Housing Options

Demand for housing across the UK has never been higher. Housing Delivery is not only a key part of meeting the needs of residents but also a contributor to Place. The pandemic requires us to urgently re-think our towns and cities with the need to shrink retail space – providing opportunities to develop more homes that could bring more life to places both by day and night.

Housing strategy should start with local need as well as improving visual amenity; contributing to the economic social and environmental regeneration of the area; delivering homes people want as well as need and providing wider benefits, from skills development to job creation, to places that people value and hopefully care for.

Post pandemic the Government has a target 300,000 new homes a year, of which around 100,000 should (according to the LGA[1] be affordable housing fit for social care, health and other key workers who have fought coronavirus on the frontline and the families of those who lost their lives) and 6,000 new homes for rough sleepers taken off the streets during the pandemic.

Research for the LGA and partners has found that investment in a new generation of social housing could return £320bn to the nation over 50 years. It also found that every £1 invested in a new social home generates £2.84 in the wider economy, with every new social home generating a saving of £780 a year in housing benefit.

Stephen H. Dunphy and Bill Kossen suggest that "The construction industry has a multiplier of 2.06, meaning in good times each primary construction job creates slightly more than two other jobs in the service economy, such as grocery clerks or baristas. But in tough times, the multiplier works in reverse, meaning for every construction job lost, two other jobs in the economy go with it."

Learning and development by children can be hampered by poor living conditions.  Development of homes can improve the health and wellbeing of the local population, help to get people out of temporary accommodation and where they are built to passivhaus standards or are well built with reliance on renewables for power as low energy homes, they can assist with fuel poverty.

Demand for homes

Across the UK there are increasing numbers of single person households partly due to the demographics of the population, with people living longer and also relationship breakdown – increasing the pressure on local authorities that are already short of homes.

There has been a steady increase in the number of households in temporary accommodation between 2012 and 2018 (the latest period for which ONS statistics are available), from 50,430 to 80,720 in England alone (an increase of 60% over 6 years). The 2020 figures are skewed by COVID-19 but show that the number of households in temporary accommodation in England on 30 June 2020 was 98,300.

In 2018 three quarters, 61,610 were households with children – later figures suggest 62,700 in June 2020. Temporary accommodation can include private sector accommodation, hostels, refugees and bed and breakfast style accommodation. A disproportionate number of households in temporary accommodation, around two thirds, were housed by London local authorities. Around 1 in 4 people cite loss of private sector accommodation as a reason for homelessness and 1 in 10 domestic violence (in 2018 – but on the increase since then).

The latest release (October 2020 with figures to June 2020) can be viewed on MHCLGs website at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/930534/Statutory_homelessness_release_Apr-Jun_2020.pdf

Government policy

No Government over recent times has met its targets for developing new homes. Last summer the PM announced the need to “Build build build” with £5bn of infrastructure support and to “Build back better”.

On 16 December 2020 the housing secretary, Robert Jenrick, set out some new measures to help cities and the high street to recover from the pandemic, including support to develop more homes in urban areas. An updated methodology will be introduced to help councils to enable the delivery of 300,000 homes a year by the mid-2020’s while prioritising Brownfield sites and urban areas with £100m funding (on top of the £67m to the Greater Manchester and West Midlands combined authorities and £20bn investment in housing announced in the spending review). The Government also intends to revise the so-called “80/20 rule” which guides how much funding is available to local areas to help build homes, to ensure funding is not just concentrated in London and the south-east.  The Government is also committed to supporting self-build and custom builders. For further detail see: https://www.gov.uk/government/news/plan-to-regenerate-england-s-cities-with-new-homes

Planning

Significant planning changes are also on the horizon with the government providing a summary of consultation responses to the “Changes to the current planning system“ consultation paper and publishing indicative local housing need statistics authority by authority, as at December 2020, available at: https://www.gov.uk/government/consultations/changes-to-the-current-planning-system

In this paper we seek to explore a number of opportunities to expand the amount of housing of all types and tenures with a view to encouraging local authorities to do everything they can to promote the delivery of housing which can have significant regeneration and other benefits, particularly for the health and well-being of the local population.

A range of options

There are many options to increase the supply of homes, including:

• Developing land for housing
• Selling land for housing
• Developing in partnership with an RP or another LA
• Supporting individuals, Community Land Trusts or Housing Trusts to deliver more homes in partnership with the local community
• Bringing empty homes back into use – enforced sales
• Establishing a local authority Housing Company or Joint Venture with the Private sector

Alternatively local authorities may buy-back homes sold under the Right to Buy or properties more generally available on the open market. Whilst this does not increase the available homes it can boost secure and affordable housing stock in a sustainable way.

Before considering the options in more detail let us start with the strategic housing role.

Strategic housing role

Local housing authorities have a strategic housing role.  These strategic housing duties require local authorities to periodically assess and address the housing needs of all residents across all housing tenures in their areas.  This is an often overlooked key facet of the housing authority's responsibilities. Specifically section 8 of the Housing Act 1985 states “Every local housing authority shall consider housing conditions in their district and the needs of the district with respect to the provision of further housing accommodation.” DCLG Guidance from 2008 suggests authorities should “plan and facilitate new supply.

Housing need and provision to meet that need should link strategically with other Council functions, both at district and county level, including: regeneration, skills and jobs, residential and social care, accommodation for care leavers and public health. We know that that local authorities also struggle to place children and adults in care and a recent case[2] highlights the national shortage of secure and regulated accommodation particularly for young people.  

There is no doubt that the quality of living accommodation affects the health and wellbeing of the population, including mental health. Can Health and Wellbeing Boards do more to prioritise the role that housing can play in maintaining or improving the health and wellbeing of the population? 

The strategic housing role links with the concept of community leadership and of local authorities shaping their places so that they make the most of public sector land and the economic opportunities that present themselves for regeneration, as well as meeting the increasing housing demand. 

With the removal of the HRA borrowing cap in October 2018 and the recent reduction in Public Works Loan Board (PWLB) borrowing rates, the availability of funding to develop new homes is no longer a barrier for most authorities. The Government has promoted mortgage schemes to assist first time buyers to get a foot on the housing ladder through mortgage deposit guarantees and many local authorities have also provided such guarantees directly to banks to enable local residents to buy dwellings (who would otherwise not have been able to provide the size of deposit required by lenders).  However, the biggest single boost to the private sector housing market over the last few years appears to be the Stamp Duty Land Tax holiday on purchases up to £500,000 introduced during the pandemic on 8 July 2020 and which expires on 31st March 2021.

Developing land for housing

Local authorities have very wide powers to acquire, appropriate and develop land for housing and this could be any type of housing to meet housing need. Local authorities can seize these opportunities themselves, only requiring a corporate vehicle where there are plans for private rented accommodation[3], or in circumstances where they prefer a corporate body to ring fence risks. 

Increasingly authorities are developing land for a mixed economy with some homes for sale that subsidise affordable and shared equity or e.g. elderly care.

Local authorities should also be ensuring a 5 year land supply through the planning framework, to build housing of all tenures, including affordable housing. For example, Leeds identified the need for 66,000 new homes, and Birmingham 88,000 homes to be developed over the next 15 years.  Leeds City Council is being particularly proactive in identifying sites and considering the local development frameworks/plans to enable such sites to be brought forward for development, and the supply in Birmingham will get a boost from developments for the Commonwealth Games. 

If local authorities have insufficient land then land can be acquired by agreement, by working with other public sector partners (through initiatives such as One Public Estate) and compulsorily under a CPO for the purposes of their functions[4] or for example where it is derelict and unsightly. Powers to develop land for housing to meet needs in the area can be exercised both inside and outside the area and so the council could buy or develop land outside of their area under section 14 Housing Act 1985.

Selling land for housing

Local authorities also have wide powers to sell land for housing and this can be at market rates, or there are a number of powers that would enable general fund or Part II Housing Act 1985 land to be sold for less than best consideration e.g. to housing associations or otherwise under various general consents (or a specific application can be made to the Secretary of State to dispose at an undervalue).

For further information on the strategic role of local authorities or powers to buy sell or develop land please contact Judith Barnes or David Kitson.

Developing in partnership with an RP or another LA

There are many opportunities for local authorities to partner with housing associations and registered providers in order to provide land (for which there are general disposal consents allowing certain disposals at less than best consideration) to develop homes for sale as well as affordable and social rented properties. A good example of this is the £120m Limited Liability Partnership between Hyde Housing and Brighton aimed at supplying 1,000 new affordable homes, at living wage rents with fixed term tenancies of up to 5 years.  For further details please contact Matthew Waters.

Supporting individuals, Community Land Trusts or Housing Trusts to deliver more homes in partnership with the local community

Some local authorities are finding or acquiring and disposing of plots to enable self-builders to develop homes, particularly energy efficient homes.

There are now over 300 Community Land Trusts (CLTs) working with local authorities and residents to develop sites to meet local needs. There are 17,000 members of CLTs, over 935 homes have been built and there are 16,000 further community led homes in the pipeline. For further information please contact Matthew Waters or see: http://www.communitylandtrusts.org.uk/what-is-a-clt  

Enforced sales – bringing vacant property back into use

There is growing frustration among local authorities that while the number of homeless people remains stubbornly high, there are still thousands of homes lying unoccupied. The latest statistics for England show that 280,000 people are homeless[5], while the number of empty homes stands at more than 648,000[6], of which 225,845 have been empty for longer than six months – and therefore defined as ‘long-term empty properties’.

Authorities have a range of available powers to bring empty homes back into use. These include Empty Dwelling Management Orders (EDMOs) and other measures to secure the improvement of empty properties, compulsory purchase and enforced sales. However, EDMOs are rarely used, because a home now has to be empty for two years before an EDMO can be issued. Enforced sales are therefore becoming more popular.

Where vacant homes require the council to step in because they are derelict, dangerous, badly maintained and/or require pest control, then a local authority can exercise regulatory powers in default and then demand the costs from the property owner[7]. In the event the costs are not paid, the council may register a local land charge on the property pursuant to the Local Land Charges Act 1975. If the costs remain unpaid then this gives the authority the opportunity to exercise a power of sale, just as a mortgagee in possession would do, and dispose of the property, allowing a purchaser to renovate the property and bring it back into use and the Council to recover its costs.

From the point of view of a local authority, using an enforced sales procedure has a number of advantages including:

• Social Impact– getting a home occupied again impacts the local area - empty homes can be an eyesore and have impacts socially (with anti-social behaviour)
• Council Tax– many empty homes are also blighted by the fact the council has been unable to recover council tax payments. Once the property is sold a local authority may be able to recover unpaid council tax and going forwards it will generate council tax when it becomes occupied.
• Recovery of Costs– the council can recover all its costs from the sale proceeds including costs for maintaining the property and the costs of sale covering legal and other fees.
• New Homes Bonus– local authorities may be able to claim a grant from central government where a long term empty property is brought back into use.

This is a ‘win-win’ situation with both social and financial benefits. The authority has repaired a derelict property and brought it back into use as a much needed dwelling; public money used for the repairs have been recovered; and the new owner will in most cases be paying council tax. Alternatively a CPO may be appropriate if there is just an unsightly property because nobody is living in the dwelling and it is deteriorating or a source of vermin. For further details please contact Lyndon Campbell.

Establishing a local authority Housing Company or Joint Venture with the Private sector

Many local authorities have established their own housing companies (or Limited Liability Partnerships), particularly to deliver privately let housing and a mix of different tenures of housing accommodation, including shared ownership. They are usually bespoke with plans that are specific to meeting local need/demand and may be 100% owned and controlled by a local authority or may be established as a joint venture with the private sector. The type of company/LLP depends upon whether the vehicle is focussed on homes for rent, whether the Council needs to access independent funding or skills or other relevant considerations. For further information please contact Matthew Waters.

Local authorities often partner with the private sector on major housing regeneration schemes, either through a contractual joint venture or a jointly-owned corporate vehicle such as a company or Limited Liability Partnership (LLP).  These partnerships may incorporate a significant element of housing provision alongside delivering enhanced commercial, leisure, retail, cultural and public realm assets.  Recent examples include:

• Slough and Morgan Sindall in relation to the Slough North West Quadrant scheme, bringing forward plans to provide 1,400 homes across a range of tenures.
• Kingston and Countryside homes on redevelopment of the Cambridge Road Estate, delivering around 2,170 homes.
• Havering and Wates in relation to its regeneration programme to deliver 3,000 homes across 12 housing estates.
• Birmingham, Canal & River Trust and Places for People/Urban Splash in relation to its housing and regeneration joint venture to deliver 1,150 homes across a 43 acre site.
• South Cambridgeshire and Balfour Beatty and Hill Group in relation to its £340m project to support local recovery, including through purchasing council and third party land for the delivery of high quality, sustainable private sale and affordable housing.

(For further details please contact Chris Harper).

Buying back RTB homes or from the open market

Many local authorities are buying back homes previously sold under the Right to Buy as a way of replenishing their stock, or buying general property stock on the open market. Examples include Barnet, Tower Hamlets and Greenwich. For further details please contact Lyndon Campbell.

Comment

There is no doubt that many local authorities could be doing more to meet housing need and take people out of temporary accommodation, create more economically viable communities and develop their Vision for Place. Local authorities have very wide powers to acquire and develop land either themselves or in partnership with others.   

Whilst local authorities have both the powers and the tools to regenerate their areas, along with access to significant public sector land assets, there needs to be a concentrated effort on delivering housing need across the full spectrum of tenures to deliver better outcomes for local people post pandemic. Health, housing and social care needs for specialist provision also need to be viewed corporately and where appropriate may need to be looked at through innovative financing structures. 

Given that funding is available cheaply at present from a number of sources – not only the PWLB, but the Municipal Bonds Agency and the private placement market as evidenced recently by Brent and Redbridge councils – what are authorities waiting for. For further details on funding options please contact David Moore.

Solutions should be bespoke to deliver the schemes and projects that will help to meet local need, driven by experience of what has been done elsewhere.

 

Replicated with consent of LLG

 

[1]              LGA report, Delivery of Council Housing – Developing a Stimulus Package Post-Pandemic

[2]              Lancashire CC v G [2020] EWHC 2828         

[3]              There are specific powers for local authorities to support companies delivering private sector rented accommodation in s24-26 Local Government Act 1988

[4]               Functions includes all the powers and duties of a local authority per Hazell v Hammersmith and Fulham LBC

[5]               source: Shelter

[6]               source: MHCLG

[7]               Legislation includes the Public Health Act 1936, Building Act 1984, Housing Act 2004 and Environmental Protection Act 1990