Opinion: How innovation and creativity can meet housing needs
Published by Max Salsbury for 24dash.com in Local Government and also in Development, Housing
New construction orders down by 27%
By David January, housing advisor, SDS
Councils are looking beyond the HRA to develop their new building programmes for two reasons.
First, yes, the HRA self-financing settlement has allowed 170 stock-owning councils to address investment in their stock, but, that said, a large number of these councils have reached their borrowing cap.
Secondly, the new HCA affordable housing programme since 2011 has provided much-needed rented homes, but these are not always going to those most in need.
The government is offering a new programme of £300 million for additional borrowing for LAs to give them more headroom, but at the same time an independent review into council housing, which it commissioned, eliminated any hope of ditching the borrowing cap.
This had the immediate effect of kicking into the long grass any emerging political aspirations of LAs, using unfettered borrowing to curry political favour. At least until after the election next year.
Councils have therefore moved forward and responded to local need by setting up local housing companies, using their general fund or outside the council’s finances, as well as working with partners to create special purpose vehicles free of the council’s financial straight jacket.
Councils have shown a range of innovation and creativity – for example, the Manchester partnership between the council, Greater Manchester Pension Fund and the HCA to develop 240 homes for rent and sale on five sites. A contractor is chosen to develop the homes under a design and build on LA land using capital funding from the pension fund with the council taking an equity stake in the for sale homes.
In London, Barking and Dagenham, Southwark and Newham Councils, amongst others, are developing LA new build through SPVs or LA companies. This allows them to choose the types of housing and the terms that are on offer to tenants, shared owners or owners of the sale homes. It also addresses the important issue for some councils of no statutory right to buy as the tenancies will be assured rather than secure.
Newham aims to provide 3,000 homes with affordable as well as market rents, allowing it to cross-subsidise the developments. Southwark, with 54,000 homes, aims to provide over 10,000 homes over the next 30 years using a range of funding streams.
Whilst the innovation is to be applauded, the LGA and other bodies have argued that in order to meet the growing need for homes at genuinely affordable rent that the borrowing caps should be removed completely.
At the moment this does not appear likely in the short term, as the government has stated that the cap is ‘necessary to ensure we manage overall levels of public sector spending to help reduce the national deficit’.
So, councils will continue to meet housing needs in these creative ways.
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