Owning a housing or property company is helping councils in England to build more homes, a new report has found, leading to building reaching its highest level since 1990.

At least 9,000 homes were directly created by local authorities in England in the 2017/2018 financial year, according to a study by the Royal Town Planning Institute (RTPI), based on figures supplied by 83 English councils to an online survey. Of these, 42% are affordable homes and 23% are social.

Projecting the figure across the whole of England, the research estimates that over 13,000 new homes were delivered by English local authorities last year, the highest since 1990. Figures from the Ministry of Housing, Communities and Local Government (MHCLG) suggest that the previous high for local authority house building was 14,020 homes in 1990.

The RTPI study also found that much of this building activity has been delivered through companies wholly or jointly owned by councils, with 78% of local authorities now owning a housing or property company. Of those councils without a housing company, 20% are considering establishing one.

‘Having local authorities back as key players in the housing market is vital to tackling the housing crisis. It’s great news that they are becoming more active again, delivering a wide range of house types to meet a wide range of needs,’ said Ian Tant, RTPI president.

But he pointed out that a lack of land is still a major issue. ‘The Government needs to help councils access land at the right price to develop themselves or sell to earn the income they need. Government should also consider a more direct role in increasing supply and influencing the location of housing,’ he added.

According to Paul Dennett, Salford City Mayor, councils have realised that it is not enough to wait for the market to deliver the homes that are needed. ‘We are using the opportunities we have as a city council to deliver more truly affordable housing. Now we need more powers and resources, especially given our infrastructure and post-industrial land challenges to help us develop a new range of targeted interventions,’ he explained.

Professor Janet Morphet of the Bartlett School of Planning at University College London, also pointed out that quality is important. ‘More councils than ever are engaging in the direct delivery of housing, motivated by their role in housing provision, homelessness and income generation,’ she said.

‘Increasingly councils are concerned about the quality of housing being built in their areas. We have heard across the country, from all types of local authority, that councils are no longer relying on or waiting for developments to come through the planning system to provide the housing that they need and are taking action to deliver directly,’ she explained.

‘Councils are also beginning to manage all their work on housing provision, whether on planning delivery, or through companies, Housing Revenue Account and Joint Ventures through single cross professional teams. Council leadership is now emerging as a critical success factor,’ she added.

Apart from the obvious reason to meet housing need, the research found that councils are increasingly involved in the direct provision of housing because they want to tackle homelessness and create better places through higher quality design, improved space standards and external layouts.

The wish to speed up development and a sense of obligation for councils to build have also gained ground, when compared with a similar survey in 2017. And 71% of councils also said they are building or planning to build special needs housing particularly for older people, compared to 42% in 2017.

The study does not assess the effect of the removal of the housing borrowing cap on housing delivery as the surveys were undertaken before the policy was announced in October 2018.