The missing piece of the housing puzzle: buying back council homes

There is a response to the housing crisis hiding in plain sight. Back in 2020, a National Acquisitions Programme or Conversion Fund was recommended by the Affordable Housing Commission. This fund would provide grants to social landlords and community housing providers to purchase existing private rented homes and convert them into social and affordable tenures. The report sought to address the risk that private landlords might wish to exit the market post-COVID and the risk of dampened sales. The market is in a different place now. We have higher interest rates, geopolitical uncertainty and, as reported by the Joseph Rowntree Foundation, a private rented sector which is consolidating, albeit with the overall stock of privately rented homes continuing to increase.

At the lower end of the market, the toxic combination of uncapped rents, a frozen local housing allowance (LHA), and insufficient social housing stock, continues to drive poverty and push more people into homelessness. At the last count, there were over 135,000 households in temporary accommodation, the highest number on record. Bringing forward a National Acquisitions Programme, alongside well-designed rent controls and an unfrozen LHA, would be a targeted response to this crisis, enabling more people to rent at an affordable level, whilst also bringing more homes back under public control at pace.

At the local level, several councils have already been doing the maths and scaling up their acquisition programmes. As the cost of building new homes has risen exponentially, more government grant funding is required to make council housing, and other affordable schemes viable. In some parts of the country, as a councillor in Plymouth noted earlier this summer, ​“it costs more money to build a home than it actually does to sell it”. In reality, buying back is often a cheaper and much quicker option than starting from scratch. For councils with their own right to buy receipts, which can now be combined with grant funding, and used much more flexibly, there is a choice to be made about whether to invest in new build housing, or to buy back former council-owned properties.  

Local authorities with ballooning temporary accommodation pressures have a further financial imperative. With councils spending  £1.46bn on temporary accommodation last year (not including the transfer of housing benefit from DWP to councils) and with this predicted to reach £4bn by 2030, it is no wonder that some are looking to acquisitions. In London, Islington Council has led the way in showing what’s possible, bringing 820 properties back into council stock over recent years, whilst saving an estimated £17m from its temporary accommodation budget, money that would have gone to private landlords. Last year, Brighton Council also approved a budget of £50m to acquire 200 homes over two years, in what has been dubbed ​“right to buy in reverse”. In taking this approach, they are not just adding homes to their stock, they are also adding family-sized homes.

Acquisitions don’t solve the temporary accommodation crisis, but they do bring more stock under public control, limiting the reliance on rip-off nightly paid rates and B&Bs, and enabling families to stay in the local area closer to their support networks. With a scaled-up programme, a limited number of acquisitions could also be used to expand the Housing First programme, meeting the Prime Minister’s ambition of eliminating rough sleeping in a sustained way.

Of course, the end goal should not be temporary accommodation. It should be safe and secure homes. But once more stock is brought under local authority control, there should be options further down the line for converting temporary accommodation properties over to social tenancies. An acquisitions programme could also involve wider community groups, especially in the renovation and retrofit of empty homes, as those organisations involved in The Northern Way, have argued.

The current funding landscape for this kind of work is limited and fragmented. The flagship £39bn Social and Affordable Homes Programme (SAHP – soon to be £40bn) is very focused on new-builds, and the strategic partnership route has been heavily over-subscribed. Homes England’s 10% acquisitions cap could and should be lifted to give local authorities outside of London more flexibility to make the right investments locally, but this will only go so far. Right to buy receipts could also be deployed by some local authorities, but in a context of constrained local borrowing capacity, there will be a lot of pressure to match these time-limited receipts with any awarded SAHP grant in order to deliver on the government’s welcome council house-building ambitions. 

Given that, a strengthened Local Authority Housing Fund (LAHF) could be the foundation of a National Acquisitions Programme. Originally established to support the resettlement of Afghan and Ukrainian refugees, the fund has increasingly been called upon for wider temporary accommodation needs, and over its four rounds of funding, has supported councils with £2.2bn in capital funding. Round four, announced at the last spending review, has allocated £950m over the next four years but, despite growing demand, there are currently no plans for a LAHF top-up at this week’s budget. A £500mn LAHF top-up for swift acquisitions would be a smart capital investment generating revenue savings for councils, and housing benefit savings for the Treasury, whilst paving the way for a more ambitious conversion programme at the next Spending Review. At Labour party conference, Andy Burnham spoke about having ​“more control of the basics” and started with housing. Now we need his policies to deliver. 

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