Local Government Lawyer Insight December 2018 LocalGovernmentLawyer 30 bring in supporting new forms of housing, and notes that the Elphicke- House review into the role of local authorities in housing supply identified that different housing delivery organisations offer different strengths and opportunities. The Government welcomes approaches where local housing companies are developing new homes for market sale or purchasing private rented homes for the accommodation of homeless households, through an appropriate legal entity structure and/or the borrowing does not count as public sector borrowing.” The point to note is that the above expression of government support for LHCs is limited to their use in the provision of market housing or temporary accommodation, activities which fall outside the remit of social rented housing and the HRA. Nevertheless, the establishment of LHCs by English local authorities appears to be on the rise. Current legal structures incentivise the delivery of council housing through LHCs. In particular: (i) LHCs are accounted for in the General Fund, therefore the HRA borrowing cap is not a constraint on council investment, (ii) LHCs are subject to the same regulation as ordinary private sector providers, and in particular are not subject to rent control,¹ and (iii) LHC tenancies do not attract the RTB. It is easy to see that factors (ii) and (iii) above make long-term investment in housing via LHCs financially more viable than a similar investment in traditional council housing stock.². In a report published in October 2017, Delivering the renaissance in council-built homes: the rise of local housing companies, the Smith Institute noted a rapid rise in LHCs. Other studies carried out by the Association for Public Sector Excellence (Novemner 2017) and Inside Housing (February 2018) have noted the same trend. The Smith Institute paper estimated that there were currently a total of 150 LHCs in England, which were being used by councils to deliver a mix of housing tenures, including 30-40% affordable housing and some at social rents. The paper predicted that LHCs could increase completions over time from 2,000 homes a year to 10,000-15,000 homes each year by 2022. This development may present a quandary for central government: on the one hand, it represents a much-needed contribution towards easing the housing crisis for “generation rent” households struggling on low incomes, but on the other, a potential way around its prized policy of enabling home ownership through the RTB. Matt Hutchings QC is a barrister at Cornerstone Barristers. https://cornerstonebarristers.com/barrist er/matt-hutchings/ ¹ Currently, a mandatory 1% annual rent reduction under the Welfare Reform and Work Act 2016. ² The recent decision in Peters v Haringey LBC [2018] EWHC 192 (Admin) establishes that councils may adopt a partnership model for housing delivery with a development partner, rather than use a company, with potential fiscal advantages, provided that making a profit is not the council’s dominant purpose.