Questions remain over Manchester’s new ‘council housing’

The development will be taken forward by a company named “This City”, set up on an arms-length basis by the council. This City will, in a first phase, target two sites – one in Ancoats, and the other in the city centre’s neighbouring Piccadilly ward. The Ancoats site will build 122 new apartments and townhouses, of which 85 will be for market rent and 30 for a new “accessible” rent set by the council, charged at or under the Local Housing Allowance (LHA) rates paid to housing benefit recipients. In Piccadilly, the current plans are for 82 homes, of which 17 will be let at the council’s accessible rent and the remainder at market rate. While the exact locations of the sites have not yet been disclosed, it is likely the first scheme will be built at Wadeford Close, near to where Ancoats transitions to Miles Platting, and the second close by at the corner of Oldham Road and Livesey Street, long rumoured as a site earmarked for future affordable housing.

Manchester City Council’s plan to establish a municipal housing company comes as part of a wider trend, with local authorities taking advantage of loosened statutory restrictions to set up their own development vehicles to directly deliver housing over the past decade. Across the River Irwell for example, Salford City Council has had a wholly council-owned delivery arm, named Derive, since 2017, which aims to build 117 homes from 2018-2023. For some commentators, the rise of housing delivery companies means that council housing “is back”, with the 4,010 new homes completed by local authorities in 2018/19 higher than the entire number of council homes built in the decade from 2000-2010. The overall number of affordable homes built by local authorities remains low however, with 150 of the 204 homes planned to be built by This City in its first phase being for market rent.

Manchester City Council’s decision to directly build housing comes in the context of an ongoing housing crisis, with 13,466 households on the city’s housing register and 3,948 households in temporary accommodation in 2018. The council’s own targets to help meet this need are for 20% of new build housing in the city to be affordable. Meeting this target would amount to developing 6,400 new affordable homes by 2025, accounting for one fifth of the 32,000 new homes projected to have been built in Manchester from 2015-2025. Only 1,327 affordable homes have so far been built according to public figures from March 2020 however, many of which by housing associations operating in areas such as Clayton, Openshaw, or Wythenshawe. Housing associations in Manchester have the capacity for 4,106 more by 2025 according to the council, although only 765 of these, plus 579 earmarked for ‘infill’ sites across places like Burnage and Withington, were under construction as of last year. Even if housing associations fully hold up their share, Manchester will still be short of its target by 913 homes, hence the council’s decision to build its own.

A return to council housing?

While the council intends to scale up delivery through This City to 500 homes per year by 2025, there are caveats to how this may be achieved, including the possibility of part-privatisation. For now, This City remains wholly council-owned, with its financial cost to be supported by government loans borrowed through the Public Works Loan Board (PWLB). The council’s report setting out its plans states however that in future phases of development it will “seek an investment partner to work with to drive forward new developments, rather than fund through further PWLB debt”. Later, it explains the need to attract an investor once phase one is complete means “the proposition must be attractive to a third party and constructed in the right way for maximum benefits”. What this means is left unexplained. The council does say however that This City’s lettings criteria “won’t prescriptively follow the council’s lettings policy”. Whether this provides an incentive for the council to cherry pick relatively more affluent tenants less likely to present an arrears risk, as many big housing associations do, remains to be seen.

Further questions of who may be housed by the homes built by This City are raised by the very different set of restrictions applied to homes built through municipal development companies in comparison to traditional council housing. Firstly, homes let to tenants through municipal housing companies are offered on more precarious terms than the “secure tenancies” offered through traditional council housing, to avoid these homes being subject to the Right to Buy. Secondly, as pointed out by urban geographers Joe Beswick and Joe Penny, the need to generate cross-subsidy by building market-rate housing makes the provision of affordable housing structurally dependent on the ability of local authorities to capitalise on rising land values that themselves drive a crisis in urban affordability. Manchester taking the decision to set its rents at or under the LHA rate mitigates this, with the council estimating this makes the homes affordable for someone earning the city’s average wage of £27,500. But given monthly LHA rates for a 3-bed in central Manchester of £747.93, a household on Manchester’s median income of just under £25,000 would still be paying over one third of their income on housing costs if rents were set at maximum LHA rates.

More affordable housing in Manchester is badly needed. Homelessness presentations in the city have now risen back to above their pre-pandemic levels, and the New Economics Foundation think tank predicts a “perfect storm” this winter for people on low incomes due to rising food costs, fuel price hikes, and deep universal credit cuts. Manchester City Council’s decision to build more affordable homes may mitigate some of this need in future years, though this remains a belated change in policy given an insistence by senior officials as late as 2016 that there was no need to increase, rather than maintain, the absolute numbers of the city’s social housing stock. But with scaling up delivery in future phases predicated on partnering with an external investor, it remains ambiguous whether accessible rents will be genuinely accessible to the people most in need in the city, and the proposals should not be conflated with a return to genuine council housing.

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By Richard Goulding

First published on the Greater Manchester Housing Action website on 29 September 2021

Richard Goulding is a housing researcher based in Manchester.

For more on local housing companies, read this piece published by GMHA, by Joe Beswick.

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Feature image: Google Maps (Baguley, Wythenshawe)