Today’s guest blog is from Cabinet Member for Housing Councillor Paul Smith.
The last few weeks have marked massive changes in the local housing scene. We have seen packed meetings in the council as more of our projects move forward. This blog should give a flavour.
Removing the borrowing cap
Local government finance should be simple but decades of legislation has made it immensely complex. The two largest financial funds within the council are the General Fund, where most of the money goes including council tax, business rates, fees and earned money, its also the fund which pays for almost all of the services. Council housing sits outside the general fund in something called the Housing Revenue Account (HRA). Since the 1980s these two funds are not allowed to subsidise each other. In summary council tax can’t be used to top up rent money (or to lower the rents) and tenants rents can’t be used to top up the council tax or to reduce it.
The housing revenue account collects around £120m in rent but has been limited in its ability to borrow money to build new homes. This limit is called the cap. As part of the budget the government removed this cap, which means that the HRA will be allowed to borrow to build new homes provided it can afford to pay the interest charges. As this interest can be covered by the rent from new homes this means we will be able to increase our building of council homes. Expecting some relaxation we had worked up ten projects with almost 400 council homes to be started by 2022. Completely removing the cap means we can do these ten projects and also to start looking for other schemes to allow us to build new homes.
The first of our two new housing companies was register in October and was launched this week. Goram Homes will be wholly owned by the general fund. This means that the council tax funded part of the council can also borrow money to build homes. Whereas the council housing department will build on land within the HRA, Goram Homes can build on land owned by the rest of the council. It is set up to work in partnership with private companies or housing associations who will put in people with development expertise and their own money. The profits from selling the housing will be split between the partners including the council and social rented housing could be owned by the council in its second housing company, set up specifically to manage property.
Having both the housing company and the housing department building homes will maximise our ability to develop sites and ensure that good quality affordable housing is built across the city.
The housing festival is a five year project to allow experiments with new building technology and new ways of organising housing within the city. This will include supporting and growing existing projects in Bristol and to invite experts from outside the city to trial new approaches. This is not about pods but about challenging the expensive, time consuming and monopolistic traditional way of building homes, which relies largely on a small number of housebuilders controlling a market dependent upon building homes the way they always have been built because that’s what they know. The council has committed to make some land and buildings available for homes, in some places where traditional approaches do not work. This approach will also increase the focus on our community led housing projects
We also want to use this experiment to test new ways of people living together. For example intergenerational housing (older and younger people living in mixed housing schemes rather than just older people care housing) already exists on the continent particularly in Spain. In these schemes the people provide each other with companionship and support in return for lower rents. From Holland we are trialling a project bringing young homeless and students living together and providing each other with mentoring.
Bristol is increasingly being recognised as being at the forefront of housing both by generating new ideas and approaches and showing that a rapid increase in affordable house building is possible when the political will and leadership is present.