Latest Public Sector News

06.11.17

Joining forces in the housing market

Piali Das Gupta, head of policy at Solace, outlines the unique ways in which councils are addressing the country’s housing shortage, such as via collaborative partnerships or new models of development.

For decades, Britain has not been building enough homes to keep up with household growth. Successive governments have introduced policy after policy to spur housing development, but the gap between demand and supply has not significantly closed. To local government, it has been apparent that there has been a blind spot in housing policy that, for various reasons, has failed to recognise that the last time Britain kept pace with housing demand was when local authorities were building in significant numbers. Is that finally changing?

There are certainly encouraging signs to the affirmative, and local government is keen to seize the momentum. Councils now approve nine in 10 planning permissions, although there is concern that homes are not always being built quickly enough after permission is granted. Last year, Solace surveyed its membership on a range of housing issues, and discovered that three out of five respondents found the number of approved sites owned by firms that do not actually build houses a challenge.  There is also a recognition that the planning system alone does not give councils sufficient levers to ensure that homes being built have the right tenures that match local need. In total, 60% of respondents were extremely concerned about the availability of affordable rented housing in their areas.

One of ways in which councils are seeking to address this gap is through getting more directly involved in housebuilding themselves. Years of being shut out of housing development by government policy have had an inevitable impact on local authority skills and capacity, though.  Whereas councils of old would have employed their own architects, surveyors and structural engineers, that is no longer the case.

Councils are now exploring new models for housing development that enable them to tap into external technical and commercial expertise, including local housing companies and joint venture partnerships. Our survey found that one in four respondents had set up a wholly-owned company and almost one in five had set up other types of joint ventures, such as Community Benefit Society or a JV with a housing association, in the past year. A number of members noted that they were currently in the process of setting up a housing company or a joint venture, or that they were considering their options. Estimates indicate that there were in the range of 50 local housing companies in operation last year. 

There are complex legal definitions for these vehicles, but effectively they enable councils to create entities that operate at arm’s-length from core council business. One of the attractions of these new models is that they can operate outside the constraints of the Housing Revenue Account, the financial system that underpins social housing owned by councils. They also enable councils to build housing of different tenures, from market sales to affordable rents.

In addition to getting more directly involved in housebuilding, councils are also placing heavy emphasis on partnership working to tackle unmet housing need in their areas. In our survey, 90% of respondents planned to collaborate with private developers and landlords to achieve their strategic housing priorities, whilst two-thirds indicated that they were planning to collaborate with other social housing providers. With respect to the latter, there is increasing recognition of the common ground that councils and housing associations share, not just in terms of proving affordable housing but across a wider range of issues, from promoting healthy active lifestyles to helping residents access skills provision and employment support.

Indeed, with Universal Credit to be rolled out across the country, it has never been more vital for councils and housing associations to join forces to ensure that the flaws in the design of the system that have become very apparent through the pilots are addressed. The wellbeing of some of our most vulnerable residents and the viability of those who provide affordable housing is at stake.

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