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Free up councils to build homes for those ‘just managing’, says think tank

Free up councils to build homes for those ‘just managing’, says think tank

A new report (link) by the think tank Localis argues that to meet the needs of those families ‘just managing’, the Government must free up local authorities to take more decisions on how and where housing can be delivered.

The report, Power Behind the Home: Why devolving housing powers will build more homes, argues that only by affording local authorities greater flexibility around finance and land can the Prime Minister hope to achieve the million new homes she targets by 2020. To drive a new surge in housebuilding by councils, Localis recommend:

  • The Housing Revenue Account debt cap be lifted to better reflect local authorities’ ability to service debt.
  • Right to Buy receipts be fully retained locally, providing local authorities with greater financial capacity to invest in replacing disposed stock.
  • Where they do not already have them, combined authorities be devolved powers to freeze land values as part of their Mayoral Development Corporation.

To allow local authorities to maintain and grow local affordable housing stock, the report also recommends:

  • Local authorities should be given greater flexibility over local implementation of Starter Homes, with regulations more sensitive to local circumstance.
  • After a property is purchased through Right to Buy, local authorities should be able to place a moratorium on allowing it to be let out for a set number of years, dependent on local market conditions.

The report, commissioned by Lloyds Banking Group, includes a survey of over 150 key local government stakeholders which finds that:

  • In enabling their council to respond to the housing needs and circumstances of their local population…
    • 59% thought the duty on local authorities to promote the supply of Starter Homes to be either ineffective or very ineffective.
    • 66% thought the Right to Buy scheme to be either ineffective or very ineffective.
    • 75% thought the forced sale of higher value local authority-owned vacant housing stock to be either ineffective or very ineffective.
  • 92% thought further freedoms to borrow money prudentially (to invest in housing) would be either effective or highly effective in helping their council respond to the housing needs and circumstances of their local population.


Liam Booth-Smith, Chief Executive of Localis, said: “If the Government is serious about building more homes they’re going to have to go further than previous administrations in tackling the issue. The new elected city mayors present Government with an opportunity to devolve more powers over housing and loosen the leash on finance. With a housing white paper coming soon this is a relatively simple win for government. If the Prime Minister wishes to build a million new homes by 2020 then local government needs more flexibility.”

Stephen Noakes, Managing Director – Retail Customer Products at Lloyds Banking Group, said: “The improvements to the housing market we all want will not come from short term fixes or purely commercial or governmental solutions. Housing policy is complex and needs long-term vision across all levels of government and from those with a commercial stake in the housing market. Lloyds Banking Group commissioned this report to stimulate debate about how to overcome the chronic shortage of high quality affordable homes, and thereby help Britain to prosper.”

 

ENDS

 

 Notes to Editors:

  1. Power Behind The Home is launched on Thursday 17th November from 3pm-4pm in the George Thomas Room, Westminster Central Hall. Speakers include James Cartlidge MP (Chair of Housing and Planning APPG), Ruth Cadbury MP (Shadow Housing Minister), Cllr Rock Feilding-Mellen (Deputy Leader of Royal Borough of Kensington and Chelsea), Niall Bolger (Chief Executive of Sutton Council), Stephen Noakes (Managing Director – Retail Customer Products at Lloyds Banking Group) and Sarah Calkin (News Editor at Local Government Chronicle).
  2. Other recommendations in the report include:
    • Government should make it a legal obligation for all combined authorities (or similar) to establish a land commission.
    • Constituent members of combined authorities should set up Combined Authority Housing Companies.
    • To drive greater efficiency in the land market, local authorities should be allowed to levy council tax on plots allocated for housing which are not built in reasonable timescales.
  3. The report’s survey was answered by 153 local authority stakeholders from every English region and all devolved nations, including chief executives, leaders, cabinet members for housing, chief housing officers, chief planning officers and chairs of planning committees.
  4. In May 2017, metro-mayors will be elected in Greater Manchester, Liverpool City Region and the West Midlands.
  5. The Starter Homes policy was established in the Housing and Planning Act 2016, having first been introduced by the Coalition Government in 2014 and then the Conservative Government in 2015. Classed as an affordable tenure, Starter Homes are available to first-time buyers under 40 years old and sold at a 20% discount. Local authorities are duty-bound to promote the supply of Starter Homes and the Government expects 20% of all major sites to be Starter Homes.
  6. The Coalition Government reinvigorated Right to Buy by abolishing variations in regional discounts, increasing discounts and relaxing tenant qualifying periods. Currently local authorities retain 30% of receipts from sales of council housing. In Scotland and Wales, both governments have abolished the Right to Buy scheme.
  7. Several devolution agreements have included plans to establish land commissions to identify potential growth areas. In each case a register of cross-sector public land assets will be developed, with some commissions (as part of Joint Investment and Assets Boards) also seeking to identify viable private sites.
  8. The Housing Revenue Account debt cap was introduced in 2012 as local authority housing stock became ‘self-financing’. It was introduced to restrict the level of borrowing by local authorities, but is widely accepted to limit ‘spend to save’ investment.
  9. Localis recommend that by using explicit compulsory purchase powers, metro-mayors should be able to purchase land at existing use value plus a premium, with the commitment to develop the land as part of a public-private partnership. These new planning powers would be wielded alongside mayoral powers to establish Mayoral Development Corporations. As part of their devolution deals, powers to establish Mayoral Development Corporations have already been devolved to Greater Manchester and Tees Valley (where an MDC has already been established). In Greater Manchester the Mayor will have the power to make Compulsory Purchase Orders subject to the agreement of the cabinet member(s) for the relevant borough(s).
  10. Mayoral Development Corporations and their associated powers were established via the 2011 Localism Act – initially only applicable in London – and their powers were first used by the Mayor of London when creating the London Legacy Development Corporation and then the Old Oak and Park Royal Development Corporation. The Act is flexible in allowing the Mayor to determine the level of authority to confer to the MDC, including investment and planning powers such as compulsory purchase. Before establishing an MDC, the Mayor must achieve agreement of local representatives and notify the Secretary of State.
  11. Increasing numbers of councils are establishing Housing Companies which, because they are private bodies, allow them to circumvent governmental restrictions. Housing Companies have greater borrowing powers (operating outside of the Housing Revenue Account), flexibility over tenure and are exempt from Right to Buy.
  12. Localis is an independent think-tank dedicated to issues related to politics, public service reform and localism.