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Solace blog

12th May 2017

How local authorities are helping to fix our broken housing market

The recent housing White Paper included encouragement for local authorities to engage more directly in the provision of housing to make up the shortfall between private sector development and locally assessed housing requirements, most frequently set out in local plans. This gap between need and provision has been a continuing issue for the government and now, while local authorities are giving planning permissions for more housing on larger plots, there are many sites where these planning consents are not being implemented, causing local frustration. At the same time,
some local authorities have been considering ways to make up that shortfall through their own direct action. In 2015, over 50% of council leaders stated their intention to form a wholly owned local authority housing company, using general fund rather than housing revenue account methods. By the end of 2016, a survey of all councils showed that 125 local authorities had created companies although not all of them are active yet.

Some preliminary investigation on the range of these initiatives has shown that local authorities are motivated to return to direct engagement in housing provision for a variety of reasons. For some, this is about creating an income stream to support revenue income to offset forthcoming funding changes, while for others it is an essential tool in changing their place and attracting other investment. Some are focusing on dealing with the increasing costs of homelessness while others want to improve the design of development in their area. Of course, in many cases, these
objectives are combined and there now appears to be a new role of the local authority as a patient (property) investor emerging with local authorities also acquiring commercial properties to provide longer-term income streams.

Those councils that are engaging in providing housing are developing across all tenures including for sale, market rent, affordable, social and intermediate. The homes that are being built using the general fund route can be kept outside right to buy provisions using s1-7 2011 Localism Act and although a potential requirement to require any such housing to be within right to buy requirements appeared in the White Paper, this was subsequently dropped by the housing minister. While some authorities are starting with small developments and creating companies to add to their development using the HRA or growing the role of their ALMOs, many more using more than one method, increasing their repertoire of approaches as they expand their activity. Many are using their own land while others are purchasing land for future development. Some have established their own housing associations.

Will this local authority housing contribution ever make up the gap of approximately 100,000 dwellings a year that exists across England? That is yet unknown but a recent research project awarded to Janice Morphet and Ben Clifford at University College London, funded by the National Planning Forum and the Royal Town Planning Institute is attempting to find out. The research is reviewing the motivations of local authorities in providing housing and the financial and legal methods that are being used. The research is also investigating the volume of housing being
provided and its tenure. Finally, the research is going to investigate how far this direct provision of housing is contributing to acceptable evidence at local plan examinations and in planning appeals. The research will include a survey of all local authorities in the coming months and the final report will be available at the end of 2017. This will include a one-off database of all the information that has been found across each local authority so that those interested can see what others have done. If you would like further information or to make available any case studies
or information about your own authority then please contact Professor Janice Morphet, a former SOLACE member, who is leading the study at

Guest blog by Trudi Elliott, Chief Executive, Royal Town Planning Institute