Two district councils are hoping to raise much-needed funds by investing in property.

South Cambridgeshire DC plans to buy 40 homes using £7m of borrowed money to kick-start its property company.

The council, which had its central grant cut by 24% this year and is expecting further reductions, hopes the Government's funding cuts will be offset by income from South Cambs Ltd.

Cabinet member for housing, Cllr Mark Howell, said: ‘With the amount of funding from Government reducing, investments in projects such as this housing company can secure a significant income in the years ahead which will help support the services people rely on.'

Nearby East Herts DC is looking at reinvesting £60m of its money into property to get better returns.

The council's executive member for finance, Cllr Michael Tindale, said: ‘It could certainly represent a significant departure in our investment strategy that hasn't changed for some years.

‘The problem is it's not producing much of a yield at the moment.  It's achieving 1%, which is derisory.  Returning 1% on investment isn't sustainable long-term.

‘The idea currently is to split the funds so that one-third goes into the money market, another third goes into commercial property and the final third goes into private property.  This is really about improving our investments to support the revenue programme for housing going forward.'