Councils to use borrowing powers to accelerate homebuilding

New powers to borrow and invest in new and existing housing look set to be used by the majority of councils but further reforms are needed to spark a genuine renaissance of social housing, a survey by the LGA reveals.

Last year, the Government accepted the LGA’s call to scrap the housing borrowing cap.

The LGA’s new survey shows the move will support the delivery of local housing with 94 per cent of housing stock-owning councils (59) saying they will use the new powers to accelerate or increase their housebuilding programmes to build homes desperately needed in their communities.

The number of homes built for social rent each year has fallen from over 40,000 in 1997 to 6,000 in 2017. The LGA said this decline has resulted from the policies of successive governments, such as rules and restrictions hampering the ability of councils borrowing to build.

This loss of social housing has led to more and more individuals and families finding themselves pushed into an often more expensive and less secure private rented sector. As a result, the housing benefit bill paid to private landlords has more than doubled since the early 2000s.

However, 92 per cent of councils are clear that more support from government is needed if councils are to truly resume their historic role as major housebuilders and reverse this decline in social housing. There are 205 councils who no longer own any housing stock in their area so will be unable to use new borrowing powers.

The survey also reveals that:

• Reform of Right to Buy (RtB) is needed with responding councils calling for the power to retain 100 per cent of RtB receipts and set discounts locally.
• 97 per cent said more national advice and guidance is needed, while others saw homelessness as a key driver behind building more homes, with 81 per cent of respondents saying additional future housing supply would help address homelessness in their area.
• The growing national and local skills gap was also a cause for concern, with councils ability to reskill and upskill crucial to accelerating their homebuilding plans.

The LGA said the Government needs to reform Right to Buy to ensure councils can replace every home sold, as well as setting out sustainable long-term funding and commitment to social housing in the Spending Review.

LGA housing spokesperson Cllr Judith Blake, said: “By lifting the cap on councils being able to borrow to invest in new and existing housing, the Government has showed it has heard our argument that councils must be part of the solution to the chronic housing shortage.

“Our survey shows that councils up and down the country want to build more good quality, affordable homes that meet the strategic housing needs of their local communities.

“The last time the country built more than 250,000 homes in a year, in the 1970s, councils built around 40 per cent of them. A genuine renaissance in council housebuilding is the only way to boost housing supply, help families struggling to meet housing costs, provide good quality homes to rent, reduce homelessness and tackle the housing waiting lists many councils have.

“Councils now also need to be able to keep 100 per cent of Right to Buy receipts and set discounts locally to ensure they can replace any homes sold.”