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What devolution can do for council housebuilding

The Prime Minister has said he wants to achieve “the biggest council housebuilding programme since the post-war period”. In doing so, he has leant into a safe rhetorical space, while also giving himself a big practical challenge. Councils generally don’t build much anymore, and to achieve his goal, Burnham must find a way to resuscitate them.

Greater devolution to mayors can help him do this. Let me explain.

Aiming for a return to large-scale council housebuilding has a clear rationale: Councils have responsibility for addressing homelessness, they have planning and compulsory purchase powers which should enable their building programmes, and they are more locally and politically accountable than housing associations.

But an immediate return to the era of municipal dreams is not possible.

In the post-war period, local authorities had a level of fiscal and programme-level autonomy that would seem almost unlimited to 21st century local authorities. Firstly, there was no hard limit on capital expenditure. If schemes met basic size and fittings standards and could be funded at the ‘yardstick’ grant rate, councils could draw down funding from central government. Local authorities also had much greater freedom to set their own rents, they could sell (or not sell) property they owned when they wanted to, and they also often bought land and built outside of their own local boundaries.

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This period came to an end with the 1976 IMF bailout imposing hard departmental capital spending controls, subsequent limits to local government borrowing, and the imposition of the Right to Buy. But it is important to remember that it was local freedoms and certainty, rather than the policies which ended them, that defined the post-war period.  

Today, hard budget constraints from central government continue to define what is possible, and will continue to do so, even if the size of the pot allocated to public housebuilding increases. Councils’ role is residualised, with half not owning any of their own stock and local authorities building only 9 per cent of new social and affordable homes outside London in the last 3 years.

Access to grant funding, administered by Homes England, is set up with the assumption that large housing associations will lead on housebuilding For councils and smaller housing associations, an uncertain system of continuous, competitive bidding makes it difficult to develop consistent development pipelines and grow their operations.

Undoing the difference between these two worlds cannot be done in one go. But the new Government can seek to emulate at least two key features of the post-war regime: firstly, a consistent funding stream councils can draw on, and secondly, local policy autonomy.

Devolution of responsibility for social and affordable housing from MHCLG and Homes England to mayors could help do this.

Firstly, mayors could take on Homes England’s role as distributors of grant funding. Rather than requiring councils to bid for funding scheme by scheme, mayors could agree long-term grant allocations from which councils could draw down. This would give councils the confidence to acquire land, plan development and rebuild the capacity needed to deliver housing consistently, while allowing them to respond to delays and changing costs.

London provides a partial example of how this could work. Five-year funding agreements between the Mayor and boroughs have helped some councils develop the largest housebuilding programmes in the country. But the GLA remains constrained by the amount, timing and conditions of funding it receives from central government.

Devolution therefore needs to be fiscal. Rather than simply asking mayors to distribute centrally determined pots, they should retain set shares of taxes raised locally. Initial funding settlements would need to be set such that funding matched places’ differing levels of need, but these would evolve only periodically and slowly, such is the stickiness of housing problems. This would provide a more stable funding base than grant regimes which can change at any budget or spending review, thus enabling mayors to support councils to plan and develop their housebuilding programmes.

This support from mayors should then come with greater policy autonomy for local authorities, including on the mix of home sizes in developments and the shares of tenures in any given development, so they can respond to local needs and local viability challenges.

Finally, just as local authorities used to respond to land constraints by building beyond their own boundaries (and, in London, rehousing residents in London County Council or Greater London Council-led schemes) mayors in cities today could help manage issues across constituent authorities. Many urban authorities face higher demand than they can build for, and with waiting lists managed council-by-council, many households are left with almost no hope of ever securing a council home.

Mayors could help untangle this by establishing schemes that enable households to move to faster-building authorities, if those households wished to prioritise speed of rehousing over stay in the immediate area.

Now devolution as described couldn’t happen in all places all at once. It could be fast tracked in established mayoralties, such as Greater Manchester and West Yorkshire, while places still waiting for mayors could prepare to take on new responsibilities over time.

Devolution also isn’t a panacea, or the only thing needed to boost council housebuilding. The overall scale of grant funding will continue to set the upper bound for how much gets built. A more permissive planning system, reduced build costs, and clarity on when new compulsory purchase powers can be used to reduce land costs, are all also needed if that maximum is to be reached.

But especially in cities, where multiple councils complicate the management of housing need, mayors can help councils do more. The Prime Minister cannot easily recreate the world in which councils could draw on as much funding as they liked, but using mayors he can establish a system that restores some of that world’s long-term certainty, local autonomy and local responsibility.

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A secure home shouldn’t depend on owning one

Prime Minister Andy Burnham’s first conference as Labour leader opened with a promise to young people locked out of the housing market: a new-build home for just a 2.5% deposit, supported by a government-backed equity loan of up to 20% of the property’s value. Your First Home is a more targeted Help to Buy, aimed at first-time buyers who don’t have help with a deposit from the ‘Bank of Mum and Dad’. In many ways, this is an admirable goal, especially given that the National Audit Office found that 3 in 5 of those who accessed the previous version of the scheme could have bought the same home without it.

Demand-side fixes for structural problems in the housing market fundamentally mean public money boosts developer profits by inflating demand for new homes and subsequently the cost that can be charged for each unit. But beyond this, Your First Home raises bigger questions about progressive approaches to housing.

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A generation of people are struggling to find secure, affordable housing. Private rental unaffordability is now a national phenomenon, with rents in every region growing between 6% and 9% per year and 1 in 5 private renters reporting cutting back on food to afford housing costs. The average age of renters is increasing, with the numbers of households aged over 55 in the private rental sector growing by 70% over the last decade. The average age of first-time homeowners is also increasing across the country, rising to 34 years old.

The aspiration of homeownership is not one that should be dismissed. For millions of people, the dream of owning a home is about being free from the anxiety of eviction, or an unaffordable rent increase that tacitly serves as one; it’s about painting walls and making a house a home; about staying close to community, or near their childrens’ school. Ultimately, it’s about security, dignity and control. But why is homeownership the primary route to access these?

A more ambitious vision of housing security would expand people’s choices and control over their homes, rather than making it easier for a fortunate minority to climb the property ladder. The Government’s commitment to a council housing revolution is one way to do this.

For decades, millions of people found security and affordability in council homes. Not only is it a more affordable tenure type, but it’s an explicit form of long-term housing that enables people to put down roots. At its peak in the 1950s, Britain was building more than 200,000 council homes a year, a scale the market has never matched, and to higher standards than private builders were required to meet. By 1979, almost a third of households rented from their council.

Right to Buy turned this collective good into a private asset. Since 1980, around two million council homes have been sold off, with 14,275 sold under Right to Buy during 2025–26 – a 90% increase on the previous year. More than 40% of these former council homes are now owned by private landlords. Research by Common Wealth found that Right to Buy has cost the taxpayer £200bn, and councils are increasingly buying-back homes sold off under Right to Buy at inflated costs. In particularly egregious examples, council houses sold off under Right to Buy are being rented back to local authorities as Temporary Accommodation (TA) just months later. In Havering, a home sold for £102,000 has cost the council £350,000 renting it back as TA; in Newham, a home sold for £77,300, has seen the council pay £200,000 in rent. Given that local authority spending on TA has doubled over the last five years to a record £2.9bn, the problem isn’t that the state is failing to spend on housing. It’s that it’s spending a fortune on the most expensive, least secure version of it – paying exorbitant rents to private landlords, rather than building homes that will still house families in decades to come.

Indeed, that the people living in council homes can stay in them for as long as needed, regardless of whether income rises or falls, has always been a central part of the council house offer. The growing argument that social housing subsidises the ‘wrong’ people, as The Economist put it this summer, is not only wrong, but has been tried before. In 2016, a proposal to make higher earning social housing tenants pay market rents to stay in their homes was dropped before taking effect. It deserved to be. Treating council and social housing as a temporary safety net is precisely what residualised the tenure from a mainstream option for a broad mix of people to a last resort concentrated on the poorest and most vulnerable, while also weakening the public support needed to build more.

Burnham has said housing should be treated as an essential service, not a market of winners and losers. Your First Home, however well targeted, helps a few more people become winners. If the Government is serious about ending forty years of neoliberalism, then the biggest council housebuilding programme since the post-war era is a worthy place to start. But it should be equally serious about what made those homes worth building: yes, lower rents, but also the promise that you could stay. Security, dignity and control over your home shouldn’t depend on whether you can raise a deposit, and the true test of a progressive housing policy shouldn’t be how many people it helps onto the ladder, but how many it gives a secure place to call home.

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Your First Home needs an exit strategy

The revival of the equity loan is welcome. But it arrives in a market of 6 per cent mortgages and uncertain prices – not the cheap money that carried Help to Buy – and the Budget must design for that.

Ask a renter what stands between them and owning a home, and the deposit comes near the top of the list. In polling for the Land, Planning and Development Federation this summer, Public First found that 55 per cent of renters name the deposit as a main barrier to buying, almost as many as cite house prices. Among 18 to 24-year-olds, it is the biggest barrier of all. Saving one while paying rent has become, for many, the work of a decade.

Your First Home, announced last month, goes straight at that barrier. First-time buyers in England will be able to buy a new-build home with a 2.5 per cent deposit, with the state lending a further 20 per cent through an equity loan that is interest-free at first. The detail, including income and price caps, arrives with the Budget on 28 October.

The Federation welcomes it. The new-build market needs a lift, the Government itself concedes it faces “challenging headwinds”, and small builders are feeling them most. Homes are built only as fast as they can be sold, so more buyers means more planning permissions turned into front doors. Every little helps, as the strapline goes.

But a home ownership scheme should be judged by how many buyers are still there, and better off, a decade later. On that test, Your First Home faces a far harsher world than its predecessor.

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Help to Buy was born in 2013 into a decade of near-zero interest rates. By the end of 2021 the average UK home cost £275,000, more than half as much again as at launch. Buyers built equity quickly, remortgaged cheaply and often cleared the state’s share within five to seven years. Even so, on Homes England’s figures, some 170,000 loans, around 45 per cent of the total, were still outstanding this spring.

Your First Home buyers will have no such wind at their backs. The average five-year fix hit 6 per cent this month, its highest since September 2023, and markets expect Bank Rate to rise, not fall. Gilt yields are at levels last seen in the late 1990s and Savills expects prices to fall this year and recover only slowly.

Now run the maths. A buyer puts down 2.5 per cent, borrows 77.5 per cent and owes the state 20 per cent of the home’s future value. If prices stand still, five years on the household owns little more than its deposit and the mortgage it has paid down. Those five years of owning rather than renting are worth a lot, of course. But when the interest-free period ends, the household must either pay a rising annual fee or clear the loan by refinancing at more than 90 per cent loan-to-value, at today’s rates. If that coincides with the end of a five-year fix, it faces two cliff edges at once.

That is the refinancing risk, and it is the scheme’s real weak point. The deposit gets people in. Refinancing decides whether they can ever move on. None of this means the scheme is wrong, but it must be built for 2026, not 2013. Five choices in the Budget would make the difference.

First, a longer runway and a gentler slope. The interest-free period should outlast a five-year fix, so the two cliff edges never meet, and the fee that follows should rise with inflation, not inflation plus a premium.

Second, set the caps for a family home, not a starter flat. Price and income caps drawn too narrowly will push buyers into two-bedroom homes they will outgrow, leaving them stuck just as the refinancing problem bites. Caps that let two young professionals buy a three-bedroom house in the first place would give families room to grow. They would also bring a broader range of homes into the scheme, helping the whole sector – and SME builders in particular.

Third, let people buy the state out in small steps. Help to Buy required repayments of at least 10 per cent of the home’s value, each with a fresh valuation. Slices of 5 per cent, priced off a desktop valuation, would let households chip away as incomes grow.

Fourth, agree a refinancing route with lenders before launch. Buyers should be able to move to a new fixed rate without first clearing the equity loan.

Fifth, make it work for small builders. A developer contribution is fair, but a flat levy would fall hardest on SME firms, which built four in ten new homes in the 1980s and around one in ten today. A contribution that scales with volume would keep the door open to the builders the government says it wants more of. The scheme should also run for the whole Parliament, so that builders can buy land against it.

The scheme can help builders sell the homes that planning reform makes possible. It cannot make them possible. That depends on a planning system that releases enough land in the right places, grey belt included. Help for buyers and land for builders are two halves of one policy.

Your First Home is welcome. Its success will depend on the detail and how it fits today’s market. It should be measured not by how many keys are handed over in its first year, but by how many of those buyers, a decade on, have built real equity and are able to move on.

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Who is devolution really giving power to?

We have entered a new era in British governance, with devolution moving from a long-term ambition to the defining mission of government.

The promise is simple. Re-wire the state and move power away from Westminster and into the hands of regional leaders, bringing decision-making closer to the communities it affects.

But if power is moving closer to communities, who is it actually being devolved to?

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The lessons we can’t afford to forget

For more than 35 years, Tpas has championed one simple principle – that housing works better when the residents affected by decisions help shape them. That belief has guided our work with residents, landlords, regulators and government, and it has helped drive significant change across the housing sector.

Grenfell forced the industry to confront an uncomfortable reality, when residents aren’t heard, the consequences can be devastating.

The reforms that followed, including stronger Consumer Standards, Tenant Satisfaction Measures, Awaab’s Law and greater transparency and accountability, recognised a simple truth: lived experience is not an optional extra. It is fundamental to good governance.

Over the coming months and years, we can expect to see powers over housing and communities increasingly move into combined authorities and local government.

This is welcome news, but there is a real risk that community voices cannot keep pace. Too often, engagement stops at the landlord level while the biggest decisions about investment, regeneration and place are made elsewhere.

We cannot afford to create a new generation of institutions that are any further removed from the people they serve than the ones they replace.

The next challenge for devolution

Our new policy paper, From Devolution to Participation, argues that resident participation must become part of the foundations of England’s devolved housing system, rather than an afterthought once decisions have already been made.

The report is not calling for more consultation for consultation’s sake. It sets out practical ways to give residents meaningful influence over the decisions being made at regional level.

That means creating resident advisory structures with a direct route into Combined Authority housing teams; ensuring evidence from tenant scrutiny, complaints and Tenant Satisfaction Measures shapes regional strategy and investment; supporting tenant-led organisations to participate on an equal footing; and requiring decision-makers to show residents what changed as a result of their involvement.

A once-in-a-generation opportunity

None of this requires starting from scratch. Nor will it be expensive. The foundations are already in place. The housing sector already has decades of experience, evidence and established structures to draw on.

We have seen from areas where devolution is already well established, such as the West Midlands Combined Authority and via the Good Landlord Charter in Greater Manchester, mayors and leaders are taking tenant voice seriously.

The task now is to formalise approaches and connect  expertise on tenant engagement to more regional bodies making increasingly significant decisions about homes, investment and place.

Every day, tenants contribute insight through panels, complaints and local forums. The challenge is not necessarily about listening, it is about acting on those voices so they influence the strategic decisions shaping housing investment that will be led by mayors.

If this Government is serious about democratic renewal, housing has the opportunity to become the blueprint for how communities shape regional government.

The political foundations are now in place. Andy Burnham has spoken about moving power closer to people, while Angela Rayner has long championed stronger communities and greater local influence.

How can we judge success?

As the Government begins the process of redesigning how England is governed, it has a unique opportunity to ensure community participation is built into that new system from the very beginning.

The success of devolution won’t be measured by how many powers leave Westminster.

Instead, it will be measured by whether the people those powers are meant to serve have a genuine seat at the table.

The housing sector has already learned, through both success and tragic experience, that better decisions are made when residents are listened to. Let’s not build a new system of regional government only to repeat the mistakes of the old one.

There will be plenty of people who are asking who devolution is really giving power to. The answer should be simple – the people whose lives those decisions shape every day.

If power is moving out of Westminster, resident voice must move with it.

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Why Andy is right to focus on council building and social rent housing

The stated intention of Andy Burnham to get the largest building of council housing at social rents since the post war period is a positive and welcome commitment that could progress the Labour policy to build 1.5 million homes.

Last year’s Comprehensive Spending Review put much more money into building social housing than for many years and also gave opportunities for borrowing from the Public Works Loan Board at lower rates of interest.

However, it was not surprising that a hoped for a kickstart to getting the new homes built has been painfully slow. A firmer focus on building council social housing, with money to back it up, will make a real difference, but as well as putting in more grant investment a few other things need to be done.

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Firstly, it has to be recognised that building housing is very different to other government expenditure. It is still seen as part of public debt under the Public Sector Net Financial Liabilities (PSNFL) measure – as if it is like education or the health service – but this is wrong because there is a return on investment in housing. Yes, it is a more gradual return if it is at social rent, but if it is properly built and well managed, there is a return and in reality, it does not take that much longer to get that return if it is social rent housing as opposed to higher rent forms.

The irony is that spending by Housing Associations on housing is not part of the PSNFL, but it is for councils, and fundamentally there is no real difference. It is a quirk of public accounting that if tweaked can open up great housing possibilities. Just remove this false accounting system and the criticism of, “But Andy, where is the money coming from?” disappears.

The second thing is to take another lesson from the post-war Labour Government and reduce further and more substantially the interest rates from the Public Works Loan Board – if it is for social rent housing. This will provide a further kick-start that councils can benefit from.

The third thing to recognise – and Andy already mentioned that he understands this – is that housebuilding at social rent levels will bring great savings on the welfare bill. The saving takes time to filter through, but housing at social council rents will save billions on housing benefit – and will be better for people struggling to survive on market rents and on so-called ‘Affordable Rents’ that can be 80% of market rents. The housing benefit cost is set to be around £34 billion this year. The benefits bill can be reduced substantially while making people happier and leaving more money in their pockets.

The other point that should not be forgotten is that we need to start building the family housing that people need. Too often, targets are met by building one- and two-bedroom housing and ignoring the need for family housing.

Finally, there has to be a new focus on small and medium size companies filling the gaps in housebuilding. There has been too much reliance on big builders, and they can use that to make excess profits and be picky about what they do and do not do. Along with this, there needs to be a strengthening of the supply chain, including with better apprenticeship schemes and help and encouragement for the smaller companies to be part of such schemes.

In all these ways, Andy’s commitment to council housing can transform the country across a wide range of fronts, from health and education to economic growth.

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Heat networks are failing consumers

On paper, a heat network seems like an excellent idea. Surely heating hundreds of homes from one central system should be more efficient than running hundreds of individual boilers? In theory, heat networks should cut energy use and make decarbonising heat much easier.

Sadly, as many of the million or so households connected to one will know all too well, the reality can be very different. Regular outages, soaring bills and flats that are punishingly hot in summer and dangerously cold in winter have become a feature of Britain’s network of heat networks. And residents connected to them have been brutally exposed to the price volatility that has characterised energy markets since the war in Ukraine began – unprotected as they are by the energy price cap which covers most households.

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Recognising these problems, the Government recently got moving on a new system of regulation and oversight. As of January this year, Ofgem took over responsibility for regulating heat networks as well as other gas and electricity consumers.

But this regime has hit early problems and bigger issues are looming as further price rises creep up thanks to the conflict in Iran. While this may be framed as a niche problem, it is one that Andy Burnham’s new administration should take a keen interest in before it becomes a bigger scandal.

Another winter without basic protections

The first issue is that the guaranteed standards of performance promised by Ofgem are not yet in place. These performance standards grant consumers the right to compensation if heating or hot water is off for too long, and require alternative provision for vulnerable customers.

This has been a major problem on heat networks. I have spoken to people in their 80s who have spent weeks without heating in the middle of winter, and young professionals who have had to drop off at the local gym every morning for months before work to get a warm shower.

But nothing has happened. Heat Trust – a consumer group – is extending its voluntary standards regime to fill the gap, but this only covers part of the market. As it stands, consumers face another winter without protection.

Consumers are paying for wasted heat

The next problem is technical performance. In many cases, only 35% of the energy contained in the gas burned in the communal boiler is delivered to homes for heating and hot water, and in the worst cases efficiency drops as low as 15%. By contrast, a household boiler is about 85% efficient. This is a terrible state of affairs – both because it wastes energy and because consumers still have to pay for it.

New technical assurance standards were supposed to require building owners to bring existing networks up to a minimum level of performance, while ensuring new systems are built properly. Much of the problem is remarkably basic: pipes aren’t insulated and heat is wasted.

This has contributed to some devastatingly hot temperatures in blocks of flats this summer: the heat that leaks out doesn’t just disappear, it goes into communal areas and people’s homes. I know of flats where indoor temperatures stay artificially high all summer thanks to the heat network. In the summer just past, that was a very, very dangerous state of affairs to live through.

But building owners are fussing about how the upgrades will be paid for, and the lobby for builders is worried that tighter new standards will result in delays and red-tape.

“[W]e’ve had a lot of people in industry talking to officials and ministers, trying to claim that the scheme as proposed is too burdensome, is too difficult to deliver, can’t be done, and so on. And at the moment, it’s on hold,” says Stephen Knight, chief executive of the Heat Trust.

“And my concern is that the voice of consumers and the interest of consumers is going to get lost in this a little bit, and people will forget that the reason that we’re doing this is that the current heat networks are often so inefficient that they’re completely unaffordable for consumers. We can’t carry on just expecting consumers to be a magic money tree to pay for all this energy that’s being wasted.”

Who pays to fix the system?

The question about how the upgrades will be paid for is a legitimate concern. The Government does not have enough money on the table currently to cover what could be substantial work. Without additional funding, the cost could ultimately fall on leaseholders and social housing tenants through their service charges and rents. Part of the £450 million boiler upgrade programme could be rerouted to heat networks, producing a bigger carbon saving for less money.

Finally, there is a looming disaster on costs. Unlike households with conventional gas heating, heat network customers are not protected by the domestic energy price cap. Their building owner typically buys energy on commercial markets and passes the cost on. In the aftermath of the War in Ukraine, some tenants faced eviction because they could not pay bills which rocketed by more than 350% as gas prices spiked. The conflict in the Middle East may not have caused spikes quite this severe, but it has sent prices up. Without protection, some of the poorest households in the country will face the biggest energy bill increases.

Some form of price capping is essential to avoid this. “We’ve argued the answer is to regulate the price of energy supplied to heat network, so all heat networks can get a reasonable, fair price for their energy,” says Mr Knight. “The prices have to be smooth – based on an average price over the preceding three month period or similar, to avoid these horrible spikes. There is no reason why heat network customers should be totally unprotected when other homeowners are. It’s unfair.”

The Government has a lot of things to think about currently, and heat networks are easily forgotten. But there are millions of people out there in homes that are expensive to heat and often far too cold or far too hot. 

Postscript

A spokesperson for Ofgem said: “The introduction of heat networks regulation marks a significant milestone in strengthening consumer protections. Our focus is on getting the framework right so it delivers better outcomes across the whole sector. Where heat networks currently provide protections or compensation arrangements, including through voluntary schemes, we expect suppliers to continue to honour these.”

“The Guaranteed Standards of Performance (GSOPs) were always intended to be a phased element of the new heat network regulatory framework. We will consult on the next stage of these proposals later this year.”

Pete Apps is the author of Homesick: The End Of London, which covers the impact of housing policy changes on communities in the capital. It is out in paperback now and available here. He is speaking in Manchester with Isaac Rose from the Greater Manchester Tenants Union about housing crisis in both cities on October 13. Free tickets are available here. 

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Your First Home: building more routes into homeownership

Equity loan schemes seem to have a marmite-like quality: people either love them or hate them. The reaction to the recent announcement of a new scheme in England, Your First Home (YFH), saw both offered. In many respects judgement needs to be delayed until we see the detail in the late October Budget, as much turns on how tightly targeted the scheme is (income caps, price caps etc.) and on the charges that will be borne by households and developers.

The legacy of Help to Buy

The announcement was made shortly after the publication of a very favourable assessment of predecessor Help to Buy schemes (HTB ran from 2013 to 2023 in England) highlighting a net present social value of £25 billion based on the uplift in the value of the equity loans (in 2024/25 prices), an increase in new build of 15% and a boost to home ownership. On the downside, it estimated that there were modest price effects in some areas and that the new build premium was edged up, while around half the users of HTB indicated they could have bought a home without it. Broadly the scheme did meet its objectives of boosting the housing and mortgage markets (including levels of home ownership and developer viability after the Global Financial Crisis) but it seems its efficacy diminished over time, not least as the market recovery continued.

The case for bringing back equity loans

In many respects the battleground here is as much about politics as it is economics. YFH is seen by some as a diversion from the Government’s core aim to rebuild the social housing sector – in my mind a necessary but not sufficient focus of policy. However, it must be borne in mind that in the complex world of government accounting, the spend on this scheme will not count as day to day public expenditure as it is a Financial Transaction. Grant for social housing is capital expenditure, whereas an equity loan creates a financial asset: the Government expects to receive money back. This should largely offset the borrowing needed to finance them under its new debt measure, Public Sector Net Financial Liabilities (PSNFL). While this does not eliminate the financial risks, it means the scheme need not compete directly with social housing investment for the same fiscal resources. In that respect and reflecting the continuing concerns about diminished opportunities for younger households (and the wide political impacts that engenders) opting to return to an equity loan scheme makes a lot of sense.

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Of course past performance is no guide to the future and because the UK has recorded house price inflation increasing in only nominal terms for some years, and is now seeing some real declines, it is possible that YFH borrowers could see both their 2.5% deposit lost and the government not fully recovering its equity loan. Such concerns must play a part in the thinking about how to target the scheme and what real impact it might have on the market. It could be quite limited. We also have to think about how loans are repaid and what impact that has on the capacity to make a next move. Currently unpublished Hamptons data suggests that HTB buyers have had to borrow more compared to other first time buyers moving to a next home – but for some that includes paying down any outstanding equity loan. Over the last five years FTBs on remortagaging and moving have borrowed on average 50-60% more, whilst HTB buyers doing the same borrowed an average of  50-85% more. These figures suggest that some Help to Buy borrowers have been able to remortgage or move while repaying their equity loans.

Making homeownership accessible to more people

While we are currently seeing high numbers of first-time buyers entering the housing market it should be borne in mind that many of them will be supported by the Bank of Mum and Dad. This has clear distributional impacts and if we are to avoid home ownership becoming ever more exclusive then schemes such as YFH are important part of the armoury, helping those with moderate jobs and credit but having limited savings get access to home ownership. And it should not stop there – we need to see further reform to shared ownership to allow it to properly fulfil its potential (and where at last we are seeing solid evidence to make the case from the Leasehold Advisory Service, Shared Ownership Resources and the Ministry of Housing, Communities and Local Government) and continued reform to mortgage lending rules, where further announcements are expected. Currently, lenders are restricted in the share of mortgages they can offer worth more than 4.5 times the borrower’s annual income. The limit has lagged behind the reality of a housing market where price appreciation has outstripped income growth, and is impacting upon a range of would be purchasers including those with low deposits and the self-employed.

If home ownership is to continue to play a key role in the UK housing system, it is important that effective “ladders” exist between renting and ownership, and this includes access to a suitable stock of housing, access to mortgages and – where necessary – access to help to bridge the gap between aspiration and effective demand.

Your First Home is no panacea, but it could make a valuable contribution.

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The Government is finally asking the right question on housing – so it can’t risk providing the wrong answer again with Help to Buy

The Prime Minister couldn’t have been clearer to the Labour Party conference hall: he intends to end our broken housing system. Just as he said on the steps of Downing Street, he remains committed to ending rough sleeping. But he went further and more personal, sharing the legacy of his parent’s decent home in Keble Drive in Old Roan. How that home ensured his family could fulfil the aspirations that led him to that conference hall.

He outlined more policy on building council homes, helping councils access public land, reforming Right to Buy and restoring the quality of our social housing stock. He indicated going further on the Renters’ Rights Act, with new powers to allow councils to acquire rented homes from slum landlords.

It’s worth noting how his policies are now in complete contrast to the Opposition. Ahead of her own party conference, Kemi Badenoch pledged to end the requirement for developers to contribute to affordable housing when building their penthouses. She also committed to removing rules that made those homes easy to keep warm and cool in. As Burnham is showing how Labour can bring hope back, the Tories are embarking on a relentless raid on aspiration.

That said, there was one potential fly in the ointment of the Prime Minister’s vision for housing. He also announced the new Your First Home scheme, explaining it would “reduce the size of the deposit you need.”

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On the surface, this seems an inherently sensible policy. Too many young families are stuck in the private rented sector – something which should be a choice has become their only option. Each month they pay their rent which, often, then pays off their landlord’s mortgage. Why not help them into ownership?

But is this scheme a new idea, or is it a reheated programme from the George Osborne era? And if so, how can past mistakes be avoided?

Is this Help to Buy 2.0?

In 2013, Help to Buy constituted £3.5bn of the government’s spending on housing, dwarfing all other measures. Most critically, it arguably contributed to the loss of 260,000 social homes over the following decade by diverting away the funds that would have paid for more social homes.

Evaluations from the IFS and Shelter, have shown the failings of the scheme. The money often helped those ‘almost owning’ at the expense of the ‘almost homeless’. If Help to Buy’s 2013 spending commitment had been invested in social housing it could have resulted in around 35,000 new homes for homeless young people. 

Help to Buy may have been a loan rather than a grant, intended to boomerang back to government coffers in the end, but it still took up most of the Cameron-era housing budget. Worse, as the loan was linked to the house prices, many of the supposed beneficiaries had to pay more for their loan as the scheme inflated their home’s worth without benefiting them. Some defaulted and lost their home.

But didn’t Help to Buy work?

A recent Government-led evaluation of Help to Buy, claimed the policy added value. But it is critical to know what question the paper was answering. It was tasked to see if Help to Buy added value in isolation of other policies. Yes, Help to Buy did subsidise some first time buyers. But that doesn’t make it a more efficient use of limited Government funds than other schemes would have been. When I eat a Mars bar, I take calories on board. It doesn’t mean that was the most healthy or efficient choice for my dinner or my budget.

Building our way to affordability?

Help to Buy made more sense if you look at the challenge the Cameron Government set itself. This Government, like many before it, has made a commitment to increase the raw supply of homes in this country over the kind of genuinely affordable homes needed.

The argument for raw supply has come from think tanks and developers, and think tanks funded by developers. It is a simple one – build more homes, and homes will begin costing less. But it doesn’t follow the logic of supply and demand. Last year, according to Savills, over 200,000 new homes were delivered in England. But there are almost 36 million dwellings in England. What happens to the price of goods when the supply of it is increased by 0.5%? Nothing whatsoever.

Homes don’t work like the iPhone. People rushing out to buy a fancy foldable model may well then put their old phone on Backmarket for thrifty folk to snap up at a discount. That’s not what happens when a Saudi investment company unloads its Mayfair property assets. They are traded off to someone else, holding or increasing their value, and over 170,000 children in England remain without a home.

Is the Government repeating past mistakes?

It’s clear the Labour Government is not suggesting a copy and paste of Help to Buy. Critically, they’re not betting the house on it. As Burnham’s speech made clear, Your First Home sits within an array of progressive policies to fix the Private Rented Sector and grow back our quantity of social homes. The offer will also have more sensible caps on who the offer is for based on their income as well as the price of the home it can be used on.

But this does not mean the scheme is without risk and not in need of careful thought. Taking on a mortgage with only a 2.5% deposit is something first time buyers should consider carefully, particularly in a time of global economic uncertainty and the risk of high inflation. In the end, this scheme’s role must be recognised as limited and specific. It’s clear this Government has the right ambition for solving our housing crisis, and because of that, the Your First Home scheme should always be seen as the support, not the headline, act. 

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Social rent council housing should be the Government’s first housing priority

The first tranche of funding for the Government’s Social & Affordable Homes Programme (SAHP) has been announced. Of 73,617 “affordable homes” to be built by “Strategic Partners”, funded by the programme, only 3.8% are to be built by councils.

On X, the Labour Party said that “Labour is funding more than 70,000 new homes across England, putting councils at the heart of house building”. Another post said, “This is the biggest council house building revival in decades.” In his first speech in Parliament Andy Burnham referred to “the biggest council house building programme since the post-war period”. What seems clear to us at the Labour Campaign for Council Housing is that this aspiration on council housing cannot possibly be achieved by the SAHP as currently constituted.

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The stark reality is this:

  • £9.58 billion (outside of London) is being given to 33 “Strategic Partners” for multi-year programmes up to 2039;
  • Just three of them are councils (Cambridge, Eastleigh and Newcastle), with a combined funding of £392.2 million, supporting 2,811 homes;
  • The other 30 “Strategic Partners” are Housing Associations, save for two ‘for profit registered providers’, Sage and Park Properties Housing Association, and the large volume builder Vistry;
  • Sage and Vistry will receive almost as much as the councils combined; £350 million each.

Given that only 2,811 of the 73,617 homes will be built by councils, this cannot possibly represent “putting councils at the heart of house building”. Nor can it be described as “the biggest council house building revival in decades”.

The Government has said that “future stages of the programme will be tilted more towards councils”. Yet there is, currently, no funding ring-fenced for councils. They have to bid in the “Continuous Market Engagement” process, competing for grant with Housing Associations, “for profit registered providers”, developers and builders.

In London the funding is under the control of the Mayor rather than Homes England. Tom Copley, Deputy Mayor for Housing and Residential Development, announced that “60% of the funding from the first round of the mayor’s new SAHP will go to London boroughs to deliver even more new council homes.” Even so, if 60% was applied nationally, it would still only equate to 10,800 council homes a year. Demolitions and Right to Buy sales will reduce the net number. (Red Brick editor note: The Government is currently progressing reforms to restrict the Right to Buy through the Social Housing Bill ).

SAHP: “a flawed programme”

For us at the Labour Campaign for Council Housing, it was clear when it was first announced that the SAHP was “a flawed programme which would not solve the housing crisis”. The £39 billion pledged over a decade was never going to be sufficient. The 300,000 “affordable homes” it will fund equates to an average of 30,000 a year. Of those, 18,000 will be social rent homes, comprising just 6% of the Government’s annual target for overall housing supply. In no sense can this be described as ‘historic’.

There have only been six years in England when 300,000 or more homes have been built. In those, council housing made up an average of 41%; 135,000 a year.

On the last two occasions when Labour conferences have discussed housing, in 2019 and 2021, overwhelmingly the delegates voted for a Labour government to fund 150,000 social rent homes a year, including 100,000 council homes. Shelter and other organisations have said that as an absolute minimum 90,000 social rent homes a year are necessary. This would require far more funding than £39 billion.

The SAHP average grant is around £130,000 per unit (£39 billion for 300,000 homes). In its recent report for Shelter, Savills estimated an average grant per social rent unit of £177,000. That would add up to £15.9 billion a year; £159 billion for a decade. The Centre for Cities estimated that £16.6 billion a year would be needed to replicate the level of council house building from 1956 to 1979.

Is this unrealistic? No. We should remember that the Attlee Government, despite facing far worse economic circumstances than we do today (the debt to GDP ratio was 250%, compared to under 100% today), funded around 800,000 council homes. It is a question of priorities.

Investment today saves money in the future. Investment in social rent council homes will save money on the housing benefit bill by taking households out of the expensive private rental sector. It will save money for the NHS by taking households out of homes which will ruin their health. It will save councils the exorbitant cost of Temporary Accommodation.

“Affordable housing”

The scale of funding isn’t the only issue, though. The Government has kept the Tory definition of “Affordable Housing”. For instance, “Affordable Rent”, an austerity measure, was introduced by the Coalition Government to facilitate a 60% cut in grant funding. At up to 80% of market rents, it is unaffordable for many. It is £60 a week more than social rent in England, £90 a week in London. As well as impoverishing tenants, it simply drives up the housing benefit bill. Why does the Government propose to continue funding it through SAHP?

If the record numbers of 135,580 households in Temporary Accommodation and 1.3 million households on the social housing waiting lists are to be driven down, the Government needs to make social rent council housing its first priority, on at least the scale that Shelter has called for. If the gulf between the Government’s rhetoric and the actual content of its housing programme is not closed, there will be a political price to be paid.

Andy Burnham, whilst Mayor of Manchester, was right when he said, “The Government should make building hundreds of thousands of council homes its defining purpose. No other policy, achievable within a Parliament, would have greater social and economic benefits.”

That requires significantly more funding and the abandonment of the Tory definition of “Affordable Housing” (see our Letter to Angela Rayner). All the funding should go to social rent homes, the only genuinely affordable tenure for tenants. The Government cannot fend off the threat of a very right wing government, whatever its composition, without beginning to resolve the housing crisis. Council housing remains the key to that.

Martin Wicks

Labour Campaign for Council Housing

Details of membership and affiliation to the campaign can be found here.

Postscript

The 2026 Labour Party Conference voted through a UNITE resolution, as part of a composite motion. The conference voted for:

  • 90,000 social rent homes a year;
  • Ending Right to Buy;
  • Cancelling council housing debt;
  • A publicly funded retrofit programme.
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A message to Andrew Griffith: cut build costs, not social housing

At the Conservative Party Conference yesterday, Shadow Chancellor Andrew Griffith promised to pare back regulation in a bid to cut the cost of building a new home by £50,000. Pledges include: scrapping changes to improve the energy efficiency of new homes; abolishing Natural England and the Environment Agency; and introducing a new ‘one stop levy’ on developers to replace the much-maligned system for delivering social homes and infrastructure through the planning system.

This blog will focus on the last of these, and why it is a tried and tested dead end for building social homes.

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How do planning obligations work?

Currently, Section 106 (S106) agreements and the Community Infrastructure Levy (CIL) secure a share of social and affordable homes as part of private housing schemes, as well as investment in roads, public transport, schools and doctors’ surgeries. Councils effectively cream off some of the profits from private development to ensure local people see and feel the benefits of new housing.

This system of planning obligations has the significant advantage of delivering social homes and infrastructure alongside private homes, but it also results in lengthy negotiations between councils, landowners and developers about exactly what will be provided, when and where.

These problems are aggravated by site-level viability assessments, which allow planning obligations to be negotiated down if a planned development won’t make enough profit to incentivise landowners to sell and developers to build. Because there is no standardised approach, viability appraisal is often described as a ‘dark art’. In some cases viability appraisals have been submitted showing a site is loss-making to reduce or eliminate social housing before it is sold on for a profit. The mistrust and uncertainty this has created adds time and cost to development.

The Infrastructure Levy: a cautionary tale

There have long been calls from academics, think tanks and others to replace S106 and CIL with a ‘one stop’ cash payment of the kind Griffith has just advocated. In fact, the last Conservative Government had a good go at doing so through its Infrastructure Levy, under which developers would pay a non-negotiable cash tax on the final value of private homes. But they ultimately ditched the deeply unpopular plans, widely seen as unworkable and likely to deliver worse outcomes than S106. 30 organisations – including private developers, councils, Housing Associations, planners and construction industry leaders – wrote to the then Secretary of State Michael Gove in favour or ‘retaining and continuing to improve’ the existing system of planning obligations. The current Shadow Cabinet should take note.

Below are four of the major drawbacks of switching from in-kind delivery to cash payments for the supply of social homes through the planning system.

1.    Fewer social homes in the places where they are needed most

If developers pay a financial levy instead of delivering social homes as part of private schemes, there is no guarantee that replacement homes will ultimately be delivered in the same area. Councils or Housing Associations would have to compete in the open land market for sites. In some places, suitable sites will not be available. Social landlords often struggle to compete with private developers’ land teams, which have greater resources, skills and experience.

S106 secures social homes in precisely the places grant has struggled to reach – places where higher demand for market homes pushes up land prices. Replacing it with cash risks fewer social homes in the least affordable places; more people in housing need moving away from communities, jobs, schools and care networks; more economically and socially segregated communities; and fewer direct benefits from new development for local people.

2.    Lower, slower social housing supply

An S106 home is a completed home ready for someone to move into. Before money raised from a ‘one stop levy’ can become a social home, the council or HA must assemble all the other ingredients needed to turn cash into homes: land with planning permission, a viable package of funding and finance, labour and materials. This is likely to take at least two years from start to finish. The result is fewer homes delivered later.

3.    Inflation and market changes erode the value of cash

Unlike a completed social home, the value of a levy transferred to a council is exposed to changing market conditions. By the time a council has assembled the other ingredients needed to turn cash into homes, construction costs will have increased, land values may have risen, borrowing costs may be higher, grant and other funding may have changed. Tax that would have funded a given number of homes when received will fund fewer homes several years later – a point backed up by research from University College London.

4.    Missed opportunities to rehouse those in need

Most importantly, every year of lost social housing supply is another year in which households remain in Temporary Accommodation, unsafe homes or on the streets. Councils would continue paying high costs for TA or other temporary solutions, and the taxpayer would continue paying high levels of housing benefit into private TA or to private landlords, rather than using the money for permanently affordable homes.

Taking on high build costs

The problem of rising build costs is real and pressing. The Home Builders’ Federation estimates they have risen by £76,000 per home since 2020. Surveys of social landlords likewise flag rising build costs as a key barrier to increasing supply.

Much of this reflects rising material and labour costs as geopolitical shocks have collided with a construction sector held back by stagnant productivity. But it is also true that builders of all types of homes are facing a sharp increase in the costs of policy compliance as many new requirements come into effect over a relatively short period of time: the Future Homes Standard, the Building Safety Levy and Biodiversity Net Gain, to name a few. These policies are needed to clear up the Conservatives’ mess on building safety while improving England’s resilience to the climate emergency. Nonetheless, they contribute to a genuine challenge.

The question is, would binning the Section 106 system help or hinder housebuilding? The recent experience of the Infrastructure Levy suggests the Conservatives’ proposal for a ‘one step levy’ would be wasteful distraction from the real work needed to drive down build costs, absorbing time and resources from industry and all levels of government – and it would, of course, produce fewer social and affordable homes, reducing overall housing supply and curtailing opportunities for innovation in the construction sector.

The Government has undertaken sweeping planning reforms to start controlling costs, with more planned – but planning reforms from central government are unlikely to be enough. Fortunately, there are many other opportunities to bring down build costs, such as smarter procurement, finally catching up with the rest of the developed world in the use of Modern Methods of Construction, and addressing the unusually low productivity of our construction sector.

While there is a role for central government, mayors will be best placed to seize many of these opportunities. As devolution progresses, I’d like to see mayors take on the build costs challenge. Could better organisation of funding and powers across housing, transport, planning and skills at the regional level strip out cost more effectively than any central government initiative? And could mayors do so by working with social housing, rather than against it?

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