Economic Volatility and Council House Building – Are They Compatible?

With government targets for new homes set at 1.5 million during this parliament, the New Economics Foundation has analysed that 365,000 social homes need to be built to meet this goal.

How realistic is this? At Babergh and Mid Suffolk, we to would like to develop our pipeline. However, like other councils, our current stock requires significant investment, even before considering DH2 and retrofitting. This and providing excellent services for tenants must be our priority.

Economic volatility is possibly the biggest risk to council house building. Our Treasury Advisors recently reprofiled interest rate predictions for the next five years, causing our HRA business plan to struggle to maintain a positive balance after year ten.

This issue is not new and is not confined to BMSDC. Last week, it was reported that Bristol City Council is proposing to sell off 1,200 council houses and withdraw from some deals with its Housing Company to balance the books.

Despite the Southwark Report and the work by CIH, Savills, and ARCH, the housing sector has yet to receive any commitment from the government, other than the rent settlement (which does not include convergence). Seventy percent of BMSDC council houses are below social rent, a situation likely mirrored across other councils.

As we continue to struggle with debt repayment, property investment, and providing excellent housing services to tenants, development plans remain out of reach for many councils.