Councils tipped to fill the development gap left by housing associations

Direct delivery

Mr Copley said that in a third mayoral term, subject to the will of the electorate next year, the GLA would pilot a direct delivery approach. He said that in this, the GLA would become a master developer, potentially working in joint venture partnerships and potentially owning homes that it develops.

He said: “I think there’s a real space there; this is not about displacement, displacing activity that’s already there. This is about genuine additionality, looking at where the GLA can add value, potentially around particularly marginal sites that it might be difficult for organisations without the sort of public sector strategic partner to bring forward.

“I think it’s quite exciting, it’s still very much in its infancy. We’re doing a lot of work at the moment actually on the finance side of this as well because we’ve got to make sure we can finance this properly.”

Speaking on another panel at the conference, Diarmaid Ward, deputy leader and executive member for finance, planning and performance at Islington Council, urged the government to abolish the Right to Buy to prevent councils losing more homes. According to an analysis last year, London councils have sold nearly six per cent of their stock through the scheme in the past decade.

Mr Ward said that, failing that, the government should reform the system so councils receive all of the funds from the sales and can use the money properly.

Mr Ward said: “You might have heard recently about the new government announcement where previously we got 75 per cent of our Right to Buy receipt as a council, and 25 per cent went to the Treasury. The latest announcement is that we’ll get 100 per cent of that Right to Buy receipt, which on paper is very, very welcome.

“But we can still only apply it to 40 per cent of a new build – you’ve still got to find the other 60 per cent. So, in actual fact that actually makes no difference to our ability to build whatsoever. Indeed, I’m currently worried about whether we can actually keep this money given the interest rate the government charges you to actually keep the money and whether it’d be better off giving some of this money back.”

Mr Ward said: “If the government let us use 100 per cent of our Right to Buy receipt on a single unit, quite a lot of those schemes under that programme could be 100 per cent council housing tomorrow.

“Think of what the difference that would make, think of how many families’ lives that will change. And we could do it very, very quickly. It would simply be a stroke of a pen on a bit of paper. Let us use our own money more effectively.”

Housing associations reduce development

Earlier in the day, on a session entitled ‘What does the current slowdown in development mean for housing targets?’, an informal survey of the room by the panel’s chair suggested that HAs are reducing their development plans across the board.

At the start of the session, Brendan Sarsfield, chair of Sustainability for Housing, asked everyone working for a developing HA to raise their hand, and then to keep it up if they were planning to develop the same or more housing over the next five years. 

The majority of hands went down, indicating a slowdown of development. He then asked those left if they could keep their hand up if they were developing 500 or more homes a year – and only one hand remained raised.

Speaking on the panel, Emma Turner, director of treasury and corporate finance at Riverside, said the provider, which now holds 76,600 homes after bringing One Housing into the group in December 2021, has cut its uncommitted development.

She said the decision was made in October 2022 after seven out of 12 factors from the HA’s ‘Armageddon’ stress test were in play following the Mini Budget.

Ms Turner said: “We are obviously maintaining our committed development. So that’s anything where we have spades in the ground or promises to our tenants if [they] voted for regeneration and that sort of thing. Our uncommitted development, aspirational development, has been taken out of our next corporate plan, which for us is three years – so there’s at least three years where for us we’re just not getting the opportunities.

“The next three years is relatively short term when you consider we have a 30-year business plan. But certainly, we will be monitoring it very closely over the next 12 to 18 months to make that decision as to when it is correct [to start more development].”

In March, Paradigm Housing revealed plans to cut development by 20 per cent because of investment needed on other priorities.

Orbit has scaled back its development ambitions, while Platform has reduced its housebuilding targets from delivering 2,000 homes a year by 2023-24 to now aiming for annual completions to reach a “steady output” of 1,600 in 2025.

Housing associations have previously warned of the seven per cent social rent cap leading to a fall in housebuilding.