Council takes action to help its struggling housing company Aequus

Bath & North East Somerset Council has stepped in to help its housing company, Aequus, which is struggling financially.

The Guildhall in Bath

The decision, taken by the council’s deputy leader and cabinet member for resources Councillor Mark Elliott, will in particular support the local authority’s Bath Quays North project to redevelop Avon Street and Green Park Road car parks, and protect the company’s directors from personal liability,

Aequus Group Holding Ltd delivers housing development and related services through its subsidiaries Aequus Construction Limited (ACL) and Aequus Developments Ltd (ADL).

Since 2016, it has delivered 280 homes and generated more than £6 million for its sole shareholder, the council.

The company has diversified activity to support neighbouring councils deliver sites in South Gloucestershire and North Somerset.

In addition, it has also actively pursued third-party sites that could be acquired from other public sector bodies, including the NHS or from the open market.

Aequus holds some limited reserves and a working capital facility to progress pre-development opportunities on third party land.

But according to a report published on the council’s website, the company has experienced “significant challenges” in delivering the business plan in 2025/26 with “unfavourable market conditions” impacting on construction activity and depleting company reserves as construction and subsequent house sales have not progressed.

The council is taking action to maintain the company whilst it works through the issues and resumes construction activity.

The time-limited indemnity and related measures support priority housing delivery, including affordable and social rented homes at Bath Quays North, protect directors from personal liability, support the going concern assessment, and allow the council to review Aequus’ future role, governance and financial sustainability.

Aequus’ sustain business plan resets cashflow and income to return to profit over the next three years.

As part of the plan, the company has taken measures to reduce its staffing and operating costs by more than 20%, including staffing reductions and a move to shared accommodation at the council’s Keynsham Civic Centre.

A report on the council’s website says a “limited number” of sites are more secure at the present time: “This includes two sites which are outside council reliant pipelines and the Bath Quays North site which has achieved planning permission.

“These sites, which are all in B&NES, have the potential to deliver over 130 units including 60 affordable homes.”

To further mitigate challenging market conditions and to deliver the council’s priority to build affordable homes, the council is applying to Homes England for funding to deliver 50% of Bath Quays North as social rented affordable housing, delivered by Aequus Construction Ltd, for retention by the council.

Homes England launched the new Affordable Homes Programme on 1st April 2026, enabling the council as a Registered Provider to bid for affordable funding.

A portfolio of 420 homes, including delivering 50% affordable provision on Plots 6-7 Bath Quays North, supports the council’s objective. In order to achieve this, land and development funding will be provided by the council direct to ACL, assisting in maintaining continuity for pre-development services and construction.

An initial £156,333 of funding will be provided directly to Aequus from the council’s existing 2026/27 Bath Quays North approved capital budget.

The 2027/28 budget will need to be uplifted by an equivalent amount, funded by a receipt from Aequus, when these liabilities are returned to them once the land transfer and development business case are approved.

In addition, the LLP (limited liability partnership) has incurred overhead costs of £181,677 to date. It is proposed to fund these costs from the council’s commercial income risk reserve as a one-off in 2026/27 to enable the company to lie dormant in line with the sustain plan.

The report says the council has received independent financial and legal advice that Aequus is solvent, and the council’s corporate director for housing and capital delivery says the indemnity does not amount to a subsidy and is being provided to the board of directors as a “reassurance” that they will not be exposed to any personal liability.

Pausing of dividends will create a financial pressure on the council of around £0.65 million per annum. In 2026/27 it is proposed that this pressure will be funded from the commercial income risk reserve.

The pressure will then be considered as part of the 2027/28 and future years’ budget process.

Some “strategic and financial information which could prejudice the commercial interests of the parties if disclosed at this time” has been exempted from the report on the council’s website.

The deadline for a ‘call-in’ – the right of councillors to scrutinise the cabinet’s decision-making process – was on Monday 3rd August. No such call-in was made.