BABERGH council is expecting to lose out on nearly £5 million on a loan to redevelop its former offices.

It marks more than a third of a total £13.7 million loaned to Babergh Growth Limited to turn the council's former Hadleigh headquarters into homes.

The company – a joint venture between Babergh District Council and Norse Group Holdings Ltd – is in the final stages of delivering 49 new homes at the Corks Lane site, known as Bowlers Croft.

A treasury management report presented to a joint committee on Monday said the authority was not expecting around £4.8 million to be paid back.

The council cited increased construction and delivery costs, as well as changes in housing market conditions, as the reasons behind the figures.

It said the scheme was now practically complete, with the full outcome expected later in the financial year, when the remaining 60 per cent of properties are sold.

Despite the loss, the authority said the development had delivered wider regeneration benefits by 'helping to transform a previously underutilised area, provide new high-quality homes, enhance the local environment and support the longer-term economic and social vitality of the community'.

The scheme followed Babergh District Council's decision to relocate its headquarters to Endeavour House, in Ipswich, in 2016.