A lettings agency set up by a council to buy properties and let them out at open market rates has failed.

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Reading’s Labour council blames “changes to local authority lending rules, the housing market, interest rates on borrowing, and other external factors have in recent years affected the viability of the company.”

The agency Homes For Reading has sent out letters to its tenants who pay the same rent as the average rental prices offering help and support to find new accommodation when their tenancies are ended, which for some is in two years’ time.

The council purchased 101 homes over eight years and will be ported across to the council’s social housing stock when each of the renter’s tenancies end.

The BBC interviewed one tenant who said that since their tenancy started in 2018 they had paid the council £100,000 in rent.

The council told the BBC that Homes For Reading was funded by loans taken out by the council which is unable to pay them back “within a reasonable time”.

A council spokesperson says: “I am sorry for the disruption and inconvenience it may cause them. Officers from the council will be working actively with every one of our tenants between now and 2026 to help them find alternative suitable housing.

“We are committed to ensuring that they can all make the transition to other suitable homes with our support.

“Ultimately the difficult financial circumstances all councils now find themselves in mean we have a responsibility to look after our finances to support the provision of services that residents rely on.