Ten of the most innovative council-run housing projects
0Reports of the death of local authority house building have been greatly exaggerated. Mark Smulian looks at the resurgence of council activity in constructing new homes – for both social and private markets – and highlights ten inspiring projects from across the country.
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The 1890 Housing of the Working Classes Act first allowed local authorities to provide homes, beginning a long and proud period of house construction by councils. Nearly 100 years later, the 1988 Housing Act switched funds for building homes to housing associations, and immediately ended councils’ leadership role in house building.
Or did it? Councils built little in the 30 years following the 1988 act, but were given a boost in 2018 by the lifting of the Housing Revenue Account (HRA) borrowing cap. This had restricted investment by councils in building new housing, and its abolition was said to herald a “new generation of council housing”.
Councils have subsequently been drawing on borrowing against reactivated HRAs, grants from Homes England, rental income, right-to-buy receipts and planning gain deals with developers. Other councils have launched non-HRA investments.
Many of the new projects involve different housing types – such as social rent programmes combined with low-cost home ownership or market rent or sale properties that cross-subsidise the social rent output.
Last year, the Local Government Association and the Association of Retained Council Housing called for a programme to build 100,000 new homes each year.
They argued that, in addition to being desirable in itself, other government policy objectives could be better achieved with this large supply of social housing. For example, moving families reliant on benefits from private rents to social tenancies would save the Department for Work & Pensions money that would more than cover funding gaps for council housebuilding.
It remains to be seen whether government will accept this “fiscal gain” argument, but many councils are already showing what can be done. Here are ten of the most innovative schemes.
1) Manchester City Council
A wholly-owned council company, This City has been created to deliver a first phase of 204 homes, with at least 54 being let at an accessible rent, at or below Local Housing Allowance levels.
This model was adopted to maximise housing choice and supply, while giving the council greater control over new homes and tenure types.
The council is expected to finance house building through a mix of debt and equity in the company, which the council will fund through the Public Works Loan Board. Interest and debt repayments from This City will be used to service the debt.
2) Greater London Authority (GLA)
Although not itself a housing authority, the GLA’s Building Council Homes for Londoners programme saw 4,689 new council homes started in 2020-21, a level unprecedented in 40 years. Most London boroughs took advantage of grants from this.
Mayor Sadiq Khan has agreed with the Government to see 79,000 new affordable homes started over the next five years, mostly for social rent and delivery by boroughs. He has said these homes will meet demanding environmental standards.
3) London Borough of Sutton
This generally prosperous outer London area saw 146 affordable homes completed, including 57 council homes, in 2020-21, mostly in town and district centres in line with a policy to develop “suburban heartlands”. The council resumed building in 2018 and has completed 93 homes.
These developments are funded through HRA borrowing, GLA grants or ‘right-to-buy’ receipts. Some of the cost will be repaid from future rental income, giving no impact on council tax. Sutton has concentrated on redeveloping garage sites.
4) Stroud District Council
Stroud has a significant shortage of affordable homes and high average house prices.
The council built 239 homes in 2014-19 mainly following the demolition of life-expired non-traditional properties.
It stopped building when it reached the HRA borrowing “cap” but resumed following the abolition in 2018. Most new building is focused on redeveloping land occupied by decommissioned sheltered housing, garage sites and other council land holdings.
Stroud has approved a budget of £22.8m for a further 111 new homes over four years.
5) Stoke-on-Trent City Council
The council approved plans in 2020 to borrow to provide 1,370 new homes.
It said most would be on sites with identified need, including the provision of new older people’s housing, supported housing and smaller, one-bedroom homes for single people.
After allowing for properties already delivered, there will be 1,241 new homes built over the 10 years to 2030-31 at a total cost of £190.5m.
This will be financed from right-to-buy receipts, a Homes England grant of £51.6m and borrowing of £138.9m.
6) Aberdeen City Council
Work has finished on 160 flats in two phases of the council’s programme to build 2,000 new council houses across Aberdeen to address a long-term shortage of affordable social-rented housing in what the council says is Scotland’s largest council housing project.
These homes are designed with high energy efficiency and support for walking and cycling, helping the council to achieve its policy objectives.
The council has used developer contributions and council tax income, including a levy on long-term empty homes.
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7) Wrexham County Borough Council
Wrexham is to invest £58.9m in its stock in 2021-22 and the emphasis so far has been on refurbishment.
But it also uses a ‘Build and Buy’ programme, which will see the council both build new homes and acquire new or existing properties to increase the housing stock. Build and Buy has £18.2m allocated for the five years to 2026.
Purchases will include former local authority stock sold under right-to-buy in the past and homes bought off-plan from local developers.
8) Gateshead Metropolitan Borough Council
Gateshead plans to invest £1.1bn in housing, which includes building 400 new homes over 10 years.
The council took its arm’s-length management organisation back in-house last year. It says its HRA business plan covers some of the cost of building, but support from public funding will also be required.
The council plans to balance its HRA by investing in its viable housing stock while divesting unpopular properties. Gateshead says its 30-year HRA business plan is fully funded.
9) Wolverhampton City Council
New council homes will be built on the council’s 1960s Heath Town estate, with a mixture of two- or four-bedroom configurations.
The council has implemented a local lettings plan for more than 500 new affordable-rent council homes due to be built by 2024.
Priority will be given to tenants on the transfer list, with the remainder for those on the emergency housing list.
Half the homes for existing tenants will be allocated according to their local connections to promote stable communities.
10) South Cambridgeshire District Council
The council builds new homes for both affordable rent and for shared ownership. It has built more than 40 homes and has 180 in progress.
As an area with high rents and property prices but also high demand for affordable homes, the council has sought to help residents by setting up Ermine Street Housing, a wholly-owned company that buys properties for letting at what it calls “competitive market rents”.
The income generated from these rents provides an additional income stream to the council.
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