Shopping for again higher | New Economics Basis

The UK is within the midst of a longstanding however sharply deepening housing disaster. And in no a part of the nation is that disaster extra visceral than in London. With already sky-high rents rising steeply as a part of the cost-of-living squeeze, London’s councils face report numbers of homeless households for whom they have to present properties. That is serving to to push many native authorities to the brink of chapter, as – owing to the power undersupply of social properties – they’re pressured to soak up the exorbitant prices of usually woefully poor-quality short-term lodging (TA).

Compounding this, macroeconomic headwinds – excessive development prices, excessive rates of interest, restricted grant funding, poor and unaffordable land provide, planning backlogs, and a scarcity of native authority growth capability – imply that constructing the genuinely inexpensive properties Londoners want is more and more difficult. Constructing a brand new era of latest social properties presents the principal long-term resolution to the housing disaster. However these antagonistic circumstances current a significant alternative for councils to take motion now, notably with stagnating home costs within the capital and with some landlords wishing to promote their rental properties. Councils shopping for properties to let as common wants social housing (for these on council ready lists) or TA helps them to take care of the speedy homelessness disaster.

When councils purchase properties from the non-public market they’ll make an actual distinction in tackling homelessness of their communities. Properties could be purchased comparatively shortly, and might extra intently match the sort and dimension of properties that residents want. By bettering the standard and vitality effectivity of acquired properties, the strategy may enhance the environmental effectivity of our housing inventory. Acquisitions obtain this whereas circumventing lots of the challenges related to constructing new inexpensive properties, together with the difficulties councils usually have with land acquisition and developer negotiations. To supply worth for cash and never overheat native property markets, acquisitions have to be executed rigorously, notably in high-demand, high-cost areas. However they do play a significant, albeit supplementary, function in growing the availability of latest social properties and are an essential a part of the package deal of options to the housing disaster.

The Higher London Authority (GLA) Proper to Purchase-back (RTBB) scheme, which launched in 2021 and ended final yr, noticed round 1,300 properties purchased by councils. Since then, the GLA has introduced the brand new Council Properties Acquisition Programme (CHAP), which units out its ambition to allow councils to purchase 10,000 properties over the approaching decade. Drawing on the GLA’s allocation underneath the Reasonably priced Properties Programme (AHP), these schemes have supplied grant funding to London’s councils to purchase properties and mitigate rising homelessness.

This homelessness disaster can also be a monetary disaster for London’s councils and comes at a excessive price to taxpayers. Our analysis reveals that acquisitions can ship important financial savings for native authorities and central authorities. If London’s councils purchase 10,000 properties over the following 10 years, this may cut back their TA prices by £1.5bn, trim authorities housing profit subsidies by £340m, and generate further oblique financial savings of £440m over the following twenty years. Annual government-wide financial savings from CHAP will outweigh annual prices after 16 years, that means that from this level it begins to generate annual financial savings. And by yr 25 the programme can have paid for itself, having delivered ample financial savings to cowl its cumulative prices. All these financial savings will produce a dividend to be re-invested extra productively in London’s financial system, whereas taking speedy steps to assist deal with London’s homelessness disaster.

Drawing on this evaluation, this report makes a sequence of suggestions. To allow councils throughout the nation, together with London, to profit from social housing acquisitions, the federal government ought to do the next:

1. Decide to a brand new AHP past 2026 on the earliest alternative, which features a longer-term funding settlement for each the GLA and housing suppliers.
2. Introduce a nationwide housing conversion fund, backed by vital grant funding, to allow councils throughout the nation to ship extra acquisitions.
3. Chill out the ten% cap that limits the variety of properties delivered by acquisitions underneath AHP grants administered by Properties England to match the upper 30% cap administered by the GLA, in addition to the acquisitions cap on right-to-buy receipts, in order that councils in London and throughout the nation can maximise some great benefits of acquisitions whereas persevering with to prioritise grant for brand new construct properties.
4. Permit councils to mix right-to-buy receipts with different types of grant funding, similar to CHAP funding, to offer councils the flexibleness they should exchange offered properties.
5. Uprate the TA housing profit subsidy to present native housing allowance (LHA) charges and thereafter to create a sustainable funding settlement for TA for councils going ahead.
6. Present the GLA with further grant funding to allow environmental enhancements as a part of future acquisitions programmes, in order that the GLA can think about elevating the usual of properties acquired to EPC ​‘C’.
7. Introduce a Group Proper to Purchase – pre-emptive rights of first refusal for councils – to offer them with a aggressive benefit when buying new properties.
8. Make capital funding obtainable to a wider vary of community-led housing teams to amass properties.

To maximise the advantages of future iterations of CHAP, the GLA ought to:

1. Require all acquisitions to be made in-borough. If a purchase order is made out-of-borough: (a) it have to be in a neighbouring borough; and (b) the native authority should display that the acquisition wouldn’t have been financially viable in-borough, or must be made out-of-borough for particular, permitted causes.
2. Contemplate asking native authorities to gather and supply information relating to the accessibility of acquired properties.
3. Receive the views of councils who haven’t hitherto participated in both of their acquisitions programmes to know the explanations for this and encourage their future participation.

Work with Group Led Housing Hub London and the broader housing co-operative sector to contemplate how housing co-operative acquisitions could be scaled up, together with inspecting methods to enhance their monetary viability.

Picture: iStock