Viewpoint: Why some councils are building homes again – and why some aren’t

Many local authorities are now directly providing housing. In a research project, currently being undertaken by UCL on behalf of the National Planning Forum and the Royal Town Planning Institute, we are exploring what is motivating local authorities to engage in direct provision of housing across all tenures and housing types, writes Janice Morphet.

From the initial literature review and round tables (primarily with local authority officers), it seems likely that much of the pressure to engage in direct housing provision is coming from council leaders and portfolio holders, many of whom are frustrated at seven years of austerity and have a desire to return to basic local authority functions as understood by their communities.

Many officers are supportive of these initiatives and we have heard of the opportunities and challenges in returning to this agenda. Some officers told us about the emergence of innovative ways of working on housing – frequently associated with open plan offices – where barriers between different professional teams are being broken down. Others have said that reducing levels of funding have led them into problem-solving approaches for issues including dealing with homelessness, generating income from assets and dealing with sites where communities frequently report fly-tipping or antisocial behaviour. Many local authorities are also very focused on providing additional housing for their communities. These problem-solving approaches have generated wider officer experience and skills that are leading councils to incrementally increase direct housing provision year-on-year.

The methods of providing housing are as various as the problems and the councils that are pursuing them. All types of council are involved in these activities across England, including small and large, unitaries, mets and districts, counties and London boroughs. The methods used frequently start with estate regeneration and hidden homes programmes, redeveloping garages or putting on extra floors or building wings. This type of project is funded from the Housing Revenue Account, although only 199 local authorities are registered with the Homes and Communities Agency to provide housing through this means.

All local authorities in England can establish a wholly-owned company to develop housing that can be sold or let for any level of rent, from social to market, using the powers in the 2011 Localism Act. In December 2016, Inside Housing found that over 125 councils had established a company to develop housing or intended to do so. Some councils are in receipt of increased levels of right to buy income and while only 30 per cent can be retained to replace sold homes, that must be used within 3.25 years. Many councils do not have the mechanisms to readily use these funds for housing and we have been advised that many councils have returned their funding to the Treasury. However, Hackney has just announced that it will be making available unused RTB income to local housing associations if they can provide affordable homes within the defined period and others may now follow this approach.

While many councils are moving ahead on this agenda, we have also heard doubts expressed by some officers. It has been suggested to us that, in some councils, finance and legal officers appear unwilling to use 2011 Localism Act powers, while others, particularly in housing services, appear to be reluctant to move away from the HRA model – perhaps for fear of losing control to a housing company. Some planners consider that it is the role of developer to provide housing and not that of the local authority, while some property officers may be keener to sell land including garage sites on estates to generate sale income, but are doing so without the benefit of planning consent or an assessment of the development value to the council’s portfolio in the longer-term if these sites were developed to generate rent.

Our research is trying to find out more about the motivations, challenges and achievements of local authorities in directly providing housing. In addition to the survey that we are currently undertaking (see below) we are also compiling a one-off information base on all direct local authority housing activity in England that we can find and this will be published on 4th December 2017.

If you work for a local authority, you can contribute to this one-off information base by completing the survey at: https://www.surveymonkey.co.uk/r/F3KVDYB

Janice Morphet is a Visiting Professor at the Bartlett School of Planning, UCL. With Ben Clifford, she is researching local authority direct provision of housing on behalf of the RTPI and the National Planning Forum.

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