Sir – Councils are looking beyond the HRA to develop their new building programmes for two reasons.
First, yes, the HRA Self-Financing settlement has allowed 170 stock-owning councils to address investment in their stock, but, that said, a large number of these councils have reached their borrowing cap.
Secondly, the new HCA affordable housing programme since 2011 has provided much-needed rented homes, but these are not always going to those most in need.
The government is offering a new programme of £300 million for additional borrowing for local authorities to give them more headroom, but an independent review into council housing, which it commissioned, eliminated any hope of ditching the borrowing cap.
Councils have therefore moved forward and responded to local needs by setting up local housing companies, using their General Fund or outside the council’s finances, as well as working with partners to create Special Purpose Vehicles free of the council’s financial straitjacket.
Councils have shown a range of innovation and creativity – for example, the Manchester partnership between the council, Greater Manchester Pension Fund and the HCA to develop 240 homes for rent and sale on five sites. A contractor is chosen to develop the homes under a design and build on local authority land using capital funding from the Pension Fund with the council taking an equity stake in the sale homes.
In London, Barking and Dagenham, Southwark and Newham Councils are developing new builds through SPVs or LA companies to be able to choose the types of housing and the terms offered to tenants, shared owners or owners of the sale homes. It also addresses the important issue for some councils of no statutory right to buy as the tenancies will be assured rather than secure.
Newham aims to provide 3,000 homes with affordable as well as market rents, allowing it to cross-subsidise the developments. Southwark, with 54,000 homes, aims to provide over 10,000 homes over the next 30 years using a range of funding streams.
David January, Housing Advisor, SDS