Councils spend £1bn on commercial property amid housing shortage

Posted On: 
18th November 2017

Councils across England and Wales to spend more than £1bn on commercial property this year, even though the number of homeless households has risen to 50,000 in 2017.

Local authority spending on commercial properties has dwarfed the amount they spent on social housing in 2017.
Credit: 
PA images

Local authorities spent more than £758m buying up shopping centres, country clubs, hotels, offices in the first half of this year, according to fresh data from Savills.

However, only 1730 new council homes were built this year, according to Government.

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The £1bn councils are on track to spend could produce more than 8,000 new council homes, experts suggest.

Earlier this year, Downing Street indicated that amount could deliver 12,500 homes.

John Healey, the Shadow Housing Minister, said: “It is absurd that out-of-date rules let councils borrow to build or buy commercial property, but not to invest in affordable housing.

“Conservative ministers are about the only people left who don’t think councils should be free to build new, low-cost homes to benefit their areas.

“It’s a budget no-brainer for Philip Hammond to lift this cap and get councils building tens of thousands of affordable homes.”

There has already been outcry over the properties local councils have chosen to buy. Coventry City Council bought Coombe Abbey hotel in a multimillion pound deal.

The local authority has no council housing despite rising homelessness, with more than 6000 households in priority need. The council believes it can earn a 10% annual return on the investment.

Kingston Council spent £54m on buying two office buildings but only built one social home.

The Department for Communities and Local Government would not comment on whether local authorities would be allowed to borrow more for council housebuilding.

“We want local authorities to deliver a new generation of council homes, that’s why just last month, we announced a £2bn boost to deliver more affordable properties at social rent in areas where they are most needed.

“We’re seeing progress, with twice as many council homes built in England in the past five years than between 1997 to 2010,” a spokesman said.