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Government vows £1bn council housing investment

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The government has pledged £1 billion pounds to overhaul council-owned housing stock over the next two years

The investment is a 50 per cent increase on the previous two-year period when £612m was spent.

Under the programme around £540m will go to London councils through the Greater London Authority.

Around £443m will be spent in other parts of the country through the Homes and Communities Agency.

The £1bn boost will be shared by 41 councils and is expected to be spent on new roofs and windows and updating kitchens and heating systems.

Northampton will receive £30 million in the final year while Cheshire will take home £8.5 million in the next two years.

How the £1 billion investment will be spent

Authority2013/14 allocation2014/15 allocation
Brighton & Hove1,000,0001,200,000
Chesire West & Chester3,000,0005,500,000
Kingston upon Hull02,500,000
Mid Devon200,0001,200,000
North East derbyshire19,781,00016,281,000
North West Leicestershire8,500,0008,560,000
Nottingham UA24,770,00020,801,000
South Tyneside21,000,00014,000,000

Housing minister Mark Prisk said: ‘By improving this country’s council homes we will transform many families’ lives for the better, bringing their living standards up to scratch, ensuring that their home is the safe haven it is meant to be.’

He added: ‘The benefits of the £1 billion I’ve confirmed today reach far beyond tenants themselves and into the local economy. With every pound spent on improvements boosting local business, creating new jobs and supporting local spending, I want to see councils realising the benefits of this cash as soon as possible.’

The GLA today also announced a £100m fund to help Londonders onto the housing ladder.

Bids are being invited for organisations to deliver proposals for a range of housing projects across London.

London mayor Boris Johnson, said: ‘London’s success is built by its workforce and if we are to maintain our vitality as a city we have to provide Londoners with a fairer housing deal. For an increasing number of Londoners the capital’s current housing market is just not working and failure to deal with the issue could lead to a damaging exodus that will hamper our competitiveness.

‘So, in the long tradition of the great house building programmes of the past and of London’s great philanthropists such as George Peabody, I want to make a new housing covenant with Londoners, one that recognises that those who contribute to our success should benefit from it too.

He added: ‘To improve the housing choices of those who work to make this city the fantastic place that it is, I am opening up the market, cutting red-tape and injecting £100m worth of investment to stimulate supply. The programme we are announcing will not just unlock the door to home ownership for thousands more Londoners, it will give a welcome shot in the arm for jobs in the capital’s construction industry and spur wider economic growth too.’

The mayor has pledged to:  

  • Assist Londoners by removing red tape, including planning restrictions, to provide greater choice and flexibility and boost the mid-market offer in the capital. The aim is to make the ‘intermediate’ market, which offers a range of low-cost home ownership products, give people the same freedoms and flexibility as those buying on the open market enjoy.
  • Enable people to find the home they want and then choose from a flexible range of options including shared-ownership, equity loans and a new option - ‘Rent to Save’ - which will help households save for a deposit while benefitting from low rents. This will be alongside new funding for the already popular ‘FirstBuy’ scheme. At present Londoners are hampered by a system that offers only a single take it or leave it financial offer tied to a particular home. 
  • Make it easier to move the equity built up in one ‘intermediate’ home into another, remove constraints on re-sales of these properties, reduce restrictions on which Londoners are eligible for assistance and remove duplications and bureaucracy in the way these homes are marketed.

Jestico + Whiles associate director Eoin Keating said: ‘While the £1bn that has been pledged to overhaul council-owned housing stock over the next two years will undoubtedly provide a boost to the construction sector, I can’t see that architects will benefit. The funding is for the Decent Homes programme which is primarily concerned with replacing windows, heating systems, kitchens, bathrooms and so on. It’s not really architects’ territory, but our surveying colleagues should be happy with the news.

He added: ‘With regards to the GLA fund, I’m not sure it will tackle the whole problem: supply is not the problem in the private sector, the lack of mortgage funding and its effect on demand is. However, In the affordable housing sector, more funding should help to unlock schemes that are currently unviable because of the burden of the affordable housing element. None of our current schemes are stalled at the moment but I expect that any additional affordable housing grant would improve the marginal viability of some.’

Hari Phillips of Bell Phillips Architects said: ‘A great deal of attention has quite rightly focused on the demand to build new affordable homes. However it shouldn’t be forgotten that thousands of people live in sub-standard council housing. Much of this stock was built cheaply and poorly in the post-war housing boom, has not been updated since and could be refurbished for a fraction of the cost of constructing new build housing.
‘Whilst this increase in spending is great news for council tenants it’s critical that local authorities use this money intelligently. Councils should be working alongside architects to formulate masterplans that incorporate refurbishment (and new-build) strategies that go beyond over-cladding to address broader issues that blight many council estates such as the quality of the public realm, accessibility and security.’

Tony Hutchinson of Capita Symonds said: ‘It would be wrong to cavil about any investment which will address the multiple problems of a recession, a dysfunctional housing market and under investment in housing condition. That being said it is important to recognise the implications of these opportunities.

‘The money for housing repair will continue the Decent Homes programme, but importantly with the reforms to the Housing Revenue Account there is scope to decide which homes can be improved to provide good quality accommodation for the next generation and which for whatever reason will continue to cost more to maintain than the income they generate. It may be that there are very good social reasons to keep some homes in this category but it needs to be based on a clear sighted understanding of the costs and benefits associated with the choice made. This provides an opportunity for building industry professionals to provide robust advice on what can be done to improve homes, how this work can be delivered and importantly what the ongoing costs are to keep the homes in good condition. This is self evidently about the home but importantly it is also about the environment, the built form and quality of place.

‘A major consideration that needs to flow from the investment is how it can be used to generate jobs and skills in the neighbourhood. In this regard the local authority has the opportunity to design projects which can be done by local firms, taking on both skilled workers and apprentices. In this respect the procurement processes used become critical and therefore recognising that social value is part of the evaluation criteria.

‘The allocation of resources to local councils gives them the opportunity to plan with confidence. The competition for resources introduced by Mayor of London’s announcement means that ultimately there will be wasted effort and costs for projects which are submitted but not approved. The language in which the programme is couched also is problematic. The phrase “those who contribute to the success of the capital should expect a reasonable housing offer in return” suggests decisions will be made on subjective grounds about the potential beneficiaries rather than the merits of the project.

‘Providing affordable routes to homeownership, by whatever route is welcome, building homes as has been well argued delivers wider economic benefits. Those benefits will be sustained if the homes provided are built where there is an effective demand, if the homes are well designed and built to minimise running costs for households who have high mortgage costs. These will be the households who are likely to be impacted by the reduction or removal of working tax credits, reductions to housing benefits and to council tax benefit. Also mortgage costs are not covered by housing benefit.

‘There is an argument that providing more rented homes at sub-market levels will provide an equal stimulus to the economy, more quickly by allowing councils to identify windfall sites in their ownership then build directly to relieve pressure on transfer or waiting lists and in so doing address issues within their stock, linking to the housing repairs funding announced.

‘Yes this is very welcome news, but they are partial solutions to a deep seated problem that is a product of many factors. Economic uncertainty, lack of affordable mortgage finance and reductions in household income underpin weakness in the homeownership market, lack of supply of homes to rent leads to spiralling rents in the private sector. Fundamentally an economic stimulus through these announcements is some good news but it is one ray of sunshine in a very stormy sky.’


Postscript: Q+A with Louise Bramble, development manager at Grosvenor


Will this help boost the construction sector? Will it create more jobs for architects?

The answer to this is really dependant on the nature of the investment.  If the money is to be spent on updating large scale estates and neighbourhoods as a single opportunity then it may create jobs for architects- recent examples such as the Park Hill Estate in Sheffield show the opportunity that council housing can present for regeneration and reinvestment. However, if the investment is focused more on improving the condition of existing homes and replacing building elements (plumbing, wiring, windows) then it is difficult to see how it will create a significant number of new jobs for architects.

The construction sector will receive a boost from this investment, although again the nature of the refurbishment (large scale redevelopment or refurbishment by individual trades) and the way in which contracts are placed is key. Whatever procurement method is followed the aspiration should be to use local labour where possible which should generate a trickle effect through the local economy.

Do you think these policies are enough to boost the supply of housing?

The reinvestment in council housing appears to be focused on improving the quality of the existing stock rather than adding additional housing. The policies encouraging new models of home ownership or occupation are required in order to house people who would in previous years have been able to buy or access larger mortgages.  In order to genuinely boost supply and provision the new models of affordable housing need to work alongside existing affordable housing models and traditional private home ownership to meet the viability requirements of developers. This will allow the development of previously unviable schemes and increase the stock.

Are there any scheme you are working on which you think could go ahead as a result?

While it would not necessarily make any difference to the schemes we are currently working on, the policies might allow us to look at opportunities which would not otherwise have been viable- if the ‘affordable’ element of the scheme becomes more valuable (currently affordable elements currently do not even break even) then schemes that were previously unviable may become so.

Is there anything more that you would like to see the Government pursue?

A potentially expanding sector, being discussed at length on the market at present is that of the private rented sector and the potential for the development of new products and leases targeted at long term renters. The government has already highlighted this sector as one likely to be of increasing importance to the provision of housing in the future and there is considerable scope for the government to work with the private sector to address the shortage of private rented accommodation.




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