Councils To Use Borrowing Powers To Accelerate Homebuilding Programmes

Last year, the Government accepted the LGA’s call to scrap the housing borrowing cap. The LGA’s new survey shows the move will support the delivery of local housing with 94 per cent of housing stock-owning councils (59) saying they will use the new powers to accelerate or increase their housebuilding programmes to build homes desperately needed in their communities. The number of homes built for social rent each year has fallen from over 40,000 in 1997 to 6,000 in 2017. The LGA said this decline has resulted from the policies of successive governments, such as rules and restrictions hampering the ability of councils borrowing to build. Read more on the LGA website.

https://www.local.gov.uk/about/news/lga-survey-councils-use-borrowing-powers-accelerate-homebuilding-programmes

Government Sets Date To Lift Borrowing Cap

Councils’ Housing Revenue Account (HRA) borrowing caps will be scrapped in less than two weeks’ time, a government document has revealed. Communities secretary James Brokenshire has written to the chief executives of all stock-retaining local authorities presenting a draft plan for removing the cap. Measures outlined in the document will come into force on 30 October, the day after the Autumn Budget. HRA borrowing will be restricted by the Prudential Code only. Read more on the Newstart website.

https://newstartmag.co.uk/articles/government-sets-date-to-lift-borrowing-cap/

Housing Minister Open To Considering Changes To Borrowing Cap Policy

The housing minister has said he is open to considering changes to the government’s policy of lifting the borrowing cap only for certain councils. When asked by Liz Twist, a Labour MP on the Housing, Communities and Local Government Select Committee, whether the government has considered raising the cap for all councils, Dominic Raab said he does not have a “closed view” on the policy. In the Autumn Budget last November the government announced £1bn of extra borrowing capacity for those councils where housing demand is highest. But critics have said £1bn is not enough to build the number of council homes required. Read more on Inside Housing.

https://webcache.googleusercontent.com/search?q=cache:atnapH4AulsJ:https://www.insidehousing.co.uk/news/news/housing-minister-open-to-considering-changes-to-borrowing-cap-policy-55226+&cd=2&hl=en&ct=clnk&gl=uk&safe=vss

Councils And ALMOs Call For Flexibility In £1bn Borrowing Cap

Council housing representative bodies are urging the government to set out flexible bidding criteria for the £1bn of additional borrowing headroom announced in the Autumn Statement. The Association of Retained Council Housing (ARCH), the National Federation of ALMOs (NFA) and the Local Government Association (LGA) are also calling on their members to prepare to bid for the debt. There are fears that too much red tape could cause the programme to be undersubscribed – as happened when the Treasury announced a similar policy in 2014 – damaging future opportunities of funding for council housebuilding. Read more on Inside Housing.

https://webcache.googleusercontent.com/search?q=cache:5slWa1zxiP8J:https://www.insidehousing.co.uk/home/home/councils-and-almos-call-for-flexibility-in-1bn-borrowing-cap-programme-54835+&cd=2&hl=en&ct=clnk&gl=uk&safe=vss

Government ‘Should Raise HRA’ So Councils Can Tackle Housing Crisis

Research by the New Local Government Network (NLGN) reveals affordable housing efforts would benefit from a reconsideration of the borrowing cap for local authorities. To NLGN, an increased capacity to borrow, among other measures, would give local authorities the autonomy to build housing where it is needed. The research, commissioned by the National Housing Federation, outlines the collaboration between local government and housing associations, who are committed to providing affordable housing in line with current demand.  Download the report from the NLGN website.

http://www.nlgn.org.uk/public/wp-content/uploads/Working_together_for_more_homes_full_report.pdf

Abolish Borrowing Cap So Local Authorities Can Increase Housing Supply

In Autumn Budget 2017, the Government raised the borrowing cap for councils in areas of high affordability by £1 billion to help achieve its target of 300,000 new homes per year. Private housebuilders have consistently provided 150,000 units per year, so the target is unlikely to be met without a significant increase in supply by local authorities. To achieve this, the Housing Revenue Account borrowing cap should be removed. At the very least, the Treasury should define the allocation criteria for the additional £1 billion more clearly. Read more on the Parliament website.

http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news-parliament-2017/budget-autumn-2017-report-published-17-19/

Chancellor's Plan To Solve Housing Crisis Will Fail

Chancellor Philip Hammond's plans to tackle the housing crisis will fail without further reforms, MPs say. Abolishing stamp duty on homes under £300,000 was the centre piece of Mr Hammond's November budget. The government says it has already helped more than 16,000 people get on the property ladder. But the Treasury select committee said the move is likely to push house prices by at least the amount the reduction in stamp duty is supposed to save. It said Mr Hammond would only meet his target of 300,000 new homes a year if he took more action to promote building such as lifting a borrowing cap on councils. Read more on the BBC website.

http://www.bbc.co.uk/news/uk-politics-42768300

Social Housing 'Deals' Plan Builds On CLG Work

Ongoing behind the scenes work with three councils will form the basis of flagship Conservative plans for ‘bespoke deals’ to build social rented housing, it is understood.  In a statement, Mrs May said she plans to enable “the most ambitious” councils and housing associations build “a new generation” of socially rented properties. This builds on behind-the-scenes work with three authorities – Stoke, Sheffield and Newark and Sherwood – which have been discussing a package of measures that could allow them to step-up house building. The packages discussed would include flexibility on borrowing caps – imposed under the self-financing deal in 2012 – but also involve new deals on rent setting and bland assembly powers. Read more on Inside Housing.

MPs: Scrap Housing Revenue Account Cap Where Housing Unaffordable

Borrowing caps on councils’ Housing Revenue Accounts (HRA) should be raised – and, in some cases, scrapped – to help boost housebuilding, MPs have recommended. A report by the Communities and Local Government Committee, Capacity in the Homebuilding Industry, suggests that HRA borrowing caps are limiting local authorities’ ability to build. The report notes that research found that 57% of 141 councils had not made use of the additional borrowing capacity since the introduction of self-financing in 2012. Download the report from the Parliament website.

Government Refuses Major Changes Recommended By Lords Committee

In February, the House of Lords Committee on National Policy for the Built Environment suggested changes to council borrowing caps, a review of the 1% rent cut and issued a call to “reconsider” its proposal to include Starter Homes within the definition of affordable housing.  In its response the government said it did not agree with the committee that the 1% rent cut may “threaten the viability of new schemes” planned by councils. The government did not accept the committee’s recommendation to review the impact of borrowing restriction on councils’ ability to deliver housing and said it is “important that the definition of affordable housing for planning purposes supports present and future innovation by housing providers in meeting the needs of a wide range of households who are unable to access market housing”. Read more on Inside Housing.

Council Housing – Parliamentary Written Answer

Mr David Lammy: To ask the Secretary of State for Communities and Local Government, if he will make an assessment of the potential effect of a removal of the borrowing cap on local authorities' housing revenue accounts on the output of new council houses.

Brandon Lewis: We have no plans to remove the limits on indebtedness but we have been able to make available an additional £300 million borrowing over 2015/16 and 2016/17 and those councils that needed additional borrowing have now had two opportunities to bid for additional borrowing. I announced on 9 October that £178 million additional borrowing was still up for grabs in the second bidding round. We are now considering those bids. 

Helping Councils to Build More Homes

Answering the inevitable question at the CIH Conference in Manchester, Kris Hopkins gave the inevitable answer: the Government is not minded to lift council HRA debt caps any time soon. But he threw down a challenge: if councils can spend the extra £300 million borrowing approved in the last Autumn Statement in full and on time, he said, we can go back to the Chancellor with a much stronger case for more. The credibility of local government's call for freedom to borrow more depends on its ability to show that it has the will and the capacity to use the money effectively to deliver the extra new homes that are needed. Read more on the ARCH website.

Labour: Let Cities Grow By Lifting the Cap on Councils' Borrowing

Existing towns and cities should be expanded and the cap on some councils' borrowing lifted to allow more homes to be built, according to the man responsible for overhauling Labour's housing policy to ease the chronic shortage. Sir Michael Lyons told the Guardian he had identified protracted delays in the release of land as the single biggest cause of Britain's housing crisis. He is minded to recommend a new generation of "urban extensions", modelled on the postwar new-town expansion, insisting that while communities should have a say in planning, they cannot veto new homes in a time of severe shortage. The expansion of current conurbations, capable of using existing infrastructure, could be built as quickly as new towns, and lead to tens of thousands of new homes, contributing to a target of 200,000 new dwellings a year by 2020. Read more on the Guardian website.

Treating Council Housing Fairly

Bringing UK public sector borrowing rules into line with international practice would free councils to build an extra 60,000 homes over the next five years. This is the central message of Treating Council Housing Fairly, a new publication from the National Federation of ALMOs which restates and updates the argument developed in Let's Get Building, published with ARCH's support last year. Its launch is timely as it highlights just how tame and lacking in imagination is the Government's proposal to deliver at most 10,000 homes through release of additional borrowing. Download a copy of the report from the NFA website.

Autumn Statement 2013: The Key Points for Housing

·         Unblocking stalled sites for housebuilding - £1bn in loans over six years to unlock sites for large housing developments.

·         Council borrowing caps raised - increased housing revenue account borrowing limit by £300m

·         Selling expensive social housing - Councils will be forced to sell expensive social housing

·         Welfare spending cap - a new cap on total welfare spending. Jobseekers allowance and state pensions will be excluded from the cap.

·         Right-to-buy expansion - The government will set aside a £100m fund to expand the right-to-buy

·         Help to Buy boost - Two further banks, Aldermore and Virgin, will sign up to Help to Buy

·         Priority 'right to move' - Employed residents who need to move for a job will be given priority

·         Capital gains tax exemptions lifted for non-UK residents  - Non-UK residents selling residential property that is not their main home will pay capital gains tax

Read more on the Guardian website.

Housing Crisis Is Worse Than Any of the Parties Are Prepared To Admit

In recent months, all three of the main parties have sought to demonstrate that they are responding to the housing crisis. Labour has pledged to build 200,000 homes a year by 2020 through the creation of new towns and garden cities. The Lib Dems have called for councils to be allowed to pool their borrowing limits in order to fund a major expansion of social housing. The Tories have launched Help to Buy, which, they claim, will stimulate supply as well as demand.  But for some idea of the extent to which all parties are still underplaying the extent of the crisis, it's worth reading the Policy Exchange report on the subject. As it notes, the UK needs a minimum of 1.5 million new homes from 2015 to 2020 simply to meet need, 300,000 a year. Around 221,000 new households are expected to be formed each year over this period and there is a significant backlog. Thus, even the target spoken of in Labour circles - a million in five years - falls short. Download a copy of the report from the Policy Exchange website.

What’s Stopping Councils from Building More Housing?

A report has called for measures – including lifting caps on council borrowing – to allow London councils the opportunity to build housing suitable for low-income families.  Nearly 1 in 8 households in London live in a council home, nearly double the proportion of other parts of England, and demand is growing with over 380,000 households currently on a local authority waiting list. The report warns that despite councils having a good record of sustainable borrowing, the current caps on borrowing imposed by the Treasury – to limit national debt – means London boroughs are torn between their need to invest in improving current housing standards and building housing suitable for low-income households. New research conducted for the report shows most London councils would like to see the caps being lifted.  Read more on the London Gov website.

ALMOs Should Be Scrapped For Companies That Can Borrow More

ALMOs should be scrapped and replaced with companies allowing councils to borrow against their housing stock, the chief of the National Housing Federation has said. The Treasury-imposed borrowing cap on local authorities means they are not able to borrow against their retained housing stock because it would increase the deficit on the national balance sheet. But David Orr, chief executive of the NHF, says that there are ways of getting round this cap that the Treasury was ‘interested’ in. He suggested replacing ALMOs – which manage council housing stock – with municipal housing companies that own the stock but are largely controlled by local authorities. Read more on Inside Housing.

Lib Dems In Favour Of New Council Housebuilding Limits

The Liberal Democrats have pledged that they will support councils to pool available borrowing within the self-financing Housing Revenue Account system, after the deputy prime minister spoke about the need to build more homes across the country.  A motion passed by the conference said that the number of homes could be “dramatically increased” by allowing authorities to pool their borrowing limits. This would allow “councils who want to build more houses but are at their borrowing limit to do so”. Read more on the Housing News website.

Housebuilding Slump Could Be Tackled By Council Investment

The national housebuilding slump could be halted by a council-backed programme to build tens of thousands of new homes.  Local authority leaders are urging the Chancellor to give the construction industry a shot in the arm in next month's Spending Round by removing unnecessary restrictions on council investment in new housing.  It comes as official Government figures released today show that the numbers of new homes completed in the first quarter of this year continues its downward trend.  The Local Government Association, which speaks on behalf of more than 370 councils in England and Wales, is calling for a commitment in next month's Spending Round to remove the unnecessary housing borrowing cap.  Read more on the LGA website.