Nationwide Building Society is to directly build about 200 “fair price” homes for sale and rent for the first time with a scheme in Swindon.
But the mutual said it was only tiptoeing into property development and had no plans to become a volume housebuilder.
The £50m investment in a five-hectare (12-acre) site not far from its corporate headquarters in the town comes after customers asked Nationwide to do more to support practical new approaches to housing.
Traditionally, building societies have offered mortgages but not directly developed homes. Nationwide said it would work with the local community on the design of the not-for-profit project, with building expected to start in 2019.
The scheme is designed to break even through sales and rentals, and any profit will be reinvested in other Nationwide projects. The building society did not give projections about what prices or rents would be.
Joe Garner, its chief executive, said: “We aim to show that it’s possible to develop quality homes at fair prices. By challenging existing practice in just a small way here in Swindon and ensuring the views of locals shape our development, we hope to make an innovative contribution to the national housing debate.”
Nationwide’s move is the latest corporate entry into the residential housing market. After the budget last week, Legal & General said it would accelerate the roll-out of prefab houses made at its Leeds factory, with plans to build 1,500 homes by the end of next year and as many as 70,000 over the next decade.
The build-to-rent sector is also booming, with City investors and pension funds banking on secure, long-term rental incomes to beat interest rates and inflation. The estate agent Knight Frank predicts that £50bn will be invested in the sector by 2020.