Housing policy - overview

Local housing authorities serve over 2.5 million council tenants in England. Their strategic housing role is made up of the 'strategic decisions and activities associated with effective planning and delivery to meet the housing needs of all residents across all tenures'.

The Housing Green Paper, 'Homes for the future: more affordable, more sustainable', also identified the following five key elements for local housing authorities:

Local authorities can apply to the Department of Communities and Local Government for new strategic structures of housing management through special purpose vehicles and social housing PFI, including arms length management organisations (ALMOs) and local housing companies (LHCs) that use local authority land to build new homes.

Local housing companies

Initially envisaged as a mechanism for local authorities to use private companies to use surplus land to meet targets for homes for key workers and affordable housing, this joint venture PFI approach is also being used to transfer stock to private companies for management and improvement.

One of the challenges of the LHC initiative is to find the best technical solution according to the local authority’s priorities and various factors such as:

Arms length management organisations

A local authority can set up an ALMO as a company to manage and improve all or part of its housing stock. The ALMO's primary objective has been to deliver decent homes within the local authority stock. The company is wholly owned by the local authority. The model offers a split between strategic and operational work. This separation of a local authority's housing management function from its strategic role results in a better housing management service, and frees the local authority to concentrate on its wider strategic function.

Structurally, ALMOs follow RSL stock transferee models, but sanctions need consideration.

While EU procurement rules do not apply to the establishment of ALMOs, they do apply to third party contractors' works.

Right to buy

Introduced in 1980, the Right to Buy scheme gives eligible council tenants in England the statutory right to buy their property at a discount. A landlord must assist a tenant who is considering to purchase the property under the right to buy.

Housing stock transfer

Large scale voluntary transfer (LSVT) is a term used to describe the transfer of the whole or a substantial part of a council’s housing stock to a voluntary sector social landlord (RSL). A transfer of 500 or more properties requires consent from the Department of Communities and Local Government.

Structurally LSVTs can involve a company limited either by guarantee or by shares, but in practice it is usual to adopt an IPS as the charitable status offers corporation tax advantages and they are exempt from registration with the Charity Commission, in addition to increased flexibility in membership arrangements.

LSVTs require a ballot and tenant participation.

Social housing PFI

PFI is applied in two ways in this area:

PFI has the advantage over LSVT in that no ballot and tenancy participation is required as there is no change to tenancy status.