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Scrapping HRA cap ‘could see 100,000 homes built’
Abolishing the Housing Revenue Account (HRA) borrowing cap could allow councils to build up to 100,000 more homes, housing consultancy Savills has said.
It estimates that local authorities could take on between £10bn and £15bn in extra debt for housebuilding without the HRA limit – building “at least” 15,000 homes a year.
Prime minister Theresa May announced today at the Conservative Party conference that the government is “scrapping” the HRA borrowing cap.
The move has been widely welcomed by the social housing sector, which has long campaigned for the cap to be lifted.
In 2016/17, councils in England built just 3,500 homes.
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Steve Partridge, director – housing consultancy at Savills, said: “First and foremost, this is excellent news and should be welcomed positively throughout the social housing sector.
“Subject to the detail of the announcement and the precise timing and arrangements to be put in place, this could offer a great opportunity to add significantly to the number of new homes provided by councils.”
Local authorities were offered £1bn of extra HRA borrowing capacity at last year’s Autumn Budget.
Bidding for this headroom closed on Sunday, with the programme understood to be greatly oversubscribed.
Mr Partridge added: “The appetite from authorities in putting forward their recent bids for extra borrowing headroom in the existing system has clearly shown the extensive ambitions of councils to make a big contribution to the delivery of new affordable homes.”
May's Conservative Party conference speech: the housing bits in full
Below is the text of the housing section of Theresa May's party conference speech:
"Last year I made it my personal mission to fix another broken market: housing.
We cannot make the case for capitalism if ordinary working people have no chance of owning capital.
To put the dream of home ownership back within their reach, we scrapped stamp duty for most first-time buyers – and over 120,000 households have already benefited.
We’ve helped half a million people onto the housing ladder through other schemes like Help to Buy.
And this week we have announced that we will charge a higher rate of stamp duty on those buying homes who do not live and pay taxes in the UK, to help level the playing field for British buyers.
The money raised will go towards tackling the scourge of rough sleeping.
But the truth is that while these measures will help in the short term, we will only fix this broken market by building more homes.
And that is what we are doing.
More new homes were added to our stock last year than in all but one of the last 30 years.
But we need to do better still.
The last time Britain was building enough homes – half a century ago – local councils made a big contribution.
We’ve opened-up the £9 billion Affordable Housing Programme to councils, to get them building again.
And at last year’s conference I announced an additional £2 billion for affordable housing.
But something is still holding many of them back.
There is a government cap on how much they can borrow against their Housing Revenue Account assets to fund new developments.
Solving the housing crisis is the biggest domestic policy challenge of our generation.
It doesn’t make sense to stop councils from playing their part in solving it.
So today I can announce that we are scrapping that cap.
We will help you get on the housing ladder.
And we will build the homes this country needs."
Speech given to the Conservative Party conference on 3 October, 2018.
