Social Housing: Cap It All Off

Social Housing: Cap It All Off

Since August the Government has released its Social Housing Green Paper, announced £2bn funding for housing associations over the next decade to build more homes and plans to scrap the council borrowing cap. LABM garners opinion from across the sector.

The Government’s Social Housing Green Paper, released in August, aims to rebalance the relationship between landlords and residents, tackle stigma and ensure social housing can act as a stable base and support social mobility. Despite the green paper being widely welcomed, some question whether it will it deliver the new deal for social housing that is needed.

At the National Housing Federation Summit in September, Prime Minister Theresa May announced an extra £2bn for housing associations over the next decade to deliver more housing schemes and called for an end to social housing stigma. Responding to the Social Housing Green Paper, outgoing Chief Executive of the National Housing Federation David Orr commented: “For 40 years we have failed to build anything like enough social housing. It is time the country had a proper conversation about the role and importance of social housing in ending the housing crisis.

“Without significant new investment in the building of more social housing, it is very hard to see how it can be a safety net and springboard for all the people who desperately need it. Our ambition for the Green Paper is that it sets a course for a future where everyone can access a quality home they can afford. To do that we need to build 90,000 new social rent homes every year.”

In the LGA’s response to the Social Housing Green Paper, Cllr Blake highlighted the need to “reverse the decline in council housing over the past few decades,” stating that: “The loss of social housing means that we are spending more and more on housing benefit to supplement expensive rents instead of investing in genuinely affordable homes. It has also come alongside an increase in homelessness, with 79,000 families, and almost 125,000 children, stuck in temporary accommodation.”

Cllr Blake also said that government should “scrap the housing borrowing cap, and enable all councils, across the country, to borrow to build once more. This would trigger the renaissance in council housebuilding which will help people to access genuinely affordable housing.”

At the Conservative Party Conference in Birmingham in October, May announced that government would be lifting the borrowing cap on councils to help support more housebuilding. The announcement came as a complete surprise to the sector as there was no forewarning. Given that councils and industry bodies have been strenuously calling for an abolition of the borrowing cap since 2012, this news is extremely welcome.

Brian Berry, Chief Executive of the FMB says: “Local authorities have a strong interest in delivering new affordable homes and many would have the appetite to directly fund this, but have been frustrated from doing so by an artificial cap on their ability to borrow against their assets to build homes. In a victory for common sense, Mrs May has now signalled that the borrowing cap will be scrapped to allow councils to build many more new homes.”

Of the announcement the LGA’s Chairman Lord Porter said: “The speech by the Prime Minister shows that the Government has heard our argument that councils must be part of the solution to our chronic housing shortage. It is fantastic that the Government has accepted our long-standing call to scrap the housing borrowing cap.

“Our national housing shortage is one of the most pressing issues we face and it is clear that only an increase of all types of housing — including those for affordable or social rent — will solve the housing crisis. The last time this country built homes at the scale that we need now was in the 1970s when councils built more than 40% of them.

“Councils were trusted to get on and build homes that their communities needed, and they delivered, and it is great that they are being given the chance to do so again.”

Announcement welcomed

The Chartered Institute of Housing welcomed the announcement. CIH Director of Policy and External Affairs Gavin Smart commented: “This is excellent news and we look forward to seeing the detail. We have been calling on the Government to lift the local authority borrowing cap to help councils build more genuinely affordable homes so it’s great to see the Prime Minister listening to the voice of housing professionals.

“If we are to have any hope of tackling our national housing crisis, councils must play a critical role and this move will help them reach their potential. But of course it’s not just a numbers game — we need to make sure we are building the right homes, in the right places, at the right prices. That’s why it is so important to give councils the tools they need to build more truly affordable homes for social rent.”

Ruth Davison, Executive Director of Public Impact at the National Housing Federation, added: “This is a very welcome decision by the Government. For years, everyone who builds affordable homes — both councils and housing associations — have argued this cap on council borrowing puts the brakes on building more homes.

“We know that we need to build 340,000 homes in England alone every year. Last year, only around 160,000 were built. We are so far off building the number of homes we need that councils and housing associations must be able to do more if we are going to solve the housing crisis.”

As always, the ‘devil is in the detail’, however since the announcement at the Conservative party Conference no further details have surfaced. Some in the sector have concerns that the decision might be diluted by the time it becomes official policy or will be subjected to long delays. It is unlikely that the finer details will be released before the Budget. Tom Kenny, Policy Officer of the Royal Town Planning Institute, asserts: “Having local authorities back as key players in the housing market is vital to tackling the housing crisis” and believes “the Prime Minister’s move to scrap the HRA borrowing cap needs to be rolled out with no further delay — this was the top recommendation of our research into local authority housebuilding.”

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