Issued by:
Brandon Lewis, Minister for Housing & Planning
Date issued:
20 March 2015
Key points
- Council-provided social or affordable housing should be
accounted for in the HRA unless the council owns fewer than 200
homes
- Secure council tenancies have the Right to Buy whether or not
accounted for within the HRA
- The requirement to account for stock in the HRA does not
include accommodation being used to prevent homelessness or end a
homelessness duty in the private rented sector or as temporary
accommodation
- The Government welcomes approaches where local housing
companies are developing new homes for market sale or purchasing
private homes for the accommodation of homeless households,
particularly where their borrowing does not count as public
- The Government does not support the establishment of
wholly-owned local authority companies to provide social or
affordable housing and deliberately to avoid Right to Buy and debt
caps.
Background
Since 2012, self-financing has given councils the freedom and
capacity to build new social and affordable housing within the
HRA. Council housing starts are now at a 23-year high.
But council borrowing in the HRA is limited by debt caps linked to
historic debt levels, and the Government has repeatedly declined to
lift them.
In February, the Elphicke-House report on the local authority
role in housebuilding noted that councils are making use of a
variety of housing delivery organisations, normally partnerships
with the private sector, to deliver new housing, and argued that
such arrangements offer various strengths and opportunities.
Such vehicles often take the form of a company in which a local
authority has an interest but not a controlling stake, so that
borrowing by the company is not classed as public. These
housing delivery organisations have been used to provide homes for
sale, market, affordable and social rent, often in mixed
developments.
The report also argued that existing rules which exempt councils
with fewer than 50 rented homes without the need for an HRA should
be revised to lift the threshold to 200 homes.
A number of councils have also established wholly-owned
companies for a variety of purposes, including to develop homes for
sale and market rent. Borrowing by such companies is treated
as if it were borrowing by the local authority, but is subject only
to prudential borrowing rules and exempt from debt caps. Tenants of
a local housing company, whether or not controlled by the council,
are assured tenants and the Right to Buy does not apply.
In a written statement on 20 March, Housing Minister Brandon
Lewis clarified Government policy on these issues.
- Where councils are developing or acquiring new homes for social
or affordable rent, they should do so using the powers in Part II
of the Housing Act 1985 and account for them in the HRA,
except where the number of homes is very small.
- The Government will accept the Elphicke-House recommendation to
allow councils, on application, to own up to 200 homes without
being required to re-open their HRAs
- These provisos do not to apply to accommodation being used to
prevent homelessness or end a homelessness duty in the private
rented sector or as temporary accommodation
- The Government welcomes approaches where local housing
companies are developing new homes for market sale or purchasing
private homes for the accommodation of homeless households,
particularly where their borrowing does not count as public
- The Government does not support the establishment of
wholly-owned local authority companies to provide social or
affordable housing and deliberately to avoid Right to Buy and debt
caps.
ARCH Comment
- The Government has made clear that it does not support the
provision of homes for social and affordable rent by local housing
companies, but the statement is silent on what powers it has, if
any, to enforce this policy.
- The statement is silent on the provision of market rented
housing through local housing companies, whether or not
wholly-owned.
Links
Ministerial statement