More than a third of councils set up housing companies (Inside Housing)

More than a third of councils have set up or are considering setting up housing companies, extensive research by Inside Housing can reveal.

The research quantifies for the first time the extent of the march into private housebuilding by town halls, which has exploded in scale in recent months.

Freedom of Information Act requests to all councils in England, followed up by in-depth research, showed 98 out of 252 councils have established or are planning a private housebuilding company.

Only 18 months ago, just a handful of councils had established companies, with 36 councils deciding to set up housing companies within the last year.

Councils are using the companies to secure new sources of revenue amid government cuts, and also to build homes outside government-imposed borrowing restrictions.  

Forty-two councils have published development plans, with 24 planning to build or acquire mostly private rented homes, six focusing on market sale and 12 delivering a mix including affordable rent or shared ownership.

Out of the councils who revealed how company income will be used, the majority said it would go into the council’s general fund. Some councils will use the income generated to tackle homelessness in their area.

Activity is focused on London and the South East with 44 of the councils in these two regions. In contrast, there are only two companies in the North East.

Development ambitions vary widely with some planning to build hundreds of homes a year, while others have only a handful in their sights.

Barking & Dagenham has the largest development ambition by a considerable margin – with plans to build 42,500 over 15 years through a variety of joint ventures.

Nearby Newham Council plans 3,000 privately rented homes over the next 13 years while Sheffield Council plans 2,300 over 15 years.

Councils have established companies in a variety of structures, including joint ventures with housing associations and institutional investors.

Barnet Council, for example, has set up two housing companies, one for private rent and market sale and the other for affordable rented homes. A spokesperson said the companies “provide more capacity for building new affordable homes than could be met through the Housing Revenue Account”.