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New council house building programme set to be overwhelmed by demand in London

The government’s programme to give councils extra borrowing capacity is set to be totally overwhelmed in London, with the majority of the capital’s town halls readying large bids. 

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21 out of 28 London councils with HRAs say they will bid for a part of £1bn additional borrowing capacity #ukhousing

New council house building programme set to be overwhelmed by demand in London #ukhousing

Ministers have agreed to give councils in areas of “high affordability pressure” across England £1bn of additional Housing Revenue Account (HRA) borrowing headroom, with half the money reserved for those in the capital.

Of the 28 London boroughs with HRAs, all but seven confirmed they are intending to bid by the 30 September deadline.

Inside Housing understands that two local authorities alone are gearing up to request around £350m between them.


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Tower Hamlets Council, where the administration has promised to deliver 1,000 new council homes, said it expects its bid to be “substantial”.

Leo Pollak, cabinet member for social regeneration, great estates and new council homes at Southwark Council, said: “As one of the biggest builders of council homes in the country, Southwark Council welcomes the mayor of London having secured new funding sources for municipal housebuilding from government, and will be bidding for its rightful share.”

Philip Glanville, mayor of Hackney, said: “[We] will be preparing an ambitious bid to help us expand on the 2,000 homes we are already delivering ourselves between now and 2022.”

The remaining £500m of capacity will be split between 165 councils outside of London, with only those in areas where private rents are at least £50 above social rents allowed to apply.

Councils not eligible have expressed concern that they are not included, while bids from many of those in the programme are also expected to be substantial.

The amount councils can borrow to invest in new housing has been limited ever since they secured the right to keep their housing rents in a self-financing deal in 2012.

New housing minister Kit Malthouse this week said he was “at a loss to understand” why local authorities have not already used the £3.6bn of total HRA borrowing capacity available across the country.

The Greater London Authority published bidding guidance for the HRA programme earlier this month.

London mayor Sadiq Khan has a target to see work start on 10,000 new council homes by 2022, and housing was a major issue at the local elections in May.

Darren Rodwell, leader of Barking and Dagenham Council and executive member for housing at umbrella group London Councils, said: “London boroughs want to do everything we can to deliver more housing for our communities, so it’s unsurprising that so many are applying to the HRA borrowing programme.

“While we’re grateful for any opportunity to support councils to build more homes in London, it doesn’t make sense that boroughs have to bid for these limited funds from central government. The capital is facing a housing crisis and more substantial action is urgently needed.

“The government must empower local authorities by removing the HRA borrowing cap and allowing us to borrow prudently to invest in new homes for Londoners.”

Hillingdon and Greenwich said they were still considering whether to participate in the programme, while Hammersmith & Fulham, Kingston, Harrow, Westminster and Wandsworth had not responded by the time Inside Housing went to print on Wednesday.

The remaining 21 boroughs with retained housing stock confirmed their intention to apply.

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