Theresa May’s missed opportunity: why councils should be able to borrow to build homes

Council housing in Southwark, south London. Image: Getty.

A Southwark Labour councillor on the housing crisis.

Across the country, housing supply is falling behind demand year on year.  The result is a housing crisis with high private rents, home ownership a distant dream, and families stuck on waiting lists for affordable homes.

Before Theresa May’s speech at their conference the Tories had briefed the press that there would be a significant announcement on taking action to tackle the housing crisis with new council homes front and centre. There was hope that we would see an end to the Thatcherite consensus on housing we’ve had for 40 years, which assumes that the private sector will build the new homes we need.

So when May said the government was going to put an extra £2bn towards affordable housing I felt a huge sense of frustration and anger at yet another missed opportunity for the government to actually help people. While funding for an additional 5,000 affordable homes a year is welcome, the reality is we need to be building an additional 130,000 homes a year – so it’s clear this simply won’t tackle the scale of the housing crisis.

This crisis is real: across the country, 1.2m families are on the waiting list for council housing, and in my own borough of Southwark in south London, we still have 10,000 families waiting for a council home. That’s 1.2m families who don’t have an affordable place to raise their children or a secure place to retire in, who are trapped in unsuitable or overcrowded accommodation.

The government’s other recent announcement on housing is going to do even less to help solve the housing crisis. An extra £10bn for Help to Buy does nothing to help anyone on a waiting list for a council home. It won’t even help many first time buyers as it will inflate property prices further, and as the IPPR have argued it will help people who could already afford it to buy and push prices up for those who already can’t get a foot on the ladder.

So let’s talk about what would have helped: giving councils the ability to borrow against existing housing stock. 

Southwark Council owns 55,000 council homes; these are assets worth billions of pounds. But we are limited in borrowing against them by national government. This isn’t because this would cause huge financial instability for councils – housing associations can already borrow against their existing stock to build new homes. If we could do the same, we would be able to generate the funds to build more genuinely affordable homes, including large numbers of council homes and then use the rents generated to repay the loans.

The government also needs to act to increase the land available to build on by giving councils the power to buy land closer to its actual use value. This would mean that the uplift in land value from development could be used for the public good such as building council homes, schools, and parks. The main beneficiaries from the current system are land speculators.

Sadly this week has made it very clear that the government is not serious about tackling the housing crisis – so the burden remains on local authorities. In Southwark we have pledged to build 11,000 new council homes by 2043: an ambitious target, but one we are determined to meet. We are funding this through a combination of Right to Buy receipts, some private sale to cross-subsidise and the very limited borrowing we are allowed. We are also very fortunate in Southwark that we are in central London, on the banks of the Thames, and can generate funding through planning agreements with developers which we can then use to build council homes. The majority of local authorities are not so fortunate.

The only solution to the housing crisis is to build more homes, and particularly more council homes. Labour have pledged that the next Labour government will deliver the biggest council house building programme in 30 years – and do so with the consent of existing residents. We are very clear in Southwark that consultation and working in partnership with our residents is vital.

We will keep doing everything we can to make sure all of our residents have a decent place to call home, but with diminishing resources, and the inability to borrow the money we need to build, we’ll have to wait for the next Labour government under Jeremy Corbyn for housebuilding on the scale our country needs.

Cllr Mark Williams is a Labour councillor and cabinet member for regeneration & new homes at the London Borough of Southwark.

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Here’s how Henry Ford and IKEA could provide the key to solving the housing crisis

A flatpack house designed by architectural firm Rogers Stirk Harbour and Partners, on display at the Royal Academy, London, in 2013. Image: Getty.

For many people, the housing market is not a welcoming place. The rungs of the property ladder seem to get further and further out of reach. There are loud calls to build hundreds of thousands of new homes (and equally loud demands that they’re not built in anyone’s back yard).

If there was ever a time to introduce mass-produced affordable housing, surely that time is now.

The benefits of mass production have been well known since Henry Ford’s car factories made the Model T back in 1908. It was only made in one colour, black, for economic reasons. Not because it was the cheapest colour of paint, but because it was the colour that dried the quickest.

This allowed the production line to operate at faster, more cost effective, speeds. And ultimately, it meant the product could be sold at a more attractive cost to the customer.

This approach, where processes are tested to achieve increasingly efficient production costs, is yet to filter properly into the construction of houses. This makes sense in a way, as not everybody wants exactly the same type of house.

Historically, affordable mass-produced housing removed a large amount of customisations, to ensure final costs were controlled. But there is another way. Builders and architects have the ability to create housing that allows a level of flexibility and customisation, yet also achieves the goal of affordability.

Back in 2006, the “BoKlok” approach to affordable housing was launched to great acclaim in the UK. Literally translated from Swedish, the term means “live smart”. Originally created from a collaboration between flat-pack favourite IKEA and Swedish construction giant Skanska, the BoKlok housing approach was to allow for selected customisation to maximise individuality and choice for the customers. But at the same time, it ensured that larger house building components were duplicated or mass-produced, to bring down the overall costs.

Standard elements – wall panels, doors, windows – were made in large numbers to bring the elemental costs down. This approach ensured the costs were controlled from the initial sketch ideas through to the final design choices offered to the customers. The kitchens and bathrooms were designed to be flexible in terms of adding additional units. Draw and cupboard fronts interchangeable. Small options that provided flexibility, but did not impact on overall affordability.

It’s a simple approach that has worked very well. More than 10,000 BoKlok houses have now been built, mainly in Norway, Sweden and Denmark, with a small number in the UK.

But it is only part of the architectural equation. The affordable housing market is vital, but the cost of making these homes more adaptable is rarely considered.

Flexibility is key. The needs of a house’s inhabitants change. Families can grow (and shrink) and require more room, so the costs of moving house reappear. One clever response to this, in BoKlok homes, has been to allow “built in” flexibility.

Loft living

This flexibility could include a loft space that already has flooring and a built in cupboard on a lower floor which can be simply dismantled and replaced with a “flat-pack style” staircase that can be purchased and installed with minimal disruption to the existing fabric.

Weeks of builders removing walls, plastering and upheaval are replaced by a trip to the IKEA store to purchase the staircase and the booking of a subcontractor to fit it. The original design accounted for this “future option” and is built into the core of the house.

The best approach to new affordable housing should consider combinations of factors that look at design, materials and processes that have yet to be widely used in the affordable housing market.

And the construction sector needs to look over its shoulder at other market places – especially the one that Henry Ford dominated over a century ago. Today’s car manufacturers offer customised options in everything from colour to wheel size, interior gadgets to different kinds of headlamp. These options have all been accounted for in the construction and costing of each model.

The ConversationThey share a similar design “platform”, and by doing so, considerably reduce the overall cost of the base model. The benefit is quicker production with the added benefit of a cost model that allows for customisation to be included. It is a method the construction sector should adopt to produce housing where quality and affordability live happily together.

David Morton, Associate Professor in Architecture and Built Environment, Northumbria University, Newcastle.

This article was originally published on The Conversation. Read the original article.