Freeing local authorities to deliver additional homes and expand home ownership

Cllr Andrew Johnson, Cabinet Member for Housing for Hammersmith and Fulham Council, says giving councils more freedom woould promote home ownership

The recent Policy Exchange report on Ending Expensive Social Tenancies has certainly sparked a widespread debate about the merits of selling expensive social housing when it becomes vacant to provide more in cheaper areas. As mentioned in a previous post for Conservative Home overall is this something which I would support, with the caveat that the receipts be used to provide more than just social housing but a range of intermediate housing for both sale and rent.

Yet there is also the wider question of how we seek to increase housing supply in general, with the Government due to make a major policy announcement on the matter in September.

It is within this context that we’re seeking to make the case for local authorities to have a key role to play in looking to deliver market and affordable homes. Of course, councils have a key role to play through the planning process, but they are also major owners of land and property with untapped equity which, if unlocked, could generate significant resources for investment. In addition, they are also the driving force behind Regeneration schemes which in areas such as Hammersmith & Fulham can deliver thousands of homes in the short term and over the next 20 years.

Considerable progress has been made by the Government in the Localism Act and elsewhere to create flexibilities for local government, however, unnecessary restrictions still exist. Removing these could not only increase investment for new homes, without crucially increasing public borrowing, but could also promote other housing priorities such as promoting home-ownership and building balanced communities.

Crucially, many local authorities are still also owners of property on a large scale within their Housing Revenue Accounts. Many, like H&F, have already committed to promoting new building on HRA land. Therefore, any initiative which aims to stimulate housebuilding and which does not fully embrace the contribution of local authorities risks missing out on considerable potential.

To fully exploit this potential Councils need the freedom to take local decisions about how to manage their housing assets and the receipts they generate. This could be achieved by:

• Automatically allowing local authorities to keep all the proceeds from sales, including Right to Buy sales, so they can be used locally to provide new homes, encourage home-ownership, regenerate areas of deprivation and repay housing debt.
• Allowing councils to charger higher rents, including market rents, in some existing HRA property when they are re-let without being penalised through the Housing Benefit subsidy system. This would increase the level of resources available to local authorities to not only deliver a balanced HRA budget, but also create funding for new build.
• Giving councils which run a successful and viable HRA additional flexibilities, whilst accepting borrowing limits set by the Government

In addition to the benefits of increasing housing supply through the measures outlined above, removing other restrictions on local authorities could also meet other key Government priorities for housing, such as promoting home-ownership and creating mixed communities.

These include:

• Using Right to Buy receipts to help local first-time buyers with a Deposit Fund, aimed at low to middle income households not eligible for social housing.
• Giving tenants the Right to Buy a part-share of their home. Something which we are currently working on in Hammersmith & Fulham.
• Allowing councils the freedom to offer a range of tenures in HRA property, including Low-Cost Home-Ownership, Affordable Rents and Assured Shorthold Tenancies to create more mixed and sustainable communities.
• Enabling councils the freedom when disposing of assets to be able to sell to prospective owner-occupiers, as well as developers and Housing Associations as a direct way to diversify tenure.

In conclusion by granting the additional freedoms outlined above we believe that local authorities have the potential to play a significant role in delivering additional housing supply, whilst at the same time promoting greater levels of home-ownership and more mixed and sustainable communities.