Blog Post

How can London boroughs deliver the housing they need?

Impassioned debates about Haringey’s now-abandoned housing joint venture with Lendlease have obscured a much more significant trend – London’s councils are getting back into housebuilding. And this can only be a good thing.

After the post-war heyday of massive civic programmes, with some councils directly employing thousands of builders, local authorities took a back seat – relying on housing associations and planning negotiations with private developers to deliver affordable homes. If councils held land, they were exhorted to sell it off for the best price, sometimes with a development agreement setting out aspirations for mix and delivery timescales.

Since the financial crisis, there has been a sea-change: delivery on privately-owned sites stalled, legislation enabled local authorities to be more entrepreneurial, and austerity pushed them to seek new income streams.

Some local authorities have set up new housing companies, or are procuring and managing a housebuilding programme in-house. Nearly 25,000 homes are already in the pipeline, but much more capacity could be unlocked by relaxing restrictions on right to buy receipts, and on borrowing against rental income.

Other councils have pursued joint ventures, where the local authority contributes land and a private developer brings investment and project management skill; revenues and control over delivery are shared to varying degrees as agreed by the partners. Some of these joint ventures have been controversial – as in Haringey – but that does not mean they should be written off.

Almost any delivery structure will involve some form of relationship with private developers or contractors; none of the boroughs building homes are directly employing bricklayers, banksmen, electricians, steel-fixers, carpenters and machine operators to build new homes.

Joint ventures and direct delivery simply involve different forms of relationship with builders – through partnerships or contracts.

A joint venture partner will take on more risk and invest more capital, and can potentially scale up quickly, but will charge a higher margin as a result. Councils can borrow at relatively low rates, but local finance officers and Treasury officials alike will worry about too much debt being taken onto public books. And in every case, local authorities will need highly skilled teams to negotiate and manage contracts or joint venture agreements, to avoid coming off worse in complex commercial deals.

London needs to dramatically step up housebuilding to meet the London Plan’s targets, and suggesting that one approach will work in every borough and on every site is trite. We need housing for sale, for market rent and for social rent; we need developments by private developers and housing associations, housing companies and joint ventures; we should draw on public finance and private finance.

Councillors should work to secure public benefit, but should also embrace new approaches to getting homes built, and share design, planning, commercial and project management expertise. The need has never been more urgent, and there’s plenty of room for everyone.


Richard Brown is Research Director at Centre for London. Follow him on Twitter.