Building more homes Contents
Annex 5: Local Authority Financing Initiatives
1.Schemes raised in evidence to the Committee included the following:
- Use of a local authority owned company, often managed by an arms’ length management organisation, to build and manage housing stock. The Chartered Institute of Housing advised that this was a “normal” way for local authorities to circumvent legislative restrictions.
- Partnerships between local authorities and housing associations to coordinate the delivery of public land and management of social or ‘affordable housing’. Dr Sue Brownhill, from the School of the Built Environment at Oxford Brookes University, told us that local authorities were developing:
“Special purpose vehicles, often but not exclusively, formed around the availability of publicly owned land. These take the form of Housing Association subsidiaries, municipal housing companies and public/private partnerships. A more widespread use of these business models within the industry could deliver more [‘affordable housing’] particularly through the development of a model specifically for housing at social rent levels.”
- Joint ventures between local authorities and private developers. For example in Gateshead the council has entered into a joint venture with a housing association and private developer to build 2,400 new homes. The council contributes land and the developer and housing association provide finance and expertise. The profits will be split equally between the council and the consortium formed by the housing association and private developer.
- Issuing bonds to fund building. Warrington Borough Council issued £150 million of bonds the bulk of which was expected to fund development and housing in the city centre.
- Building homes in the private rented sector and using the income to fund social and affordable rented housing and some houses for private sale. The Minister for Housing described this as a “really interesting model”.
- Investment of local authority pension funds in housebuilding for private sale. In Manchester, land owned by Manchester City Council is being developed using a £25 million investment from the City’s pension fund. Councillor Sue Derbyshire noted that this scheme did not include building social housing as the fund would “need a return on their investment, because they are investing prudentially and with a fiduciary duty to their pensioners”.
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