£195m bill for council trying to meet affordable homes target

With almost 8,500 people on the council house waiting list and first-time buyers still being priced out of the housing market, East Riding Council estimates more than 5,000 affordable homes need to be built in the borough over the next five years.

Under the Localism Bill currently going through Parliament, the centralised system of funding council housing, by redistributing resources to areas where demand outstrips resources, will be replaced by one which allows councils to keep and manage their own rental income.

But the cost of effectively buying itself out of the subsidy system could see the council being forced to fund a settlement of about £195m.

Although the actual figure will be announced at the end of January, the authority is already describing the prospect as a “major concern”.

A report by Steve Button, the council’s director of policy, partnerships and improvement, said: “Although the council has always promoted this change in approach, the manner in which the change has been progressed and, in particular, the scale of the settlement, remains a major concern.

“This level of debt will clearly have a significant impact on the council’s ability to address identified housing priorities, including the need for additional affordable housing.”

The report, a strategic overview of housing in the East Riding, says that average house prices have more than doubled over the last 10 years.

It says these costs, considered alongside household income and difficulties in borrowing, mean an extra 1,008 affordable homes will be needed each year until 2016.

The council is to launch a new affordable homes strategy to address the issue.

The report said: “The council recognises that the operation of the housing market is currently heavily influenced by difficulties in accessing credit and mortgages, uncertainty in employment and reduced public sector funding.

“Of households found to be in housing need by the 2011 strategic housing market assessment, almost 500 of those who would like to purchase a home have sufficient income, but are unable to enter the market due to lack of deposit.

“The council is keen to work with local communities, private developers and investors to develop a range of market housing products to better meet the needs of residents and so increase housing delivery.”

The authority said tackling and preventing homelessness remains a priority - although the report warns the number of people under threat of being homeless is likely to increase.

“Preventing homelessness and dealing with the consequences of homelessness remain a priority,” the report said. “This is particularly the case given the ongoing economic difficulties in the country and in light of anticipated consequences of the Government’s welfare reforms.”

Council interventions are proving effective.

The authority has saved almost 1,400 households from becoming homeless over the last year - a rise on the 1,000 households saved between 2009/10.

Measures used include mediation between families and landlords, and providing temporary accommodation, advice and assistance. A total of 125 households moved into bed and breakfast accommodation last year as part of this, with average stays of 22 days each.

An estimated 41,000 homes in the East Riding fail to meet the Government’s Decent Homes Standard.

The report will go before the council’s health, care and wellbeing overview and scrutiny sub-committee on Tuesday.