Darya Kolas, Partner & Head of Social Housing at Copping Joyce, discusses the temporary housing dilemma facing local authorities.
The burgeoning crisis of temporary accommodation in the UK is at an all-time high, as highlighted by the charity Crisis, with 105,570 households finding themselves in impermanent dwellings. This figure underscores the gravity of the situation, amplifying the urgency for local authorities to devise viable housing solutions.
The financial toll is also evident, with the Local Government Association reporting that the annual cost of providing these temporary homes has surged past £1.7bn, casting a shadow over the sustainability of current housing strategies. Faced with such stark realities, authorities are compelled to carefully evaluate their resource allocation, striving to balance immediate needs with long-term strategic goals within their temporary accommodation portfolios.
For many local authorities, the key issue is navigating the trade-off between immediate budget constraints, the urgency of housing needs, long-term sustainability, and the availability of suitable resources. This complex balancing act goes beyond mere choices; it is a strategic imperative that shapes the effectiveness of their temporary accommodation acquisition strategies.
For immediate housing needs, local authorities often turn to Right-to-Buy buy-backs of ex-local authority stock and acquiring street properties. These strategies are advantageous for their relatively quick implementation and moderate budget requirements. They enable authorities to swiftly increase their temporary housing stock, addressing urgent demands. However, sustainability, management and maintenance of these properties can be demanding, often requiring significant ongoing investment and oversight.
Long Term inflation linked Full Repairing and Insuring (FRI) leases, while requiring minimal initial capital, carry historical warnings for local authorities. These attractive, rapid response solutions to housing shortages have previously led to financially burdensome contracts due to market fluctuations and unforeseen circumstances. Success with FRI leases demands rigorous financial modelling and sensitivity analysis, especially considering variable factors like Local Housing Allowance rates and inflation. This level of detailed financial oversight is not just about prudent fiscal management; it’s a critical safeguard against potential pitfalls that have tripped up authorities in the past.
For strategies focusing on long-term sustainability and quality, the landscape shifts. New build blocks are a prime example, offering sustainable housing solutions that align with modern standards. However, their high cost is a significant barrier, making them a less accessible option for many authorities working within tight budgetary constraints. Forward fund agreements, on the other hand, present a more cost-effective alternative to new builds. These agreements allow authorities to secure housing at a discount, in exchange for taking on the development risk. This trade-off can be advantageous but requires a willingness to navigate the complexities of development projects.
Lastly, the option of developing land for housing stands out for its sustainability and potential long-term benefits. This approach, while offering the most control over the quality and sustainability of the housing solutions, is laden with risks and resource demands. It requires a substantial investment of time, capital, and expertise, with projects often extending over several years. This makes development land a challenging choice for authorities seeking immediate solutions but can be a valuable part of a long-term housing strategy.
Aligning asset acquisition with strategic objectives is a critical aspect for local authorities in addressing the housing crisis. This situation is more than a simple quantity versus quality dilemma; it's about finding the right mix of immediate solutions and long-term investments. Local authorities must weigh these options carefully, understanding that the wrong combination can lead to further complications rather than solutions.
To navigate these complexities, collaboration and shared learning are essential. Local authorities can greatly benefit from forums where they can exchange case studies, strategies, and insights. This collaborative approach fosters informed decision-making and the development of innovative, practical strategies.
Furthermore, collaboration should extend beyond local government circles. Engaging with private and third-sector organisations opens up avenues for resource sharing, joint ventures, and innovative financing models. These partnerships can enhance the scale and effectiveness of housing strategies, leading to more robust and sustainable solutions.
A nuanced approach is required, one that carefully considers various objectives and selects the appropriate mix of temporary accommodation sources. Whether opting for immediate solutions like FRI leases, buy-backs, and street properties, or investing in long-term projects like new build blocks and development land, the decision must align with both immediate needs and future goals. Through collaborative efforts, shared learning, and community engagement, local authorities can navigate this intricate landscape, working towards a more balanced and effective approach to temporary housing.
