New research has found that London boroughs are planning to cut their council housing spend by a total of £264million over the next three years as costs spiral.
The research by London Councils, the capital’s local government association, has found that the costs of managing council housing have significantly increased while income has lagged behind, with ministers keeping social rent increases below inflation over the past several years.
In total, the London boroughs own and let roughly 390,000 social homes in total, representing over one in 10 London households. However, the capital is home to a greater proportion of high-density council housing and tower blocks than other areas of the country, which cost more to maintain.
London Councils say that the £264million real-terms reduction in spending is in a bid to stop their Housing Revenue Accounts going bust, but it warns that five unnamed boroughs could exhaust their HRA funds before 2027-28.
Grace Williams, London Councils’ executive member for housing, said: “We have reached crunch point for London’s council housing finances. Boroughs are frustrated that at a time when we want to invest in our council housing and build new social homes, the grim reality is that many will need to make deep cutbacks. We are dealing with fast-rising costs but also the legacy of years of government underinvestment and budget squeezes.”
Williams added: “Boroughs play an essential role in modernising older properties and building the new affordable homes Londoners are crying out for.”
“A better future for London’s council housing is possible but it requires national policy decisions that give us secure and sustainable finances. We remain committed to working with the government on our shared ambitions for council housing.”
According to London Councils, boroughs are calling for a return to social rent convergence. This was first introduced by the government between 2002 and 2015 and established a national rent formula to ensure that social housing tenants pay similar rents for similar homes, taking local incomes and property values into account.
A spokesperson for the Ministry of Housing, Communities and Local Government, said: “The government inherited a serious housing crisis, but we are taking decisive action to turn the tide and deliver the biggest boost in social housing in a generation.”
“That’s why we’re exploring a new five-year social housing rent settlement to provide the sector with the certainty it needs to invest in new social housing.”
“This is alongside giving councils flexibility to use their Right to Buy receipts to invest in social housing, providing an £800million top up to the Affordable Homes Programme, as well as a £2billion down payment on further funding.”
