Housing bill would spell loss of 80,000 council houses, town halls warn

Town hall leaders have criticised the government’s drive to boost homeownership, warning that it would lead to the loss of 80,000 council houses in the next four years and add more than £200m a year to the housing benefit bill.

In a cross-party attack on David Cameron’s proposed housing and planning bill, Lord Porter, the leader of Conservative councillors across the country, said the planned sell-off of council houses would drive people into the more expensive private rented sector and reduce their chances of saving enough to put down a deposit on their own home, which for the average first-time buyer is now 116% of their annual income, according to new research by Savills.

The Local Government Association (LGA), which Porter also chairs, forecast that on top of the 66,000 council houses expected to be sold to tenants by 2020, town halls would also be forced to sell at least 22,000 of their highest value council homes to fund the sale of housing association homes to tenants. A £2.2bn cut to council housing budgets would risk making building replacements “all but impossible”, the LGA said.

Porter said councils believe the bill would “not help government achieve its ambitions, having the unintended consequence of reducing the availability of much-needed council housing, and hampering our ability to invest in new affordable council housing”.

Labour, which has previously estimated the likely loss of council housing at 200,000 homes by 2020, joined the attack. The shadow communities secretary, John Healey, said: “This isn’t just bad news for young people and families on ordinary incomes who need a decent home. It’s bad news for taxpayers too because it means more people renting privately and housing benefit rising to cover the cost.”

The government hit back at the LGA’s research, describing it as “misleading and based on speculation”.

“More council housing has been built since 2010 than in the previous 13 years,” said a spokesman for the Department for Communities and Local Government. “More homes were built as a result of right to buy under the first year of the reinvigorated scheme, showing councils are delivering on their commitment to provide a new affordable property within three years.

“The housing bill ensures the sale of empty high value council assets will enable receipts to be reinvested in building new homes that better meet local needs as well as supporting home ownership through right to buy.”

But the LGA said that replacing the council homes that are sold off would be prevented by cuts and complex rules restricting councils from replacing homes on a one-for-one basis and that more affordable rented accommodation, not less, was needed.

“With 68,000 people currently living in temporary accommodation, annual homelessness spending of at least £330m and more than a million more on council waiting lists, it is clear that only an increase of all types of housing – including those for affordable or social rent – will solve our housing crisis,” said councillor Peter Box, LGA housing spokesman.

The LGA represents 370 councils in England and Wales.

The row came as figures for 2015 released on Thursday showed a 7% increase in new homes registered on the previous year, which means that house building is now running 75% higher than just after the economic crash in 2009.

According to the National House Building Council, the large majority were for private sale, but council and affordable house building also rose last year by 5% to 37,529. However, the overall total – 156,000 – is still well below the estimated 250,000 homes a year that need to be built to solve the housing crisis.