Shropshire Council is planning to set up a company to build homes – it must build affordable and green homes

Shropshire is getting serious about building homes. That’s good news but we councillors will need to study the detail carefully. All developments should include affordable housing and all should meet the highest green standards.

The build homes, Shropshire Council will need to set up its own housing company. That’s not too difficult as many other councils have already set up local housing companies (LHCs).

A paper published by the Smith Institute think tank a year ago concluded: “LHCs offer councils a ‘triple dividend’ in the form of much needed extra housing, a greater stewardship role in place-shaping and a financial return to the council.” It cautioned that LHCs, and therefore councils, could suffer in a housing market downturn. However, in my view, councils must take carefully evaluated risks, especially in difficult financial times. Inside Housing reported in February that almost a quarter of councils in England have invested £130m in setting up 58 new housebuilding companies since 2012. That gives us a ball park figure of £2 million or so to set a company in Shropshire.

Why do we need to do this? I have highlighted before that we have bigger than average homes in Shropshire and four in ten of them have two or more spare bedrooms. We have a deficit of affordable housing. We build at a lower density than almost any other council in England. The LHC could help with these issues. The proposal to explore setting up a local housing company is expected to be nodded through cabinet when presented by planning portfolio holder Councillor Robert Macey on Wednesday 7 November. A full paper will come to council in December.

The cabinet paper complains that “private sector developers are focussed on profit maximisation in the 3-5 bed ‘for sale’ market. The evidence is that the market is not, and will not, build the housing we need to meet the broad future needs of our communities.”

This proposal has significant implications for the council’s plans to transfer the council homes it owns in Bridgnorth and Oswestry to a social housing provider. The budget this week gave council’s permission to borrow against future rents from council homes and use that money to build new homes. But if the council no longer has a revenue stream from rents, its ability to borrow will be constrained.  

We will need to look at the details in December. We must ensure that there is a guarantee that enough affordable homes are built by the council. There must be an absolute assurance that all schemes in rural villages have affordable housing on site – even though schemes of ten homes or less do not need to provide affordable homes under national planning rules in many areas. All developments sponsored by the LHC should meet the Building with Nature benchmark, which has three key themes: wellbeing, water and wildlife.

Although we don’t yet know the details, I think Shropshire Council is right to explore setting up a local housing company.

2 thoughts on “Shropshire Council is planning to set up a company to build homes – it must build affordable and green homes

  1. Shropshire Council has a very bad history regarding ‘setting up a company’ It has never been made public how much their disastrous IPCLtd venture cost the public purse. It would be yet another ideological profit opportunity for the usual suspects.
    Applying the Market and Private companies to the spending of taxpayers money just adds another band of expense. In the past Council houses were built in the millions without the recourse to setting up pretend Micky Mouse pretend ‘Companies’ and ‘infernal internal markets’ in the Public sector
    This is not the way forward.

  2. If the scheme goes ahead consider whether modular (factory built) houses are a viable possibility. When the plans are finalized ensure that the company stays FOREVER PROFITABLE under council control to benefit the community. IN NO WAY SHOULD IT BE ALLOWED TO BE SOLD OFF

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