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Newport City Council could sell some of its properties to a housing association and use the money to invest in “innovative” support for people facing homelessness.

The local authority is considering selling five assets to Pobl for a total of £974,100.

The properties – in the wards of Allt Yr Yn, Pillgwenlly and Stow Hill – are already leased to the association, which is a ‘strategic partner’ of the council for housing and related support services.

If the move is approved, the income could be ring-fenced to create its own “transitional housing stock as an alternative to high-cost temporary accommodation”.

Currently, the provision of temporary housing is among one of the council’s biggest pressures, and this year’s draft budget proposals include a plan to increase funding by another £813,000.

“Newport, like many places in the UK, has been facing significant pressures because of a rise in demand for affordable accommodation against a decrease in the supply of such housing,” said Cllr Saeed Adan, the cabinet member for housing.

Recent cabinet reports show 601 households were in temporary accommodation halfway through the current financial year – a rate above the council’s targets and “driven by the continued increase in the number of single people requiring homelessness assistance”.

The report also noted the number of positive outcomes for people who are either homeless or at risk of homelessness had “dipped”, for reasons including the complexity and “precarious” nature of many applicants’ housing situations, as well as a reduction in the number of homes available.

“We are continuing to look for innovative ways to find housing solutions for local people, and this involves working with partners such as Pobl,” explained Cllr Adan. “The association already holds the leaseholds on these properties. The purchase of the freeholds will allow them to access further funds to sustain and increase their supply of affordable homes in the city.”

He added: “It is proposed to use the funds raised from the agreement to potentially create the council’s own temporary accommodation as an alternative to more expensive provision, such as hotels and bed and breakfast.”

Cllr Rhian Howells, the cabinet member for assets and infrastructure, is expected to approve the sale of the properties later this month.

Any decision to ring-fence the proceeds of the sale will have to be approved by cabinet members.