Innovation in council housebuilding – East Riding of Yorkshire

The East Riding of Yorkshire covers a large rural area with several market and seaside towns. The council has retained its stock of 11,500 rented and leasehold homes and has actively pursued a new-build programme since 2008.


The East Riding of Yorkshire covers a large rural area with several market and seaside towns. The council has retained its stock of 11,500 rented and leasehold homes and has actively pursued a new-build programme since 2008. Currently its development programme is for about 100 homes a year, mostly general needs, on sites spread across the area. It is buying construction land on the open market and is also purchasing Section 106 properties from private developers.

Context

As a large, economically diverse area, East Riding has housing need in both the more deprived areas and those that are relatively thriving. In the latter areas, affordability is a real barrier. Demand throughout the area for affordable housing is high, with some 8,000 people on the waiting list for an affordable home. The council is the largest social landlord in the area.

Council housebuilding

East Riding of Yorkshire Council’s affordable rents policy means that new homes and existing stock on re-let are let at 80 per cent of local market rents. This creates headroom in the HRA for investment. The council was quick to take up opportunities via the HCA Affordable Homes Programme, building 331 homes under the 2008-10 programme with the largest local authority grant outside London. It followed up with another 156 homes under the 2011-2015 programme.

The current new build and acquisition target is about 100 homes a year for the foreseeable future. Most of these will be for affordable rent, but a small number of shared ownership homes for the intermediate market are also being piloted. As previous programmes have exhausted most of the council’s landbank, it is embarking on a private sector land acquisition programme and has so far identified three sites in different parts of the district.

The programme of HRA acquisition is allowing the council to buy new homes direct from developers under Section 106 agreements. In addition, if need is identified in a small village, the council can consider buying a single dwelling for refurbishment and letting.

Funding

The council took on £208 million of debt under HRA self-financing, but servicing this is actually less costly than the net annual contributions to national pooling made under the previous scheme. The council created an earmarked reserve fund to pay down the debt, and is therefore creating borrowing headroom. It is currently borrowing at just below its full capacity to fund existing stock investment plus new build.

In addition, the council uses the 30 per cent allowable portion of right-to-buy (RTB) receipts, reserves, and as noted above has been successful in securing Homes England (formerly HCA) grant funding.

 

Additional motivations

The council has set out its strategy to meet housing need for the most vulnerable, promote sustainable communities and independent living, and ensure there is a range of good-quality, affordable housing on offer. It is committed to its landlord function, based on demand from tenants, and sees housing as a key part of its business as a council.

There is a need to remodel or regenerate some outdated stock, creating either existing or new housing that is fit for the future. In addition, the ageing population of the area has needs for specialised housing of various types, sometimes with on-site care and support.

Challenges

Although the council can deliver its current limited programme within its existing borrowing capacity, the four-year rent cut did bring difficulties and resulted in a pause in the new build programme. Now it is back on track at a somewhat lower level. Certainty on rents to 2025 is welcomed, but clarity on rent policy for the longer term would aid the council’s business planning. Restrictions on blending sources of income (particularly Homes England grant and RTB receipts) remain problematic, and greater flexibility would allow the authority to achieve more – as would lifting the borrowing cap.

East Riding’s large geographical area without a city-sized hub means that planning for new housing must meet the needs of a range of communities, using relatively small sites to meet local needs. Some villages lack services such as transport, GPs and shops, bringing into question the viability of new affordable housing. 

Benefits and opportunities

East Riding of Yorkshire Council believes it can use its HRA asset and resource base in an innovative way to achieve cross-tenure benefits. It has created a HRA new build investment reserve to ensure this type of work remains focused. Funding in the reserve can be used to remodel sheltered housing, buy land, construct new build and acquire Section 106 properties.

The unitary council is creating specialised temporary units for people leaving hospital, working with its adult social care team to deliver care and create efficiency savings. It is looking to build bungalows for older people and is investigating the feasibility of a further extra care scheme. 

Private developers in the area tend to favour building large four to five bedroom homes, while housing associations generally build three to four bedroom housing. The council sees its role as filling a gap by building one and two bedroom homes, for which there is considerable demand (particularly due to welfare benefit reforms).

Although the council has exhausted its own land supply, it believes this opens an opportunity to be more innovative in bringing forward development in the areas most in need. It wants to establish itself as a ‘first port of call’ for partnership with developers in the area.

Development process

The local plan and the strategic housing market assessment are the guiding documents for the authority’s new build programme, setting out where development should take place. A series of parish needs assessments also informs activity, with a focus on areas of greatest need. The council employs a rural housing enabler as part of the York, North Yorkshire and East Riding Local Enterprise Partnership’s strategic housing group, who undertakes consultation with local communities and land owners to help bring forward sites in rural areas.

The council has a ‘toolbox’ of specialist services within its staff complement designed to deliver new build projects. These include architects, a procurement team and a project management team. Local communities are consulted on any forthcoming projects.

It maximises use of available funds, as demonstrated by its success in bidding for Homes England grant (which it plans to continue). The council is keen to bid for any extra borrowing headroom the MHCLG may offer.

The council is also exploring modern methods of construction, such as off-site manufacturing, to deliver homes more efficiently and to a high quality.