A local crisis? Local authorities and the housing crisis

Miniature red and green houses against a white background.By Alex Addyman

England needs to provide between 200,000 and 250,000 homes each year to meet the current housing shortage. The role of local authorities in meeting this shortfall was recognised in the Autumn Statement and has been progressed through some recent policy initiatives. This blog considers some of these initiatives and questions whether local authorities have the capacity to deliver them.

A recent article in Housing Ireland highlighted a number of policy initiatives designed to tackle the housing supply issue including two with a core role for local authorities. The first is from The Department for Communities and Local Government in response to the Autumn Statement. The review, led by Natalie Elphicke, and Councillor Keith House, called for evidence on how councils can use self-financing powers, assets, capacity, skills and land to increase housing supply. It will also consider how authorities can lever-in additional capital for housing development using innovative finance mechanisms and whether social housing development can be delivered more efficiently. The call for evidence ended last month and the report will be produced towards the end of the year.

Secondly the Lyons Review has been commissioned by The Labour Party to review the changes needed to build 200,000 houses a year. The review includes proposals from the Chartered Institute of Housing. Key recommendations to come out of the review include the proposal to increase local authority borrowing caps to enable them to build 75,000 houses over five years and the use of partnerships between local authorities to recoup land costs facilitated strategically and systematically by Local Enterprise Partnerships.

London is particularly affected by housing shortages which, combined with a soaring cost of living in the capital is reaching crisis-point. The London Chamber of Commerce recently set out a series of recommendations to the Mayor which included a number of actions for local authorities. This included: working with local authorities to increase housing density around transport hubs; to reclassify empty retail and industrial space for mixed residential use; and to review the status of poor quality greenbelt land. The review also highlighted that government-imposed restrictions on borrowing capacity against social housing rents prevented London’s local authorities from building more homes. In terms of rental housing a report from the Resolution Foundation highlighted the role of local authorities in build-to-rents. The report suggested that local authorities should:

“designate a proportion of their public land for private rented sector development only. Furthermore, local authorities need to recognise that build-to-rent provides lower returns than build-for-sale and adjust their affordable housing and other planning requirements accordingly. If not, build-to-rent will continue to lose out to the higher return build-for-sale market.”

Similarly Addleshaw-Goddard highlighted issues over communication within the local authority planning process as a barrier to private rental development. Specifically they noted that:

“Those setting housing policy within local councils often endorse Private Rental Sector development, while planners within the same authority reject a scheme because there is no defined use class or flexibility within the National Planning Policy Framework.”

Capacity to deliver?

Clearly local authorities will play a significant role in stimulating house building to meet the under-supply of new homes. Whether they will have the capacity is another question. The most obvious barrier to delivering housing supply is finance. As well as specific issues, such as the limits to borrowing against social housing rent highlighted above, local authorities operate in a ‘deliver more for less’ environment which is inevitably having a negative impact on their ability to deliver rapid change and development.

Beyond finance there are capacity issues around skills and roles within local authorities. While most employees in the housing sector have a positive outlook in terms of their roles and futures (which correlates with evidence we looked at last week) there is a significant divide in positivity of outlook between local authority housing professionals and those in housing associations and other similar roles. Local authority housing professionals were much less likely to be positive about their future career citing instability and uncertainty as major factors.

Furthermore, when surveyed, over a quarter of housing professionals believed their organisation does not have sufficient internal skills to meet the ‘present and future challenges that the sector is presented with. Leadership of change management, efficiency expertise and understanding of the commercial sector were highlighted as three main areas where the business is lacking.

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One thought on “A local crisis? Local authorities and the housing crisis

  1. Pingback: Counting down to 2015 … a year in policy (part 2) | The Knowledge Exchange Blog

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