Budget failed to to take the brakes off councils building homes

Government needs to invest significantly more in genuinely affordable homes and be far bolder in its support for councils if it is to meet the ambition to deliver 300,000 new homes a year, according to our major new study.

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The new report was launched in parliament a couple of days after the chancellor delivered the budget.

The budget put housing centre stage – which was welcome – but failed to give councils the powers or the funding they need to tackle the housing crisis.

Through running seminars, pilot workshops and producing case studies over the past ten months we found councils right across the country can and want to do much more to tackle the housing crisis in their local authority areas, from direct delivery of social-rent homes, new local housing companies and joint ventures through to bringing empty homes back into use and supporting community-led housing.

The study, which involved an online survey of 76 councils, found 76% of the councils that responded already had or were considering setting up local housing companies on their own.

A further 56% of the councils already had or were considering setting up local housing companies as a joint venture.

However, alongside revealing strong appetite for innovation in delivering new homes, the research highlights that many councils are concerned about their ability to deliver genuinely affordable homes available at social-rent levels.

The survey found social rent is the most in-demand housing tenure among over half of English councils, although in 2016/17 just 5,380 new social rented homes were built in England.

The survey also revealed a disjunction between councils having identified a pressing need for more social-rented homes in their local areas and their motivations for setting up new models of housing delivery which was often to generate income.

So, while the evidence has shown there are new approaches to enable councils to build more homes, many of these approaches do not meet the need for genuinely affordable homes at social-rent levels.

When asked what would encourage councils to build more affordable homes 80% of councils that responded to the survey identified increasing grant levels as a priority and 2/3 of councils said lifting the Housing Revenue Account (HRA) borrowing cap would allow them to build more homes*.

Based on engagement with over 200 council representatives from more than 130 councils during the course of the project, the report makes a series of recommendations to government including calling for significantly more investment in homes available for social rent and other affordable tenures if we are to deliver the step change necessary to meet our nation’s housing need.

Alongside calling for a significant increase in funding for affordable housing, and the additional £2bn in the budget is a welcome start, councils are sending a clear message to government through this research the HRA borrowing cap should be lifted for all stock-holding authorities to help them maximise their potential as a major contributor for meeting the shortfall in the supply of affordable housing.

If government is serious about the commitment to deliver 300,000 homes each year, then it must take the brakes off councils so that they can play a more active role in delivering the homes and communities we need.

* which the government has done in the Budget, although this is limited to areas with ‘high affordability pressures’.

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