In July , the think-tank Centre for London released a new report – Borough Builders: Delivering more housing across London. Specifically, they looked into the potential of council-led housebuilding in tackling the housing crisis, with the added benefit of delivering a percentage of housing needed, as set out in the New London Plan.

The main findings were that London Boroughs have already begun to actively address the housing pressures in their local areas with 14 Boroughs having ‘direct delivery’ programmes, and with 17 having wholly-owned development companies. Together, these local authorities and their respective approaches aim for the delivery of approximately 23,600 homes over five years. Or, to put it another way, almost 8% of targets for Boroughs as included in the London Plan. If all of them were to deliver at least 10% of their target, this would mean an extra 37,000 new homes in the same time frame.

The report draws on a case study of the London Borough of Croydon. Brick by Brick (BXB) was established in 2016 by Croydon Council and is a wholly-owned development company. It has a board of four directors with half being nominated by the Borough, and the other half being independent appointments. BXB has gained planning consent on 40 sites such as car parks and vacant buildings. The organisation aims to build 1,050 homes by 2020 – of which 479 will be affordable. In addition, a further 218 homes will be delivered as part of the ‘Cultural Quarter’ redevelopment. When completed, homes will be exclusively available to Croydon residents for an amount of time before being offered more widely. BXB have also made provisions in the event of a market downturn by entering properties for sale into the private rented sector or leasing back to the Council for rent.

It is no secret that Greater London has consistently fallen short of London Plan targets, or that local authority house building has severely dwindled in the last few decades. However, recent years have seen a change in the latter. If some of the barriers and burdens can be lifted, which hinder the ability of councils to both build and retain funds, London could go some way in returning to the heights of its council-led housing days.

Challenges

Below are just some of the many hurdles outlined in the report.

Right to Buy (RTB) Receipts

This issue is far from a new one, and was also covered in a 2017 Centre for London report regarding inter-borough collaboration (which we also wrote a blog about at the time). RTB was a lifechanging policy when first announced by Margaret Thatcher in 1979; yet it has not stood the test of time for several reasons. Chiefly, the fact that houses sold are rarely replaced like-for-like, leading to a decrease in supply of social housing exacerbating the very issues RTB aimed at tackling. A big part of this is due to only 30% of the receipts being available to be put towards a replacement home, with a three-year limit of use on this 30% before it must be returned to the Treasury. With RTB sales increasing, this places more pressure on councils to come up with the remaining funds needed.

Planning and Local Residents

With the planning process being tough for all developers, it can be all the tougher when the relevant local authority is the developer. There can be local opposition from those wary of the council’s role, especially when the homes are to be delivered via wholly-owned companies rather than directly; given the local authority is also the quasi-judicial planning authority. The roles can be perceived as conflated and contradictory. This can also lead to closer scrutiny of planning commitments.

Recommendations

The report concludes with some suggestions to facilitate and expand council-led delivery.

‘Inter-Borough Collaboration’

This was the main theme of the 2017 report which highlighted the benefits of greater collaboration between councils, especially between Inner London Boroughs who have the funds to build but lack the land, and Outer London Boroughs who have surplus land but lack funds. The Borough Builders report states that whilst councils express support for greater collaboration, they can struggle to see the benefits, not least where they have differing aims and ways of operating.

Right to Buy Reform

It is suggested the Government relax the restrictions on receipts, allowing councils to combine them with other funds to replace homes like-for-like. As well as this it is urged all homes delivered through wholly-owned companies will not be eligible under RTB.

Greater Data

It is suggested both the Greater London Authority and Government should produce more data on local housing companies, specifically how many units of all tenure are delivered by which type of provider – directly or wholly owned. However, the report does state this is not solely the responsibility of the GLA or Government, councils also must be more communicative about their delivery.

Ultimately the report concludes by noting some London Boroughs are taking the initiative and pioneering active approaches to housebuilding in their local area, but not all are active and there is still some way to go. It calls for the Government to both recognise the role local authorities can play and that it also should relax the conditions attached to funding, which effectively bind councils’ hands.

Of course, this all hinges on whether the Government has a vision for London Boroughs to become house-builders once again.