Over the past couple of years England has experienced a quiet revolution in council home building with the establishment of around 150 local housing companies (LHCs). Instead of waiting for Government to give them the green light to get building again, councils – of all parties and in all regions – have set up their own arms-length, ‘private’ housing companies, which are exempt from the right to buy (RTB), social rent regulations and borrowing caps.
LHCs are wholly or part-owned by their local council but operate commercially, providing a financial return to the council and the opportunity to recycle any surplus into new affordable housing. They usually offer a mix of private homes to rent and buy, alongside affordable housing and some homes at social rent level. In the process some are making savings by providing temporary accommodation or offering discounted homes for key workers. Others are helping kick start regeneration schemes or supporting estate renewal.
The Smith Institute’s new report, ‘Delivering the renaissance in council-built homes: the rise of local housing companies’ concludes that collectively LHCs have the potential to deliver up to 15,000 extra homes per year by 2022 (compared with just 2,000 new council homes in 2016). Almost all LHCs are with a single authority. However, if they were collaborations by a number of councils and were done at scale for example by Combined Authorities then the delivery could be so much more. Imagine the market power of an ambitious Manchester wide local housing company or something similar in the West Midlands or in other combined authority areas.
In ‘Halfway House’ – an earlier report from the Smith Institute – we highlighted the potential that the new Metro Mayoralty areas have to deliver an uplift in social and affordable housing as well as some of the constraining factors. In these circumstances Multi Authority Housing Companies (MAHCs) could be a way of maximising the opportunities for house building at scale.
There are already some examples of multi-authority LHCs, such as the North Essex Garden Communities (NECG) LHC, which involves Essex County Council and three district councils: Braintree, Colchester and Tendering. According to the ‘North Essex Garden Communities Peer Review’ by Lord Kerslake the project is a superb example of councils working together, offering “opportunities to put new thinking to the test about sustainable communities and how new communities are developed”.
As Mayors grapple with limited housing powers but rising public expectations there is a case for serious consideration of MAHCs. They have cross-party support and appeal to both councillors and council officers. They give a “triple dividend” in the form of much needed extra housing, a greater stewardship role in place-shaping and a financial return to the Mayor.
There is huge potential for MAHCs in Combined Authorities, which government should support. In “fixing the broken housing market” we need all the help we can get, and that must include a role for councils building again. And not just council housing, but a mix of new affordable homes for local people to buy or rent.
The reports ‘Delivering the renaissance in council-built homes: the rise of local housing companies’, by Paul Hackett and “Halfway House: the opportunities and limits of devo-housing in England” by Paul Hunter are available free on the Smith Institute website http://www.smith-institute.org.uk/. If you would like more information or to discuss MAHCs please contact email@example.com