New London Architecture

How can we build more council homes in London? 

Tuesday 11 June 2024

Karen Sullivan, Director of Planning and Development at Islington Council, highlights the housing crisis in London and the need for radical reform, citing barriers like lack of public investment, high costs, and land shortages.

Despite the best efforts of London’s local authorities, Registered Providers and the Mayor of London, the current housing system is failing to deliver the new council homes (and homes for social rent) that so many Londoners urgently need. This very timely Think Tank brought together a cross-sectoral group of housing experts to discuss how a new Government could address this challenge. Shelter is currently working to develop proposals for reform of the housing system so that new ideas can be put forward in a report to the next Government. 

Participants in the Think Tank agreed that radical and ambitious reform of the housing system is needed. 

There was a broad consensus about the current barriers to delivery. A lack of public investment in social housing was seen as perhaps the most significant barrier. It was also highlighted that investment in building new homes is competing with the need to invest in improving the condition of existing council homes and homes owned by Registered Providers. A longer term rent settlement could provide greater certainty and stability in relation to investment programmes.

Other barriers to delivery include: high borrowing costs caused by economic uncertainty; rapidly increasing construction costs; a shortage of suitable land; and the need for greater certainty in the land use planning system.   

The high human and financial cost of failing to deliver council homes and social housing was highlighted. Millions of pounds of public money are being spent each day in the private market either through housing benefit or housing homeless people in temporary accommodation. 

Poor quality and insecure housing can also lead to poor personal outcomes in terms of health, education and employment.  This further increases the true cost of inadequate housing to the wider public sector. The current housing system is therefore not only failing to provide secure and decent homes it is costly, wasteful, and poor value for money. 

In response to this problem, it was suggested that a new Government could create an investment ‘bridge’ in public housing that will (over time) enable revenue expenditure in the private market to be switched to capital expenditure to build new council homes.  This transition would be partly enabled by incrementally decreasing revenue expenditure on dealing with the effects of a failed housing market.

The Think Tank also identified ideas that could increase the supply of affordable housing in the more immediate term. 

For example, many councils and Registered Providers have developed programmes to build private homes to fund the construction of social housing. More public subsidy would enable the proportion and number of new council homes delivered through these programmes to be increased. There are also opportunities for councils to buy back homes that have been sold through the right to buy and to buy empty homes. There were also calls to provide greater flexibility in terms of how right to buy receipts are used to fund new homes and to enable local authorities to combine right to buy - receipts with other forms of public subsidy.  The opportunity to bring forward stalled s106 schemes was also highlighted.

Other reforms that were suggested included: clarifying the rules on the release of public sector land because landowners are often looking to secure the highest possible financial value to fund public services; updating the National  Planning Policy Framework to strengthen housing targets for council homes and social housing; strengthening  planning policies on viability to ensure that developers are discouraged from overpaying for land; delivering new homes through community land trusts; and making it easier for local authorities to compulsorily purchase vacant land.  

It was agreed that London also needs more intermediate housing, but most attendees felt that addressing this issue should not shift focus away from the more pressing challenge of delivering council homes and social housing. It was suggested that the funding of intermediate housing could be attractive to longer term institutional investors.

The Think Tank also agreed that new social housing needs to be built to a high standard and must be accessible, sustainable, flexible, and durable in the longer term. Whilst some members of the Think Tank were sceptical about the cheaper cost of modular housing others thought that it provided an opportunity to build new homes more quickly.

Although we did not necessarily agree on every potential solution to this most urgent of problems, the work of the Think Tank demonstrated that a cross-sectoral response to this challenge is crucial. There was also a clear demonstration that the different sectors are keen to work with a new Government to solve this most urgent of problems. 




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