South Cambridgeshire Council is planning on lending £20 million to a housing company in a bid to reduce homelessness.

The plans, set to be discussed by South Cambridgeshire District councillors, would see the funds go to Ermine Street Housing, allowing them to buy homes from the open market.

The firm, which currently owns and rents out roughly 530 properties throughout Cambridgeshire, would buy new properties in South Cambridgeshire for use as temporary accommodation for the homeless.

Councillor John Batchelor, South Cambridgeshire District Council’s lead cabinet member for housing, said: "This loan would help to provide additional local temporary accommodation for single people who become homeless.

"This would reduce the amount we need to spend on expensive bed and breakfast accommodation under our homelessness responsibilities.

"Times continue to be tough for councils, as we need to do more with less.

"Innovative schemes like Ermine Street help ensure we continue to be financially secure whilst providing vital frontline services that residents want and need."

Last year, Ermine Street Housing provided the council with an income of £3.6 million, a figure expected to rise to £4.25 million this year.

If passed by the Ermine Street Housing board, the loan is set to be disbursed over the next two financial years.