Opportunities, challenges and trends in delivery of housing in England

Recent announcements calling for an urgent new programme of building 90,000 social homes cite rising costs of temporary accommodation and housing benefit, and lack of supply as key issues justifying such a build programme. Our recent research found that 94 per cent of local authorities (LAs) are engaging with housing provision through at least one of a growing array of methods, and 76 per cent have affordable housing as a council corporate priority. This gives a firm basis from which they could scale-up to support a new national programme of social housing delivery.

Our fourth report follows the same methodological approach as our previous reports published in 2017, 2019 and 2021. We carried out desk research, direct questionnaire surveys to local government officers, roundtable discussions and case study interviews, to interrogate the current picture around the direct delivery of housing by LAs across England.

Since our previous report was published, there has been an era of continuing change for all organisations engaged in the provision of housing, not least LAs. These changes have both increased the pressure to provide more homes and the challenges that councils face in making any provision to meet their local housing need.

In this round of research, we found an increasing range of activity including a growth in acquiring existing homes for affordable housing; direct delivery under the Housing Revenue Account (HRA); and development under own companies and joint ventures with developers and housing associations (HAs). Many councils are focusing on improving the standards and proximity of temporary accommodation, and trying to promote better quality of design as a motivating factor alongside meeting local housing requirements and tackling homelessness.

Although Section 106 (s106) planning gain remains vitally important for many authorities in providing affordable housing locally, many are seeking to move beyond reliance on this as the sole mechanism given the challenges this presents. In our survey, 68 per cent of authorities reported they had an action plan or strategy to boost affordable housing supply in their area, beyond just s106:

• Actively supporting HAs or other registered provider partner’s developments planned on council-owned sites (including small sites and garage sites)
• Buying back former Right to Buy properties
• Taking on s106 properties where registered providers are not interested
• Use of the council’s housing company
• Having a registered provider housing company which can access Homes England grants
• Use of council-owned sites in partnership (for example working with registered providers on vacant land)
• An empty homes purchase scheme and direct purchase of existing housing
• Building under the HRA
• Using the Public Works Loans Board
• Building out rural exception sites
• Proactively targeting stalled sites
• Working directly as an authority on land purchase and assembly.

There has been an increase in LAs taking s106 properties where local registered providers are not interested. Evidence for this practice has emerged in roundtable discussions in previous years, where examples have been cited where HAs have walked away from taking on homes to which they were previously committed in planning negotiations. Elsewhere, there has been no interest from HAs once development has been completed with issues such as poor quality finishing being mentioned. In these cases councils have taken on the properties as a last resort. In 2023, our desk survey showed an emerging new practice where LAs are agreeing to take on s106 homes from the outset, such as in Epping Forest DC, Shropshire UA and Warwick DC.

Despite the increasing range of activity and opportunities of LAs directly engaging in housebuilding again, it is fair to say there are a number of challenges in this area. A majority of respondents to our survey reported that increased costs of retrofitting existing housing (for example in relation to fire safety, damp and/or mould) were impacting their plans to deliver new housing and were symptomatic of congested priorities. There were common concerns about a lack of suitable land (with authorities still heavily reliant on building on their own land) and scheme viability concerns (with widespread comment that affordable housing grant funding was insufficient, particularly given rising build costs and the costs associated with desired higher environmental standards).

These factors, and continued concerns over issues like the Right to Buy meaning LAs were often losing more social rent housing than they were building (particularly outside London) and continuing revenue pressures on authorities meant that 50 per cent of our survey respondents were pessimistic about the future prospects of increasing affordable housing supply in their area (up from 23 per cent in our 2021 survey).

There is real political support for LA housing development across the country, and whether through necessity or proactive desire, affordable housing delivery is a becoming a core part of local government activity again. Compared with our 2017 research, there is a longer term upward trend for more activity to directly deliver housing by LAs of all political control and in all parts of the country. To realise the potential of this ambition and tackle the widespread challenges, we will require further reform, activity and commitment across the different layers of government.