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Wednesday, Apr 02, 2025

Study Reveals Financial Strain on English Councils' Social Housing Budgets

Study Reveals Financial Strain on English Councils' Social Housing Budgets

Over a quarter of English councils may sell homes to manage budgets, as financial pressures mount in social housing sector.
A recent study highlights significant financial pressures facing English councils, with over a quarter anticipating the need to sell homes to balance housing budgets.

The research, involving 76 stockholding councils managing their own social housing, reveals that more than a third of these councils have already reduced spending on repairs and maintenance.

The study, commissioned by Southwark Council, concerns over 870,000 social homes, underscoring challenges for Angela Rayner, the housing, communities, and local government secretary.

The councils have been forced to consider emergency measures, with 90% expecting to utilize emergency funds to balance their books in the coming years, and 71% likely to delay or halt ongoing housing projects.

Despite these efforts, two-thirds of councils remain at risk of failing to maintain a balanced budget.

Further findings from the study indicate that 61% of councils have postponed new developments, and 68% anticipate scaling back commitments to build or renovate social housing.

Among the councils surveyed, 37% have curtailed repair and maintenance operations, while 28% foresee selling existing housing stock as a necessary step.

Currently, 45% of councils are resorting to reserve funds to cover day-to-day expenses.

The survey reveals that 10 councils have already sold homes to mitigate budgetary shortfalls, while others have resorted to borrowing funds.

Kieron Williams, Labour leader of Southwark Council, emphasized the need for significant action, stating that without it, councils would struggle to meet housing demands and elevate existing housing standards.

The backdrop to these challenges is Rayner's wider plan to construct 1.5 million new homes during the current parliamentary term.

In November, she proposed consultations to limit the right-to-buy scheme, which has significantly reduced social housing availability since the 1980s.

Despite securing £500 million from the Treasury for social housing, this figure fell short of the £1 billion anticipated by some.

Adam Hug of the Local Government Association warns of the precarious position of council housing and calls for urgent governmental support to ensure quality housing provision.

Last September, 109 councils united behind recommendations for reforms, including changes to the 2012 Housing Revenue Account (HRA), which they labelled as unsustainable, an investment plan to modernize existing social homes, and more realistic budgeting for new developments.

The Ministry of Housing, Communities and Local Government, affirming its target of creating 1.5 million new homes, has pledged collaboration with councils to achieve this goal.
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