A £2bn fund for affordable housing could deliver up to 25,000 homes for social rent, according to Conservative Party estimates, but questions surround how many freedoms councils will be given to build at scale.
Ms May said “councils as well as housing associations” will be encouraged to bid for a share of the £2bn to “allow homes to be built for social rent, well below market level” in “parts of the country where the need is greatest”. These would provide a “new generation of council houses to help fix our broken housing market”, she said.
A press release issued by the Conservative Party following the announcement said with “a typical subsidy of £80,000… can supply around 25,000 homes for social rent”. However, it suggested only councils in areas of the country “where rents are high” would be able to bid to the fund for homes for social rent.
The latest government figures show 6,800 homes for social rent were delivered by councils in 2015-16 – numbers have been on a downward trajectory since 2010-11 when 39,500 were built.
The Conservatives added they would “encourage more investment in social housing” by “setting a long-term rent deal for councils and housing associations” but provided no further details.
Key figures in the Local Government Association have welcomed the announcement but are seeking clarification on the policy’s finer details.
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LGA chair Lord Porter (Con) said: “The money isn’t the interesting part of the speech: it’s the first time I can remember any prime minister being positive about council housing in 40 years.”
He told LGC he hoped councils would quickly exhaust the £2bn pot and demonstrate to the government that the only way to solve the housing crisis was to allow councils to build more homes.
Martin Tett (Con), the LGA’s housing spokesman, told LGC it is “not obvious to me at the moment what a new programme of council housebuilding will mean and how it will actually operate” but added: “I’m not going to knock it. I think it’s a great thing that’s happening and we look forward to playing our part.”
The “key issues” for him were “how that £2bn will be allocated and to whom”, whether councils’ borrowing caps would be lifted, and if homes built would be subject to the right-to-buy.
The LGA has been pressing the government to lift the borrowing cap on the Housing Revenue Account and for right-to-buy discounts to be made sensitive to local housing markets for some time. Ms May’s announcement appears to fall short of those calls.
Cllr Tett said: “It would be wrong of me to turn up my nose at £2bn – that is clearly not the case.
“They have offered an additional £2bn at a time when public expenditure is still quite constrained and there will be plenty of other ministers sat around the table saying ‘I could do with that £2bn’.”
The idea of the government doing deals with councils in high demand areas to enable them build more homes was first introduced in the housing white paper at the beginning of the year. Stoke-on-Trent and Sheffield city councils, and Newark & Sherwood Homes - the arm’s length management organisation of Newark & Sherwood DC, have been in discussions with the government over their own bespoke housing deals but nothing has materialised yet.
Speaking at a fringe event at the Conservative conference yesterday, communities secretary Sajid Javid said a “number of councils” had come forward and said he would “support councils that come through with sensible plans for development”.
He added: “I’d like to see more council houses.”
Earlier in the session he described the lack of affordable housing to rent or buy as “the biggest social problem we face as a country”.
“At the last conference I dedicated my whole speech to housing, I did the same this year, I’m going to keep doing that until I think we have got a step change in our delivery of housing,” he said.
Mr Javid said there were three things he would be focused on: releasing “more land in the right places”, speeding up delivery by developers and diversification “so we don’t have a market of only nine to ten really big developers”.
Reacting to today’s announcement Chartered Institute of Housing chief executive Terrie Alafat said: “The number of homes for social rent funded by the government collapsed from 36,000 to just over 1,000 between 2010-11 and 2016-17. Reversing this trend will be a significant task – how much of this new funding will be dedicated to building these kinds of homes?”
“There is much to welcome in these announcements and they are certainly an important step in the right direction, but we still need to do more if we are to finally build the number of truly affordable homes we need.”