Councils still facing obstacles to building new homes

Despite the government heralding 'a new generation of council homes' last year, a new report shows that councils are still facing obstacles to building more homes.

The report, released by the Chartered Institute of Housing, National Federation of ALMOs and the Association of Retained Council Housing, asked different-sized councils across England what was still stopping them building the homes their local communities need. For three-quarters, the lifting of the borrowing caps was a significant factor but generally not the only one.

Several respondents told us they plan to build only around 50 new homes (or fewer) per year, while two had programmes of around 500. No councils planned to build no homes at all. However, there are still barriers. While the government’s planned rents policy from 2020 onwards is generally welcome, the associations argue that councils need more long-term income stability and would prefer a ten-year policy, as opposed to the five years the government is proposing, coupled with more local flexibility to allow for regional differences.

Other significant constraints include: the requirement to allow tenants to buy their homes at a significant discount, and restrictions on how councils can use the money they raise from selling these homes; land shortages and planning constraints; the capacity of the building industry to deliver as many homes as councils and ALMOs want to build; and shortages of skilled staff.

The Treasury estimates that local authorities will soon be building 10,000 houses a year. The Chartered Institute of Housing, National Federation of ALMOs and the Association of Retained Council Housing suggest that’s likely to be met - and even exceeded. But councils and ALMOs say they could do more.

Chloe Fletcher, policy director at the National Federation of ALMOs, said: “This is solid evidence from the front line of housing demand. It highlights all that we have been trying to put before successive housing ministers over the last five years.

“The lifting of the HRA debt cap was fantastic news to the sector and a very necessary reform of the system but it is not enough on its own. Finding land on which councils can afford to build is a huge concern, as is the current right-to-buy regime which both depletes housing stock and siphons public money out of the system.

“We have been arguing for some years that right to buy doesn’t necessarily have to end. However, it must urgently become a sustainable home-ownership offer that sits comfortably alongside our very desperate need to provide more homes that more people can afford to rent.

“With the right support, councils and their housing management ALMOs are ready to do that, but they need the wholehearted support of government. And government needs local authorities - the national housing crisis is a problem that the private sector simply can’t solve on its own.”

Gavin Smart, CIH chief executive, said: “This report shows that councils are stepping up to the challenge of building more homes, and with more help they could make a significant contribution to ending our housing shortage. But a combination of factors is stopping them.

“If the government wants councils to play their full part, it needs to take on board the points raised in this report and give councils the flexibility they need to really get building the homes their communities need.”