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How local authorities can move into PRS to provide family homes

How local authorities can move into PRS to provide family homes

Between 2006-07 and 2016-17, the number of households with dependent children in the private rented sector increased by almost one million (966,000).

However, almost nine-tenths (86%) of the pipeline in Britain’s nascent Private Rented Sector (PRS) market is for flats and apartments.

This leaves a huge gap in the market for local authorities to invest in and secure delivery of PRS housing which is suitable for the needs of families and provides them with modern, well maintained and professionally managed homes.

More than a fifth of UK households, totalling around five million, currently rent in the private sector with the PRS sector more than doubling in size since the year 2000.

By investing in the PRS sector, local authorities will assist an increasing number of households who are unable to buy their home but are not eligible for subsidised social housing.

For more than 35 years there has been a structural shortfall in the construction of new homes. 

On average the private sector only delivers around half of the 300,000 new homes we need each year in England and the private sector has not built more than 200,000 homes a year for 50 years.

At their peak in 1953, local authorities in Britain built almost a quarter of a million new homes (245,160) in a single year.

Fast forward to 2004 and the number of new homes built by Councils had fallen by more than 99% to just 130 homes.

There is a good reason for this, spending restrictions introduced at the same time as Right to Buy, made it impossible for local authorities to build again in large numbers.

The on-going housing supply and affordability crisis has seen councils come under increasing pressure from Central Government to speed up delivery of new housing and support more private sector led development.

However, many local authorities are frustrated with the pace, cost, style, type and mix of housing associated with private sector development.

As a consequence, many entrepreneurial councils have been exploring the options around direct delivery of housing on their own land (especially for new private affordable rent), which empowers local authorities with a better financial return and a greater role in place-making to create attractive neighbourhoods than their residents want to live, work and spend their leisure time in.

Research conducted last year has shown that 49 local authorities have set up 58 new Local Housing Companies (LHCs) many more set up since including Liverpool City Council’s Foundations, North Downs Housing Ltd in Guildford and Oxford City Housing Ltd.

Bringing local authorities back to new house construction through LHCs and other methods is going to be key to solving Britain’s housing crisis. However, some LHC’s have struggled to deliver significant numbers of new homes, whilst establishing them, staffing and running them takes substantial time and resource on behalf of a Council. Having more options to support housing delivery, including both rental and for sale homes is complimentary to, or can step in the place of establishing, an LHC.

Public Sector Plc has recently developed a housing delivery and management model called LetLife, for local authorities that will support ambitions to build more housing and create a sustainable income stream to fund vital services where austerity measures have impacted funding.   For a more information about LetLife and the benefits establishing a Partnership with Public Sector Plc contact the team at housing@publicsectorplc.com.