Councils are Essential to Tackling the Housing Crisis

Last November Nottingham City Council passed a motion calling on the Government to remove the Housing Revenue Account borrowing cap. Just under 12 months later, the Government has finally listened and is recognising councils as essential in tackling the UK’s housing crisis.

Nottingham City Council has embarked on the biggest new Council house building programe in a generation, building 404 council homes since 2015 and aiming to build 2500 homes that Nottingham people can affordable to rent or buy by May next year. The council has created award winning quality developments in partnership with Nottingham City Homes and last year Nottingham City Homes built more new homes than any other Arm’s Length Management Organisation in the Country. We always aim to do more, however, two issues have prevented this:

  1. Councils are only allowed to use right to buy receipts to fund 30% of the cost of a scheme, the remainder must be funded through borrowing on the Housing Revenue Account which is in turn limited by central Government;
  2. Councils are only allowed to spend the money on a very narrow range of housing types and it cannot be given to Nottingham City Homes to support them with the costs of homes they are building to own for themselves.

Earlier this summer a lift on the borrowing cap was proposed but was based on criteria which would have had nothing to do with demand or affordability, instead simply relying on a crude comparison between housing association social rents and private rents where only 104 Councils could extend their borrowing cap – 91 of which are in the South of England.

The Government’s latest announcement thankfully extends this to all councils meaning areas with high demand like Nottingham will be able to get on with building the new homes that local people need. Crucial to solving the UK’s housing crisis is ensuring that we build a mix of council homes, aspiration family housing and bungalows. The lifting of the HRA borrowing cap will allow is to achieve this in the numbers we need and I welcome the Prime Minister’s announcement last week.