Barking's build ambitions
London council Barking and Dagenham intends to build 763 new council homes by 2015. Gavriel Hollander finds out how
Barking and Dagenham Council has one of the most ambitious local authority new build programmes anywhere in the country.
Its contract with the Greater London Authority as part of the Homes and Communities Agency’s £1.8 billion affordable homes programme has committed it to build 763 new affordable homes by the end of March 2015. It is the HCA’s biggest council contract -more than twice the size of Birmingham’s. And the council is pressing to go even further.
‘We are going to exceed that by up to 100 homes,’ says a confident Ken Jones, director of housing strategy at the council. Phil Waker, cabinet member for housing at the authority, is even more bullish: ‘I’m hoping we can exceed it by even more,’ he chimes in.
For some, Barking is the poster boy council for a new era of local authority-led house building. It is an era made possible, in part, by the self-financing revolution that saw 171 stock-owning English councils seize control of their housing budgets this spring in return for taking on a combined £29 billion of historic housing revenue account debt.
‘The main change is that we can plan for the long term now,’ says Mr Jones.
Barking led the campaign for reform of the HRA under the previous Labour government. But in the short-term, the imposition of council debt caps by the Treasury means there is little room to leverage in extra money to fund new building.
The east London authority’s self-financing settlement - the amount it owes the government - is £265 million. There is about £12 million in ‘headroom’ between that figure and the debt cap meaning that, until the debt starts being repaid the council’s borrowing potential is limited.
‘Councils are going to want to use their own resources in the same way as a housing association would,’ says Darren Henaghan, corporate director of housing and environment. ‘The debt cap is not like any normal accountancy rules for prudential borrowing.’
With building housing just one of three key priorities for Barking - along with maintenance of its existing 19,200 homes and a wide-ranging estate renewal programme - the cap could have been a problem. But the council doesn’t plan to kick its heels while it reduces its debt.
Of the 763 homes it will build over the next three years, 477 will come courtesy of a partnership with fund manager Long Harbour, which raised £64 million of equity from institutional investors. Barking’s stake in the project comes from the use of council-owned land for the development. It is a model that could be replicated for future development, with the council already in talks with Aviva Investors over a similar deal.
‘I was fearful of the debt cap at first,’ admits Mr Waker. ‘But now we realise there are other things we can do if we do bump up against it [the borrowing limit].’ He adds that building new homes now is the best way to guarantee cash flow in the future.
Other London councils have looked at similar investment but the cheap land values in Barking make it more viable. ‘We have not closed the door on [similar investment] but we don’t think it stands up here because of our land values,’ admits Paul Ellis, cabinet minister for housing at Wandsworth Council.
Even with investors wanting commercial returns, around one in five of the 477 homes will be for social rent, with a further 10 per cent let at 65 per cent of market rate. For the remaining 300 homes that will be built under the HCA programme, the majority will be well below the 80 per cent market rate the programme allows.
The price mix reflects a policy under which no council tenant should pay more than 35 per cent of net household income on rent.
Meanwhile, the council is spending more of its own money - £34 million in the last financial year - on its existing stock, of which a third still does not meet the decent homes standard. Much of its old housing is being demolished, including the towers known as Legoland in Goresbrook Village. Barking is well under way on a programme funded by the previous HCA regime to build 144 homes that will help rehouse those decanted.
But this, combined with an influx of families forced out by high rents elsewhere in London, has created other problems. The number of households in temporary accommodation has doubled in two years to more than 1,200, with more than 100 in bed and breakfasts. The council has not ruled out following the example of its neighbour Newham Council by trying to rehouse people outside London.
‘It is something that we are keeping under review,’ concedes Mr Jones.
number of affordable homes to be built by 2015 under the Homes and Communities Agency programme.
The council hopes to exceed this
housing waiting list in Barking
number of households in temporary accommodation, more than 100 of which are in bed and breakfasts
council spend in 2011/12 on improving existing stock