Around 23,000 new affordable homes will be delivered through a £1.67bn government investment deal – including at least 12,500 social rent homes in high cost areas in a move to support families struggling to pay their rent.
Communities secretary, James Brokenshire, also heralded a ‘new generation’ of council housing by inviting councils to bid for a share of £1bn extra borrowing for home building – a raise to be split equally between London and the rest of England.
Councils have requested this extra financial flexibility, which will be allocated to those in areas with the highest affordability pressures.
Welcoming the boost, the LGA wants more.
Cllr Martin Tett, LGA housing spokesman, urged government to go further and scrap the cap on council borrowing completely – as advised by the Treasury Select Committee .
“This would free councils to make the investment decisions that will boost housebuilding in their local areas unencumbered from rules and regulations created in Whitehall,” said Cllr Tett.
“The LGA has been clear that councils must be given greater freedom to borrow to build desperately-needed new homes in their local areas and play a leading role in solving our housing shortage,” he said.
A figure of 300,000 homes built a year is taken as a baseline to keep up with demand.
The last time this country built the amount of homes it needs each year, councils were responsible for 40% of them.
Councils looking to resume this historic role say they need to borrow to build with no added restrictions, keeping 100% of receipts from Right to Buy sales with greater flexibilities on Right to Buy discounts to local communities.
Localis interim chief executive, Jonathan Werran, harked back to Harold MacMillan’s successful tenure as housing secretary, saying the £1.67bn was a move towards a mixed economy when state and private builders didn’t crowd each other out as much as mutually reinforce each other’s ambitions.
What worked well in the years following MacMillan’s tenure could work again if government “empowered, resourced and directed” councils accordingly – meantime, the situation stayed challenging, Werran said.
“Last year just 1,490 homes were started by local authorities – suggesting the majority of local government is not set up for the large-scale construction of housing anymore.
“In context, an extra 12,500 more council homes built per year would mean the sector uprating its output very considerably,” he said.
The £1.67bn announcement defines an area of affordability pressure as where there is a difference of £50 more per week between average private sector rents and social sector rents.
And the overall package is pitched as part of the government’s £9bn investment in affordable homes, £1.67bn of which was announced in March 2018 for London.
Government plans to build 1.5 million new homes by 2022 through planning reform and targeted investment.
Brokenshire said the latest initiative was intended to “secure” delivery of an additional 23,000 affordable homes- the majority in defined high-cost areas – and new generation council housing.
A bidding process will now begin for both programmes, with successful bids for the affordable homes funding notified throughout the year, with the list of l councils succeeding in having their borrowing caps increased announced in due course.
By government figures, over 378,000 affordable homes have been built since 2010.
The funding is intended to include homes let at social rent, alongside other tenures such as affordable rent and shared ownership.
Dipa Joshi, director at Assael Architecture, said that incentivising councils to build had to account for attention to the quality of design and the management of the new developments.
“In order to learn from the past, where well-designed and modern council housing developments fell prey to poor management, government and local authorities must take into account the whole life cycle of these new homes, prioritising the build quality and social value of each scheme,” said Joshi.
“The quantity of affordable homes delivered is undoubtedly important, but this should not come at the cost of sacrificing the build quality,” he said.