The great British council house revival

In the post-war era, most of the UK's housing was delivered by local authorities, including swathes of council estates that still comprise a large proportion of the nation's housing stock. But following Margaret Thatcher's election victory in 1979, the state began to withdraw. Council's stopped building and lost homes through RIght to Buy. Limits were placed on authorities' use of local taxes to build new houses and they were unable to use receipts from RIght to Buy sales to build replacements. To an extent, the mantle for building homes for social rent passed to housing associations, but the volume of council homes still declined.

Now, however, the situation has changed again. Last summer, a report – Local authority direct provision of housing continuation research – produced by Dr Janice Morphet and Dr Ben Clifford from Barlett School of Planning at UCI, on behalf of the Royal Town Planning Institute (RTPI), found that 69% of councils surveyed were once again building new homes. It also found that the number of homes being delivered by councils annually was the highest since 1990.

A further incentive to built cam in October 2018, when then-prime minister Theresa May announced that the borrowing cap on HRAs would be raised, if not lifted entirely, allowing councils to borrow to invest in new homes. The timing was not coincidental. With interest rates at a historic low and unlikely to increase any time soon, authorities were able to borrow cheaply.

However, other factors are at play. The RTPI report revealed councils had concluded that securing affordable housing through section 106 negotiations wasn't producing – and probably never would produce – the homes that their communities needed. According to Morphet, councillors were fed up with affordable homes contributions being whittled down through negotiations around viability, in particular. "Councillors didn't want to be associated with it," she says. "Developing puts councils in control. When they make promises, they can keep them."

John Perry, senior policy adviser to the Chartered Institute of Housing, adds that councils are also concerned housing associations arent plugging the gap. "I think councils are getting involved primarily to meet housing needs. They may think that housing associations are not building the right homes for their area – so not enough social rent, not enough larger homes."

Money is also a factor. Finn Williams is co-founder and CEO of Public Practice, which places private-sector built-environment professionals with councils that need additional support. He says that many of their associates are supporting housebuilding. In his experience councils' motivations for embarking on housebuilding often for the first time in decades, vary significantly.

"There has always been a driver around addressing real need, and especially around affordability," says Williams. "But there has also been a driver around generating income, in particular in the last four to five years. It's a way of balancing their budgets and cross-subsidising other services. There is increasingly a driver to lead by example by raising design standards sustainability and placemaking. So, depending on the council there is a different level of emphasis on those different drivers."

"They need to bring those skills in-house and they are all doing it at the same time, so there are high levels of competition for that talent. It was already an issue for the private sector and housing associations, and now that there are so many local authorities wanting to build in-house capability, they are the most in-demand skills that weve seen in local government."

How councils are delivering housing varies considerably. For example the West Midlands Combined Authority (WMCA) is supporting the region's councils through a £350m housing deal struck with the government in 2018. The authority has a target of 215,000 homes by 2031, and is just as willing to support authorities in the region as it is private developers and housing associations, says David Warburton MRICS head of land and development at the authority. "A number of authorities are either delivering new council houses directly or alternatively setting up their own private rented sector housing delivery arms.

"Wolverhampton, for example, has Wolverhampton Living, which has a significant programme of private-rented sector delivery in the city. There are other authorities looking at direct delivery of council housing. Dudley is quite well advanced – in terms of delivery people have already been handed the keys. We are invested in those types of schemes, but with all our schemes, including the council schemes we want them to be mixed tenure."

Enfield Council in north London is also dedicated to delivering new homes directly. According to Joanne Drew, director of housing and regeneration at the authority, Enfield reviewed its HRA in light of the 2018 changes and drew up a programme for the delivery of around 3.500 homes over a 10-year period.

"That includes some private sale and an element of cross-subsidy, but the main reason we're doing private sale is to create mixed and balanced communities rather than really capitalising on cross-subsidy," says Drew. "We have geared up with a development team that takes control of a scheme's design, takes it through planning and then through to procurement. However, we ask contractors to do the actual building on our behalf."

Drew adds that the point of the programme was to build homes that wouldn't be built if the market was left to its own devices. "It's maximising the number of family-sized homes, looking at the green agenda, thinking about housing products like intergenerational housing and the later-living model – stuff that a developer won't make because it has profit implications," she says.

Nottingham provides an alternative example. Around 15 years ago, the local council established an arm's-length management organisation to manage its housing stock, primarily to make it easier for the council to access funds to support its obligations under New Labour's Decent Homes programme. Since then, however, Nottingham City Homes has evolved.

The organisation is still a regulated, registered provider (RP) of social housing, but in the last couple of years it also established a separate company called Nottingham City Homes Enterprises. According to Malcolm Sharp chair of the group, the whole idea is to "maximise the routes by which we can be as effective as possible" in delivering the different tenures the city needs.

"We have ambitions to build more social housing through RP," he says. "At the moment, it isn't vulnerable to Right to Buy. We can get a financial case up and running because we're not going to be threatened in five years with having to sell the property, which would blow the financial model apart."

However, the company also builds and redevelops homes for market rent and has agreed a deal to convert homes in Nottingham's Arboretum area into apartments. "In their time, they were elegant properties but they had fallen into rack and ruin," says Sharp.

"The point is that we're putting into the market good-quality properties with secure tenancies and a good landlord. The council wants to set the standard that it expects the private sector to achieve. They have a new licencing scheme to up the quality of the private rented sector."

For the moment, Nottingham City Homes isn't building houses for private sale, but has considered it. It was asked to look at a large, council-owned site and did extensive modelling work, but decided against the idea. "The problem was that the for-sale units would have to be smaller houses of a lower specification compared with the rented homes next door if they were to be viable," says Sharp.

"You could do that, but we needed a Plan B in case they didn't sell because of the area that they're in. We weren't keen to take them back into our stock, which was the fall-back position. In the end, the council decided to put the site out to market."

The starting point was to look at all council-owned land and only then decide how each site should be brought forward. Some are being delivered through the council's HRA, while others are being brought forward via Goram Homes, the council's housing company. Generally speaking, it is charged with bringing forward larger sites that can accommodate upwards of 75 units, while the HRA is used for delivering homes on smaller sites.

So, local authorities are delivering homes in a variety of ways, with some doing so knowing that some social housing will be lost under Right to Buy. Others have set up housing companies that can act, in effect, as private housebuilders. And others are opting for a hybrid model. However, given the severity of the housing crisis what matters most is that they are getting on and building.