You are viewing 1 of your 1 free articles

Councils must deliver new social housing themselves

Comment19.09.25by David Taylor

It is time for local authorities to pivot their arm’s-length developers from private sale to social rent and bring them in-house, writes David Taylor, chair of Havering Council’s Places Committee

David Taylor

Cllr David Taylor is chair of Havering's Places Committee

Sharelines

It is time for local authorities to pivot their arm’s-length developers from private sale to social rent and bring them in-house, writes David Taylor, chair of Havering Council’s Places Committee #UKhousing

Local authorities up and down the UK are facing temporary housing emergencies, brought on by the collapse of the private rented sector and a freeze of the Local Housing Allowance. For many – such as in my borough, the London Borough of Havering – this emergency is costing us millions and fast-tracking us to bankruptcy.

Despite this situation, many of those facing financial ruin are failing to build the social housing needed and instead are continuing to prioritise development of homes for private sale.

It is time for local authorities to pivot their arm’s-length developers from private sale to social rent and to bring them in-house.

Havering Council formed Mercury Land Holdings (MLH), an arm’s-length developer, in 2015. MLH became a separate legal entity to the council despite being owned fully by it. Council officers form a majority of the board and MLH is financed by loans from Havering Council. However, MLH does not focus on social housing.

Setting up companies like MLH makes construction of homes by Havering more expensive and less transparent, and it does little to solve the temporary housing crisis.

MLH is financed by borrowing from Havering Council, which borrows from the government. Havering then attaches an increased interest rate to make a profit. Havering makes around £1m a year from this, which helps to trim its general fund deficit (currently predicted to be around £88m).

Last year Havering Council decided to dispose of some car parks in Romford town centre. It sold them to MLH, which borrowed yet more money from Havering Council to purchase the sites. Once MLH receives planning permission, it will have to pay (borrow) more, and it will need to borrow to fund construction.

This complex arrangement, with Havering profiting from the lending, means that MLH will be facing higher construction costs than if the council had built these developments itself.

MLH is paying Havering Council £8m for two of the car parks and in its latest planning application it has scaled back on the improvements to the river and social housing provision due to “viability”.

The two Romford car park sites are due to deliver around 240 homes, and removing the cost of land purchase would mean a saving of around £30,000 per unit. It is clear to me that bringing development in-house would save millions.

It has long been a belief of mine that any approved development must have the Section 106 provision meet the Social Housing Market Assessment (SHMA). In Havering, our SHMA shows that we have an urgent need for three or four-bed family homes. Unfortunately, building these types of homes is just not viable for many developers, but it could be done in-house.

Councils do not have to deliver the same ROI as a private developer and they can afford to take longer to get a return on their investment. With private developers focusing on the one and two-bed properties, bringing MLH in-house would allow it to focus on larger family homes. Not only would this help meet our housing need, it would also mean a better quality of life for hundreds of families across the borough.

Reporting to the scrutiny committee that I chair, Havering said it had 509 families in temporary accommodation as of November 2024. The proposed plan to resolve this includes an £18m spend on buying homes from the market and a further £25m in office-to-residential conversions.

“Bringing MLH in-house would allow it to focus on larger family homes. Not only would this help meet our housing need, it would also mean a better quality of life for hundreds of families across the borough”

Families with support needs and complex lives being crammed into permitted development office conversions doesn’t fill me with much joy. Nor do I think it is what we need, especially as one of these proposals involves moving around 50 families out of the borough completely.

It is clear to me that bringing development in-house would allow for better-quality housing.

Havering is going bankrupt. We have an £80m budget deficit and millions of that is due to temporary accommodation costs. Havering Council spends £7m on paying private landlords and nearly £6m a year on hotels and nightly accommodation.

This shows a potential for a £13m spend reduction, as well as new revenue from rents.

While MLH may have been a good idea during happier times, the £1m profit is an insignificant income. MLH doesn’t meet our housing need, it doesn’t provide value for money, and it is inflating the cost of construction.

Companies like MLH exist across the UK, not just in Havering. With many local authorities facing financial collapse, it is time for local councils to bring these developers in-house. This will drive down costs and allow for the construction of what we actually need.

David Taylor, Places Committee chair, London Borough of Havering