Stark warning from Enfield Council as it pleads for government to intervene to help tackle housing crisis, reports Simon Allin, Local Democracy Reporter
Enfield Council is warning of a collapse in affordable housing delivery after revealing it has been unable to sell properties designed to fund lower-cost homes.
The civic centre wants the government to stump up more cash for housebuilding as it claimed the cross-subsidy model – where it uses the sale of private homes to help fund affordable housing – is becoming “increasingly unviable”.
It comes as the housing market faces mounting pressure from construction inflation and recent hikes in interest rates, which have pushed up the cost of borrowing.
The economic turmoil has sparked a collapse in the borough’s private rental sector – which the council has increasingly relied on to house homeless families – prompting the authority to start moving people needing temporary accommodation outside London and the south-east to more affordable areas.
In further worrying signs for the local housing market, the council has revealed 23 family homes on the 50-home Bury Street West development in Bush Hill Park were put on the market at the end of last year but remain unsold as potential buyers are struggling to obtain mortgages.
It says its business plan relies on the capital receipt from this development, and changing the homes to social housing “is not viable based on existing grant rates”.
The revelations are set out in the council’s submission to the inquiry into the finances and sustainability of the social housing sector, which was launched in March by the Levelling Up, Housing and Communities (LUHC) Committee.
Opposition councillors and housing campaigners have repeatedly criticised the council for delays in its housing developments and mounting debt levels. But the submission points the finger at government policies for failing to provide enough money for housing.
It calls for further grant funding for affordable homes, citing research by the Greater London Authority estimating that London would require an extra £4.9billion every year to build the number of affordable homes it needs – more than six times the current funding settlement.
The submission warns: “If affordable housing delivery is to not collapse entirely, including by councils that can play such a significant role with their land and community connections, more funding is needed quickly and decisively.”
Further measures proposed by the council include allowing local authorities to use more money from Right to Buy receipts to fund developments and removing restrictions on combining the receipts with other funding sources or using them to buy completed homes from developers.
Reductions in borrowing rates from the Public Works Loan Board, which lends money to local authorities at a discounted rate, would also help boost housebuilding, the council says.
As well as building new affordable homes, Enfield Council needs to invest in improving the quality of its existing housing stock.
But according to the submission, a government policy introduced in 2016 stating that social landlords must reduce rents by 1% each year for four years, combined with a further cap imposed this year, have reduced the capacity of the council’s 30-year housing revenue account (HRA) business plan – which funds the maintenance of its homes – by £395million.
The document warns: “It is simply not possible to plan and deliver the levels of investment required with interventions in business plans and a lack of funding that addresses the renewal needs of aged, expired stock.”
According to the council, the level of reserves available in its HRA that are not earmarked for specific uses is £17m. This means “tight financial management is required and control over costs and exposures”.
The submission claims delivering the proposed new decent homes standard, set to feature new requirements around health and safety and a “pro-active regulatory regime”, will be “impossible” without “positive measures to provide support”.
Enfield Council and the Department for Levelling Up, Housing and Communities were approached for comment.