Nationwide will take on the role of a housebuilder to construct around 250 homes in Swindon at a site three miles from its head office.
The building society will work with Swindon Borough Council and people living in the area over the next six months to decide on the number and mix of properties to be built.
The area is known as Oakfield Campus, a brownfield site formerly occupied by the University of Bath.
The plan is to start building in 2019 and have homes of mixed tenure, with some to buy and some to rent.
Stephen Uden, Nationwide’s director of social investment, said: “We want to show that it’s possible to develop quality homes at fair prices, challenging existing thinking in the sector and helping to inform the national housing debate.
“We’re aiming to demonstrate how, by putting people at the heart of housing, regenerating areas and reinvesting any profits, communities can be created, delivering the homes people really want and need.
“We are in the early stages of this process and before we do anything else, we will be working closely with local residents and Swindon Borough Council to understand how the initiative could benefit the wider local community.”
Any profit made will be reinvested in other community activities like parks, playgrounds and community centres.