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Majority to accelerate housebuilding after cap lift

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A vast majority of councils say they are planning to take advantage of the recent scrapping of the borrowing cap on Housing Revenue Account (HRA) to boost housebuilding, a survey has found.

Research by the Local Government Association reveals 94% of the 63 housing stock-owning councils who responded to the survey said they will use the new powers to accelerate or increase their housebuilding programmes. Of these, 89% said they were “now considering” increasing their level of housebuilding, and 5% were ”likely to consider [building] over the next five years”.

Of the seven London boroughs and nine metropolitan districts that responded to the survey, all were now boosting their level of housebuilding following the removal of the borrowing cap.

Last October, the government decided to abolish the cap on the amount councils can borrow against their housing revenue accounts as a way to revive council housebuilding, and the Office for Budget Responsibility predicted that councils would build an extra 20,000 homes by 2023/24 as a result.

But 205 councils are unable to take advantage of the new borrowing powers because they no longer own any housing stock.

The survey revealed that 83% of councils expressed a willingness to see more local and regional collaboration in sharing and developing skills. 

Building quickly by using methods such as off-site manufacturing was most commonly reported by councils as an area in which more support was needed, with 68% of councils saying the need for support for this was “very” or “fairly” likely.

The number of homes built for social rent each year has fallen from more than 40,000 in 1997 to 6,000 in 2017, due in part, the LGA said, to government rules and restrictions ”hampering the ability of councils borrowing powers to build”.

The LGA added this loss of social housing has led to more people being pushed into the often more expensive and less secure private rented sector, doubling the housing benefit bill paid to private landlords since the early 2000s.

LGA housing spokesperson Judith Blake (Lab), called for a “genuine renaissance” in council housebuilding to boost housing supply, help families struggling to meet housing costs, provide good quality homes to rent, reduce homelessness and tackle the housing waiting lists.

“By lifting the cap on councils being able to borrow to invest in new and existing housing, the government has showed it has heard our argument that councils must be part of the solution to the chronic housing shortage,” she said.

“The last time the country built more than 250,000 homes in a year, in the 1970s, councils built around 40% of them.”

“Councils now also need to be able to keep 100% of Right to Buy receipts and set discounts locally to ensure they can replace any homes sold.”

The survey was sent to all councils with Housing Revenue Accounts (165 local authorities in England), and 63 councils responded.




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