Thursday, 19 January 2017

Councils axe build programmes after rent cut

Councils have axed thousands of homes planned under fledgling development programmes, as they battle to accommodate the 1% rent reduction imposed by the government.

An analysis of more than 40 councils’ Housing Revenue Account (HRA) business plans show heavy cuts to capital investment including housebuilding.

South Cambridgeshire, Dover, Cambridge and Reading are axing or putting on hold plans to build thousands of homes while Bolsover, Bournemouth and Southampton announced reductions in their capacity.

Many others plan to remove millions from capital expenditure, which include building and repairs works, as they seek to cover the £2.5bn hole the rent cut leaves in business plans over four years.

John Bibby, chief executive of the Association of Retained Council Housing, said: “Most authorities are telling me that the new build programme they’ve developed will be the first thing that would have to go because of the uncertainty.”

Mark Howell, cabinet member for housing at Conservative-led South Cambridgeshire District Council, said the council had hoped to build around 1,000 homes - “the biggest new build programme in our area for two generations” - but “this will now not be possible”.

Reading Council had plans to build 1,000 new homes over 30 years however the reduced rent income “has eliminated almost all of the proposed new build programme”.

Conservative-led Dover District Council has put a plan to build 500 homes on hold because it has “less control over rents and housing assets”.

Nick Cross, head of housing at Southampton City Council, said one of the council’s regeneration programmes, which would have included 475 homes for social rent, will now be cut to 50 with the rest as Starter Homes or market sale “because we just don’t have the funding”.

Councils began developing new build plans for the first time in 2012 when the government signed off on a deal to allow them to keep rent receipts in exchange for taking on historic debt.

The business plans, which have been published over the last month, show a mixed picture with councils such as Southwark and Sheffield explicitly protecting plans to build new homes.

However, there are substantial cuts to capital spending outlined, with Oxford City Council cutting its capital programme by £54m over the next four years, while Hinckley and Bosworth Borough Council, Haringey Council and Norwich City Council have all substantially reduced capital budgets.

Oxford, Cannock Chase and Thurrock’s budget plans reveal they all applied for waivers to the rent cut – which are only available if their business is unviable as a result.

Thurrock said the government’s plans had the “potential to make the council’s current HRA business plan unviable”.

A DCLG spokesman said: “We’ve doubled the housing budget to help build 400,000 affordable homes and more council housing has been built since 2010 than in the previous 13 years – but we want to do more.”

Additional reporting by Corin Williams, Heather Spurr, Martin Hilditch and Peter Apps

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