Council leaders are ready to lend £4m to a housing firm which sparked controversy, so more homes can be built on the edge of Norwich.

Norwich City Council's full council is due to agree to make the money available to Norwich Regeneration Ltd (NRL) for the third phase of house building on the Three Score site at Bowthorpe - where 1,000 homes will ultimately be built.

NRL is the council's own property development company, set up to provide more housing and generate income for the council.

The loan would help enable 24 new homes to be built on the site, which would be sold privately.

A further 53 affordable homes would also be be built by the council, using money from its housing revenue account.

There were question marks and criticism of the first tranche of housing at the Rayne Park development in Bowthorpe.

The first scheme had lost almost £6m, with opposition Green councillors unhappy at what they said was a lack of transparency and scrutiny of NRL.

But a number of changes, including appointments of directors and the creation of a scrutiny panel, means the Greens are now far more comfortable with the way the company is run.

The city council's investment in NRL consists of £10.2m in loans and £3.9m in equity shares.

The company repaid £5.5m of loans in March and April and a further £4.5m is due to be paid back in this financial year.

So, the council is prepared to lend £4m to the company for the latest scheme.

Norwich-based Savills has undertaken due diligence and concluded that there should be "sufficient margin" generated for investment to be justified.

They said: "There does appear to be a positive direction of travel within the business, which can only continue if it is supported through the identification of sites which enables NRL to allocate its central costs against a larger number of projects.”

Norwich Evening News: Paul Kendrick, Labour's cabinet member for resources on Norwich City Council.Paul Kendrick, Labour's cabinet member for resources on Norwich City Council. (Image: Archant)

Paul Kendrick, Labour's cabinet member for resources, said: "NRL has turned out to be a success. It did have its troubles, but we have turned things around and we are keen to get these homes built as soon as possible."

Sandra Bogelein, leader of the Green group, said: "I am now much happier with the way the company is being run. They have addressed a lot of our concerns."