on the horizon which I think will prove a profitable venture for this council.”

Fellow cabinet member Councillor Graham Swift said “whilst the reality of this is probably slower than we want it to be”, it represented a significant step forward for the commercialisation of council.

Early outlines for the company are that council will provide equity and a working capital loan of up to £750k to get the business started.

The council will also provide temporary loans of up to £1m as necessary in the future – with council to act essentially as an “overdraft” facility.

The business plan for the company would see it up and running in 2020-2021.

A council report on the proposal confirms that the council has already explored the setting up of subsidiary companies to compliment the housing business, including the establishment of a letting agency.

The council initially approved template documents for a company in December 2015.

Among the details set out are that the company would have its own legal identity and have the benefit of limited liability.