Councils need the tools to build the homes we need
Housing, or the lack of it, is one of the biggest issues facing councils.
Housebuilding has failed to keep pace with the rising population, particularly when it comes to affordable and social homes.
Government data shows the proportion of housing for affordable or social rent in England has fallen from around 20 per cent in 2000 to 16 per cent in 2023.
Despite various government schemes over the years, increasing the supply is challenging, with providers citing issues such as access to funding and increasing construction and land costs as barriers to delivery.
The shortage of affordable housing is a key driver of homelessness, which has been exacerbated by the ongoing cost-of-living crisis, as those on lower incomes are unable to keep up with rising bills and housing costs. The latest government figures show that homelessness rates have increased by more than 10 per cent in the past year, with 358,370 households seeking support from their local authority in 2023/24.
This is putting extraordinary pressure on budgets, with councils now spending vast sums of money – £1.75 billion collectively – housing people in temporary accommodation because of a lack of social and affordable housing.
What’s clear is that we are beyond crisis point and we are urging the Government to take bold action to tackle the housing shortage.
Councils share the Government’s commitment to building more homes, but need to be given the right tools, powers, resourcing and funding to do so.
In our Local Government White Paper and in the LGA’s consultation response to the National Planning Policy Framework, we set out some short-term and longer-term measures that would help councils boost the supply of housing and provide sustainable funding for those in need.
As building houses takes time, we need some immediate measures to help alleviate the pressure on councils’ budgets from housing and temporary accommodation pressures. This would include an increase in the subsidy for temporary accommodation, so that it is no longer frozen at 90 per cent of 2011 local housing allowance (LHA) rates.
Over the past five years, frozen LHA rates have left councils to pick up more than £700 million that they are unable to claim back from government.
Coupled with this, we need a commitment to uprate LHA rates to the 30th percentile of local rents beyond 2025/26.
“We would like to see the rollout of five-year local housing deals to all areas that want them”
These measures would enable councils to invest the money being spent on costly temporary accommodation into replenishing their housing stock and homelessness prevention services.
We would also like to see the Government go even further with its reforms to the Right to Buy scheme, to truly stem the annual net loss of social homes and to allow councils to use their receipts to deliver replacement homes.
This would include allowing councils permanent flexibility to combine receipts with other government grants, and the ability to set the size of discounts locally and to exempt new-build homes.
In the medium term, we would like to see the rollout of five-year local housing deals to all areas that want them.
Our research suggests this would lead to 200,000 additional social homes being built over 30 years, delivering a stead stream of desperately needed new social housing.e first 696).
We need to see strengthened housing revenue accounts via a long-term rent settlement and restoration of lost revenue because of rent caps and cuts, to give councils certainty on rental income and support long-term business planning.
The future of council housing finances hangs in the balance because of the cumulative impact of historic and proposed government policies and regulatory burdens, as well as recent turbulence in the economy and markets, with high inflation and interest rates.
Combined, these are forcing councils to make trade-offs, such as reducing their new housebuilding programmes.
Ultimately, we would like to see government take a longer-term approach, focusing on sustained housebuilding and preventative services, which includes homelessness and supported housing.
Previous analysis has suggested that investing £1.6 billion in supported housing would create savings of more than £3.4 billion.
Various pots of piecemeal funding for supported housing improvement and commissioning are coming to an end, so we are asking ministers to consider how they fund housing-related support for the future in a way that is flexible and sustainable, and encourages long-term and strategic commissioning.
Our message to government is simple: work with us and give us the tools to build the homes our country needs.
- The Government is expected to publish a long-term strategy for housing in spring 2025. See the LGA’s work on housing and planning. This article was first published in Inside Housing