Housing magazine has given me a good opportunity to plug ARCH's
timely seminar on New Approaches to Market
Renting by running a story which
draws attention to several more councils which are making plans to
build or acquire homes for market rent.
The magazine reports that Broxbourne Council, which transferred
its housing stock in 2006, has established a company, Badger BC
Investments, to provide market rented properties for key workers,
such as teaches in local schools.
The story suggests that building for market rent is particularly
attractive for stock transfer councils sitting on large cash
reserves derived from stock transfers because with interest rates
so low, homes for rent offer a more attractive rate of return. Rob
Beiley at Trowers and Hamlins solicitors is quoted as knowing of
half a dozen other councils thinking of a taking similar
However, plans to provide for market rent are not confined to
councils which have transferred their stock. The article also
mentions that Newham council - which has retained its stock and now
manages it directly - is planning to build 3,000 homes for market
rent and acquire another 500 over the next 13 years. Our ARCH
seminar on 17 March will hear from Stephen Hills
of South Cambridgeshire District Council which has established a
company to provide homes for market rent. Ashford Borough Council
in Kent - another stock-retaining council - have done the same.
All these councils are responding to a need for good-quality
market rented housing arising in those parts of the country - the
majority of areas - where house prices have risen beyond the reach
of younger households on average incomes or below.
But what makes direct council intervention an attractive option is
the low interest rates at which councils can borrow, coupled with
the need to find other sources of income to make up for the
withdrawal of government grant to support General Fund
The irony is that, because these homes count as a General Fund
activity, not only are councils able to use cash reserves, but they
can also borrow up to prudential limits to finance their provision.
Debt caps do not apply.
Given the pressure on the General Fund, many councils will want to
use surpluses arising from providing homes for market rent to
defray General Fund spending. However, as ARCH has argued in our submission
to the Lyons Review, allowing councils the option of providing
for market rent within the HRA could both provide them with the
financial capacity to increase the scale of such activity and allow
surpluses to cross-subsidise the provision of additional social
I am looking forward to an informative and useful event on 17
March. Alongside Stephen Hills we will hear from David Pipe of CIH,
who will present the findings of a major CIH project on market
rents, and from Martin Pereira of LB Havering about the operation
of their social lettings agency. If you have not done so already,
it is not too late to book your place.