Council housebuilding gets £2 billion boost

 Barking & Dagenham’s Beacontree Heath development. Image Source: Stitch Architects

Local authorities will get a £2 billion boost from government changes to funding arrangements aimed at reviving dwindling council housebuilding.

The government has increased its affordable homes programme from £7.1 billion to £9.1 billion, which it claims will create spending of £5 billion on housebuilding from councils and housing associations.

“With a typical £80,000 subsidy, this £2 billion investment can supply around 25,000 more homes at rents affordable for local people,” explained the Ministry of Housing in a statement

In the last two decades the number of council houses in Britain has halved according to government statistics released in November 2017, which show total stock in Britain of two million homes.

In Glenigan’s ranking of the construction industry’s top 100 clients, 22 entries are local authorities but residential work is having little impact.

Leeds City Council is the highest ranked local authority after awarding £272 million-worth of construction work in the 12 months to Q3 2018.

Nearly three quarters of this spending is for the £120 million Leeds Public Transport Investment Programme and the £80 million East Leeds Orbital Road. The biggest housing project identified by Glenigan’s construction market research is for 27 houses.

Dundee City Council features amongst the top 100 clients, but due to a £100 million energy from waste plant, while the West Midlands Combined Authority’s appearance is down to the Midlands Metro project.

London leads the way

Unlike the provinces, social housing work in London is booming. In the three months to August 2018, housing starts in London surged 145% as work began on 5,774 units according to the National House-Building Council.

NHBC Chief Executive Steve Wood put this down to “increased activity by housing associations and the continued flow of inward investment on for-sale and private rental developments.”

However, councils in the capital are also pressing on with work. There are 10 London boroughs in Glenigan’s ranking of the top 100 clients.

The London Borough of Barking & Dagenham has let £185.9 million-worth of construction work in the last year, while Hackney’s construction programme is worth £177.4 million. Both feature council house projects.

Barking & Dagenham council is building a £39.8 million apartment scheme in Wood Lane, while Glenigan’s construction market research identifies more than 300 units starting in Hackney’s housing programme.

Countryside’s design and build contracting division is working on Barking & Dagenham’s Wood Lane development (Glenigan Project ID 15335982) and Hackney’s £80 million Clapton Common scheme, which features 132 flats (Glenigan Project ID 16237786).

Emerging trends in the capital

In the capital, an emerging trend is seeing big commercial housebuilders to form joint ventures with councils to develop unused land. This gives housebuilders access to land and local authorities a share of profits.

Housebuilders are increasingly willing to accept this arrangement as these agreements unlock large sites, where their JV partner is also the local planning authority.

Affordable housing completions have leapt 66% to 1,073 units in the last year at Countryside, which has 29,878 social housing plots under its control. This land is not all in the capital but most of the group’s exposure is in London, the Home Counties and the North West and other housebuilders are increasingly changing their working models to access land.