This article is part of a series based around our Plan for Affordable Housing which you can read more about here.

To sign the petition supporting our Plan for Affordable Housing click here.

Across the country growing numbers of councils are attempting to circumvent restrictions placed on their ability to build traditional council housing by forming arm’s length property companies which are then used to invest in affordable housing. These council owned property development companies are able to take advantage of local authorities’ ability to borrow money at sub-market interest rates from the Public Works Loan Board. This finance is then used to address the housing needs of the local community through the development of affordable homes.

There is no standard model for how this should be done and different councils have adopted varying strategies. Here are a few notable examples:

  • In Croydon, the council is using its wholly owned property development company, Brick by Brick, to build 1,100 homes in the next 2 years with 50% being made available for affordable rent and the remainder sold privately to fund further housebuilding.
  • The Sheffield Housing Company is a joint venture involving the local authority, a building contractor and a local housing association. It aims to build 2,300 homes across the city by 2025 which will include a mixture of affordable rent and low cost first time home ownership.
  • In Plymouth, where the council doesn’t own any housing stock itself, the local authority loans money at low interest rates to housing associations for the purpose of facilitating new affordable housing development. This strategy has led to an impressive 410 affordable homes being delivered during 2016/17 and 280 affordable homes during 2015/16.

A somewhat different approach is currently being pursued by the Conservative led Portsmouth City Council administration. Instead of building affordable homes for local people, the council has embarked on a major spending spree, investing in commercial property all over the country. Since 2014 over £100m has been spent on a variety of commercial premises, ranging from a Waitrose in Somerset to a Mercedes Benz showroom in Eastleigh.

Table 4: recent property investment by Portsmouth City Council

Property Location Cost
Schlumberger industrial unit Gloucestershire £8m
Waitrose supermarket Somerset £13.2m
Matalan retail unit Swindon £9.7m
DHL warehouse Warwickshire £12.4m
Mercedes Benz showroom Eastleigh £8.75m
Estate of trade units Leeds £13.75m
Travis Perkins warehouse Leicestershire £15.7m
Lidl and Dunelm retail units Worcestershire £8.3m
Sharps Bedrooms factory West Midlands £11.5m
UPS warehouse Yorkshire £7.25m
Total cost £108.55m

Source: PCC property investment strategy

While this strategy may fit neatly into their ideological framework regarding the financing of public services, the Portsmouth Tories’ approach does little to address the housing crisis experienced by local residents. In fact their property investment strategy could be actively worsening the situation if finance intended for housing is being diverted into commercial property. Concerns have been raised as to whether this is the case with the £48.75m central government funding received by Portsmouth City Council in 2013 as part of the Solent City Deal. This money was provided for the purpose of bringing forward housing development on the Tipner regeneration site, but has instead been used as part of the commercial property investment scheme[1].

Land at the Tipner regeneration site and at St James’ Hospital in Milton is currently listed by the Homes and Communities Agency as expected to be brought forward for development by June 2018. These sites provide excellent opportunities for the council to invest in Portsmouth and work with local communities to bring forward developments which include significant levels of affordable housing.

We believe Portsmouth City Council’s property investment strategy should be refocused towards the urgent task of meeting the affordable housing need of the local community.

To sign the petition supporting our Plan for Affordable Housing click here.

 

 

[1] http://www.portsmouth.co.uk/business/government-city-deal-grant-has-paid-for-portsmouth-s-property-spending-spree-says-tory-councillor-1-7138771

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