Councils build homes again as the crisis deepens

A survey of UK local authorities has found that 98% have significant housing need, with many taking matters into their own hands. Paul O’Brien, chief executive of APSE, who commissioned the research, reveals the councils who are innovating to solve the housing crisis

There is a plethora of academic literature supporting the importance of decent homes to build resilient, healthy communities, deliver better educational outcomes and create the conditions to support stable employment.

Investing in decent homes is, in APSE’s view, a de facto investment in the future of our communities; however, for decades, housing has been a festering public policy failure. Successive governments have attempted to put a plaster over the gaping wound of housing need. We need a radical shift in housing policy and that is what our new research paper, written and researched by the Town and Country Planning Association (TCPA) in conjunction with APSE, is calling for.

To place the housing crisis into context, buying or renting a home is increasingly unaffordable for ordinary working people. The average house costs almost eight times average earnings. Underlying this we know that those people relying on the private rented sector for a home has doubled since 2000.

This is as a direct result of the loss of council homes, and a lack of new council homes being built. It has created a classic economic condition where demand is outstripping supply leading to price inflation and poorer quality homes among those available to rent. For those wanting to buy, the policy shift towards so called ‘affordable’ homes offers little comfort. The bar is simply set too high; even where the mortgage may be afforded the cost of buying a home creates a prohibitive deposit burden – made even harder for people to save for, given many are already living in high rent accommodation.

While the recognition in the recent housing white paper, of the housing market being in crisis, was welcomed, this comes after six years of far-reaching legal and policy changes to housing, planning, benefit provision and regeneration funding. When taken together the overall impact has changed the ability of local authorities to deliver affordable homes and fettered the wider role of councils in placemaking. We wanted to explore, however, how councils are nevertheless rising to the challenge of delivering the new homes our communities desperately need.

Councils are building homes again
One area of growing interest is the development of local authority housing companies. While there are many different models, such as regeneration companies to those with mixed developments of homes for affordable and market sale or rent, the underlying ethos is that local councils have decided they can no longer wait for the housing market to correct itself. Through using a company model, councils are now starting to the build new homes communities desperately need.

In South Cambridgeshire the District Council has established Ermine Street Housing. Starting back in 2013, the council agreed to invest £7m in a pilot project taking the form of an independent limited company, but wholly owned by the council. The company portfolio included 160 homes purchased and rented at market rents, with longer term tenancy options.

In November 2015, a decision was made to expand the business and invest a further £100m over the following five years, to buy an additional 500 properties. Ermine Street Housing now owns housing stock outside the district in Suffolk, Northamptonshire and Peterborough. The housing company has helped the council to meet a number of wider objectives including generating a revenue stream enabling the council to deliver services at a time of reduced government grant. There are also clear regeneration benefits as well. By helping to provide good quality, flexible rental housing Ermine Street Housing has supported local businesses and their employees.

Housing companies however are not limited to districts and even in heavily populated areas like central London the housing company model is proving a useful mechanism.

In Lambeth, an inner London borough which combines areas of affluence with areas of severe poverty and deprivation, the council has witnessed rapid population growth, expected to reach 357,000 by 2030. As one the most densely populated areas in the country there is a very large shortfall of social and affordable homes. Lambeth’s local plan was adopted in September 2015, with its first strategic objective being to increase the overall supply of housing by at least 17,925 additional dwellings, including a 1000 new council homes, and increase the mix and quality of housing to address the all types of need. This will be delivered over the next four years through a combination of initiatives, including estate regeneration, small sites development and specific housing projects.

To help deliver Lambeth’s priorities, the council is establishing Homes for Lambeth, a special purpose vehicle wholly owned by the council. As well as building new council housing, Homes for Lambeth will provide a welcome intervention in the private rented sector by building private rented homes with longer tenancies and rent stability. A welcome addition to the inflated private sector housing market in London.

While housing companies may not be a panacea in themselves APSE firmly believes that allowing councils the freedoms and flexibilities to innovate provides them with the capabilities to deliver realistic solutions to local housing need. It will be vital that whoever forms a government after 8th June places housing at the heart of its’ strategy for local government.

• The research report ‘Building homes, creating communities’ written and researched by the TCPA is available to download using this link.