Following the Second World War, there was huge investment in new social housing, to replace losses and support the movement of people into the New Towns includingCrawley. Much of this effort was through the Commission for New Towns. In Crawley’s case, the housing stock peaked at 16,000 homes but this has today reduced to just over 8,000 units, largely through the effect of RTB (Right to Buy). This is still a substantial housing stock, one of the largest in the south-east.
The social housing stock needs to be large. Crawleyhas low unemployment, at about 3.1 percent, but we also have something of a low-wage economy. This means that market forces do not serve us well. Many people are priced out of making a property purchase in the private sector. This is reflected in the national average age of the first-time buyer, which is now well into the thirties.
Crawley Council policy is to deliver as much quality social housing as we can, without being too prescriptive about the method. We recently completed the first direct build Council housing in more than a decade and we have the good news of Kilnwood Vale, west of Bewbush, going ahead. Crawleywill receive 50 percent of the nomination rights to the social housing in this 2,500-home development. Further ahead, there is the prospect of the development of 1,900 homes in the north-east sector. Both of these schemes deliver social housing through planning agreement between the developers and the local authorities.
Governments of all colours have sought to have their housing investment repaid by local councils. This is achieved by requiring local authorities with housing stocks to pay back an annual ‘notional surplus’ to the government. The figure is calculated on a council’s HRA (Housing Revenue Account) which is used to maintain the housing stock. InCrawley’s case, the amount is about £16 million each year.
The government is now requiring councils with housing stocks to exit the HRA subsidy system from April 2012. This means that a council has to pay an exit fee to the government in return for no longer making an annual repayment. ForCrawley, this one-off contribution will be more than £250 million. In return, we will no longer be paying £16 million each year.
The Council will have to borrow the money to pay to the government but fortunately the PWLB (Public Works Loan Board) will be lowering its interest rates for this purpose. This means that we can borrow at a competitive rate over a term of say 30 years. The net effect will be positive in that the loan repayments will be less than what we currently pay to the government.
There is another opportunity in all of this process. We can structure our debt in a creative way. For example, we could have interest-only repayments in the early years of the loan, in anticipation of future capital receipts coming to the Council. By doing this, we would create surpluses available for new housing investment.
Councillor Bob Lanzer, Leader of Crawley Borough Council
8th November 2011