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Government should ‘throw weight behind’ council housing companies
The government should “throw its weight behind” council housing companies, the chair of the Local Government Association (LGA) has said.
Lord Gary Porter was responding to a report from the Smith Institute which reveals a “quiet revolution” in council housebuilding, with around 150 councils setting up housing companies despite little government support.
The report shows that increasing numbers of councils are directly funding their own housing companies without government grant to try and meet local housing need, mostly building homes for private rent and sale. Some are recycling the company’s profits to subsidise new affordable and social rented homes, as well as providing temporary accommodation and housing for older people.
The Smith Institute said around half of all councils in England may soon have a housing company. Most of the housing companies are building on council land and paying a dividend back to the council.
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Last year Inside Housing carried out an investigation into council-owned housing companies, which revealed more than a third of councils had set up housing companies but the majority only had plans to build a small number of homes each year.
These companies are not bound by regulation governing social housing, including the Right to Buy and the Housing Revenue Account borrowing cap.
Most companies only have modest building ambitions, averaging around 50 homes a year, the report said. Only a minority of companies are building homes for social rent, with 30-40% of homes classed as “affordable”.
The Smith Institute has called on the government to provide more support for council housing companies, in the form of a high-level task force that would recommend how to make best use of the companies’ potential, flexibility for councils to invest all Right to Buy receipts into the companies. It called on the government to encourage more councils to team up to set up housing companies to deliver more housing.
The government has previously said it “wants to see” council housing companies offering the Right to Buy to tenants. The Smith Institute said this caveat should be removed because it is “confusing” for councils and “undermines” investor confidence in the companies.
The report found that the largest concentration of council housing companies is in London and the South East, where housing demand is intense and prices are some of the highest in the country.
Lord Porter said: “This report shows that councils are taking the lead when it comes to delivering desperately needed homes for their communities.
“It’s crucial, though, that the government provides a stable environment to allow councils to invest in homes and get on with the job… Councils are determined to lead the way in building new homes, and are leading local innovations finding different ways to make this happen. We’d like to see the government properly throw its weight behind our work and provide us with the tools to get on with the job.”
Terrie Alafat, chief executive of the Chartered Institute of Housing, said: “With the right support, councils can once again become major contributors to building the housing we so desperately need. We would urge the government to create an environment which enables them to do that – giving councils more freedom and flexibility around things like borrowing caps, rent levels and allowing councils to keep all of their Right to Buy receipts could be transformational.”
