Prime Minister Theresa May promised "a new generation of council
housing" and followed this up by announcing the intention to scrap the Housing Revenue Account borrowing cap
- a promise subsequently delivered in the 2018 Autumn Budget.
In the first of a series of short articles outlining what this
means for some of our member councils, our colleagues at Luton
Borough Council summarise what the scrapping of the HRA borrowing
cap means for their council and how they intend to use the new
Patrick Odling-Smee, Service Director of Housing at Luton
Borough Council writes:
"This year we mark 100 years since the Addison Act 1919, the
legislation which paved the way for large-scale council
Since that date, hundreds of thousands of homes have been
built across the country. Not just for the returning war heroes who
provided the motivation for the Act, but for individuals and
families of all backgrounds.
But this Act was not just about bricks and mortar; it was
about creating communities and decent homes.
A century on, it feels fitting that local authorities are
now able to set in motion new plans to step up their homebuilding
activities. Having received the announcement from Theresa May last
September, we can now begin to see the shape of things to come here
The prime minister told the Conservative Party conference in
Birmingham that housing was 'the biggest domestic policy challenge
of our generation', but that local authorities were being held back
from building by fiscal rules. She said the government would scrap
the current cap on how much councils could borrow against the value
of their housing stock, which was implemented in 2012.
For us here in Luton, the challenge has always been about
more than investment alone.
We are lucky enough to havesignificant funding sources
available to us but the lack of land availability, our relative
inability to unlock this land without associated risks and
perceived land value has proved a significant obstacle.
Add to this the fact that the local market is not as
attractive for shared ownership and outright sale opportunities,
meaning registered providers are increasingly apprehensive about
We also have shortages in resource and skills in our housing
development and planning department.
So here in Luton, we plan to use the new borrowing freedoms
for land acquisition wherever possible and the development of
affordable homes. Our strategic targets include delivery of 3,500
homes, of which 700 are affordable homes, by 2022.
To address our staffing shortages, we plan to work in
partnership with our registered partners other partners and make
sure that the skills are transferred to our in-house team.
Luton is one of the few councils in the country that have
our own in-house building team - BTS. They have already completed
over 14 new homes for the HRA and they are on site with another 27
more. They have particular skills in developing smaller infill
sites on existing estates. We will be using them to build new
HRA homes on smaller sites in the town.
To date we are proud to be able to conclude two of our
larger HRA developments in Marsh Farm costing £32 million,
- 11 houses (ready for let in Sept 19) and 83 flats (ready
for let in February 2020) and
- Roman Way costing £4 million for 20 units including 3
bungalows also nearing completion by this summer July
We also have two emerging sites a total cost of £15 million
going in for pre-planning applications that will supplement our
Marsh Farm delivery with a further 50 units.
The next five years will see a significant investment of £75
million to continue to pursue our targets for Luton residents
have incomes that mean they can afford only 10 per cent of the
average house price in Luton and are increasingly locked out of
Luton's housing market
struggling to save for a deposit or to pay their rent
the case of, parents fear that their children will be unable to set
down any roots in the town they grew up.
We understand that moving towards these targets may require
a fundamentally different approach to homebuilding.
Our new Housing Strategy sets out plans to diversify our
homebuilding approach and build more socially rented and other
genuinely affordable homes.
Reviewing council-owned land, working with
partners to find new uses for surplus student accommodation and
seeking opportunities for partnerships with investors and
developers to make full use of borrowing headroom are just some of
the ways we hope to deliver these ambitious targets."