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Islington Council calls for Government to cut 'red tape' to help build hundreds more council homes

Islington Council has today (12 March) urged the Government to use tomorrow’s Spring Budget Statement to help the council build hundreds more badly-needed council homes.

The council is currently delivering Islington’s largest council house building programme for a generation, with 500 new council homes between 2015 and 2019, in addition to 1,500 more genuinely affordable homes for social rent and shared ownership.

However, Government financial rules are restricting the council’s ambition to build many more council homes.

The council wants permission to borrow more money to build self-financing new council homes, which it will repay using money from future rental income.

Government restrictions mean that the council cannot borrow money above a certain level to finance the building of new council homes. This restriction, known as the Housing Revenue Account (HRA) borrowing cap, also means that the council is forced to build a greater proportion of homes for open market sale to finance the building of council housing.

If the restriction was lifted, the council could build many more council homes, and a greater proportion of all homes built by the council would be for council rent.

Currently, 60 per cent of homes the council builds are for council rent, with 40 per cent for open market sale; with the receipts from the open market sale homes used to finance the building of the council homes. Lifting the restriction would allow the council to increase this ratio, so that 85 per cent of all homes the council builds are homes for council rent.

For example, currently, due to the Government restrictions on borrowing, for every 1,500 homes the council builds, 900 are for council rent and 600 are for open market sale in order to pay for the new council homes. If the borrowing restriction were to be lifted, of these 1,500 homes, 1,275 would be built for council rent, and 225 for open market sale.

Lifting the borrowing restriction would also allow the council to greatly increase the number of new council homes being built, subject to the availability of land and planning permission.

In the Government’s 2017 Autumn Budget, the Chancellor announced that councils in high-demand areas would have their HRA borrowing caps partially lifted. Islington Council has written to the Government to begin discussions about this, but so far no concrete proposals have been published by the Government.

Cllr Diarmaid Ward, Executive Member for Housing and Development, said: “Islington Council is building more new council homes, prioritised for local people, than any time in the last 30 years. Next year we will build 200 new council homes, thanks to investment we have chosen to make, despite ongoing massive Government cuts to the council’s core funding.

“But we want to build even more new council homes and genuinely affordable housing. To help us do that, we are urging the Government to cut red tape and restrictions that are stopping Islington and other councils from building new homes for local people. Lifting the HRA borrowing cap is a sensible way to deliver much-needed investment in new council homes, and is an entirely sustainable way of doing so.

“In its Spring Budget Statement, we are asking the Government to back councils to build more new council homes, following its announcements in the Autumn Budget about lifting HRA borrowing caps in high demand areas like Islington, so we can build more of the genuinely affordable homes that Islington so badly needs.”

For more information on Islington’s council housing new-build programme please see


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