It is essential we support councils to build homes again in much greater numbers

It is essential we support councils to build homes again in much greater numbers

There was much to commend in the Government’s Housing White Paper, at least in its overall vision, says David Pipe, Policy Officer at the Chartered Institute of Housing (CIH), but it’s essential councils are supported to build homes again in much greater numbers.

Critics have suggested that it was light on detail in a number of areas, and was not as bold as it could have been in terms of some of the specific policy proposals included (or perhaps more accurately, not included). Though there is some truth in this the white paper still represents a significant change of direction.

Overall it is clear that government intends to move away from its exclusive focus on home ownership, instead recognising that there will always be a significant number of people who cannot buy. In addition government is intending to focus more on increasing levels of house building over the longer term, and less on supporting individuals to pay more for houses now through schemes like help to buy. This shift in emphasis is very welcome.

However, if government is to be successful in actually delivering it, they will need local authorities to play a much bigger role in building new homes — something that is clearly acknowledged in the white paper itself. During 2016 councils completed just 2,000 new homes, compared to 24,000 completed by housing associations and 115,000 by private developers.

The barriers currently preventing councils from building more are already well known. Borrowing caps and recent changes in rent policy greatly undermine their ability to borrow to invest. We estimate that at the point that local authority self-financing was introduced in April 2012 councils could potentially have built up to 550,000 new homes over a 30-year period. Following the introduction of the 1% rent reduction, this was reduced to just 45,000.

Revenue source
Meanwhile receipts from Right to Buy sales should provide a further source of revenue for councils to invest in new homes. However scheme rules mean that much of that money is instead returned to the Treasury, while the funding that is retained locally is subject to a number of restrictions which, in practice, often make it very difficult for councils to actually spend it.

Government appear to have ruled out any across the board changes to borrowing caps or to the 1% rent reduction. However the Housing Minister has left the door open for individual councils who are prepared to make concrete commitments to build to strike bespoke deals, and we hope that there is scope for these issues to be addressed within those arrangements.

Meanwhile on Right to Buy receipts, the minister has expressed a willingness to look again at the scheme rules to enable more of the homes that are sold to be replaced. He could start by making two very simple changes; by letting councils keep 100% of the money raised from sales and by removing unnecessary restrictions on how this is spent.

In setting out a long-term vision for housing policy the Government has taken the first step towards addressing the housing crisis. Supporting more councils to build, in much greater numbers, will be essential if they are to make that vision a reality.

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