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Councils expanding in housing role, RTPI-sponsored study finds

04 December 2017

The Local Authority Direct Provision of Housing study, conducted by Professor Janice Morphet and Dr Ben Clifford of the Bartlett School of Planning, University College London, found that 91% of local authorities in England – of all political leaning and size – are engaged in providing homes in some form or another. 

The study finds that councils are actively exploring ways of housing delivery outside the usual Housing Revenue Account (HRA) route, largely due to frustration with the borrowing cap.

The study, commissioned by the National Planning Forum (NPF) and the RTPI, is the most comprehensive to date that investigates the current state of local authority housebuilding.

Professor Morphet said:

“Public sector housebuilding today has evolved into a more dynamic and diversified activity. Austerity, market forces and the political landscape have prompted councils to return to housing provision with a wider remit. Affordable and social housing remains at the core, but many other tenure types and activities are going on to serve different local needs.

“Most are adopting a problem-solving approach to providing housing in their areas with housing need and homelessness identified as their major motivation. They are funding these initiatives through borrowing, their own assets and funds, and working with partners.  Some attribute their success to working in a more joined-up way across housing, regeneration and planning teams.

“The appetite and ambition to build is there, and they could do more by learning from each other. Some changes in Government policy could help to get it going at a wider scale.”

A mix of traditional and innovative ways to provide housing 

Many councils are embarking on major plans in delivering hundreds of new homes through a mix of traditional social housing programmes (managed under HRA) and other funding and delivery routes.

These include setting up housing companies; purchase on the open market; creating land banks and land funds as long-term investors; acting as estate agency of their own commercial and residential properties; partnership developments including joint ventures with the private sector; and councils in-house team acting as a developer.

Emergence of housing companies

Housing companies are emerging as a popular vehicle to deliver more units or seek income from property portfolios to fund other essential services.

Around 44% of councils have a housing company, with more than 30 being established in 2017 alone. 

Over half of authorities who responded to the study’s online survey cited the lack of land as the biggest barrier to delivering homes, along with financing issues such as the HRA borrowing cap. 

Stephen Wilkinson, RTPI President, said:

“Having local authorities back as key players in the housing market is vital to tackling the housing crisis. The Chancellor’s move to lift the HRA cap will have some positive impact, but this needs to be rolled out more widely and quickly. We also need more drastic measures to help councils access land at the right price to develop themselves or sell to earn the income they need. Government should also consider a more direct role in increasing supply and influencing the location of housing.” 

Mike Hayes, Secretary of the National Planning Forum, said:

“At a time when the nation desperately needs to build more houses this study has thrown a timely light on the emerging practice and level of ambition of local authorities in all parts of the country and of every political hue to contribute to the national effort based on local knowledge and to meet local needs.

“There is no doubt that this is a good thing – for the national effort, for local communities and for cash-strapped local authorities struggling to keep services going in an environment of austerity to make a positive contribution to their local area.

“The National Planning Forum commends the report to the sector and to Government and looks forward to its many recommendations being taken forward and to local governments making an even bigger contribution to the national need for more houses.”

The study contains recommendations for Government, the Local Government Association and other public bodies.

Read the report summary and recommendations here