WHITEHALL

EXCLUSIVE: Housing pressures may push councils into effective bankruptcy

Rising housing pressures will force some councils to effectively declare bankruptcy, a local authority chief executive with more than 40 years of experience in the sector has warned.

Rising housing pressures will force some councils to effectively declare bankruptcy, a local authority chief executive with more than 40 years of experience in the sector has warned.

The warning comes after the national cost of temporary accommodation reached more than £1bn a year - up 71% over the past five years – with Hastings BC naming it as the ‘main risk to the council being able to balance its budget'.

Writing for The MJ, Chelmsford City Council chief executive officer, Nick Eveleigh, who leads on housing for Essex districts, wrote: ‘Many authorities across the country with hitherto strong financial management may face bankruptcy over the coming years.'

In an interview, Mr Eveleigh said: ‘Chelmsford was hit first out of the Essex districts but it's beginning to get serious for all of us.

'Housing is the Achilles heel for districts.

'A lot of districts are likely to have to shut other facilities in order to meet the cost of temporary accommodation.

‘We can't find anything that is going to solve this at the moment.

'There are a lot of pressures out there but I think housing will be the one that pushes some districts over the edge.'

Last month nine councils within the Special Interest Group of Municipal Authorities (Sigoma) warned they could issue a section 114 notice by 2025 and Mr Eveleigh said he would not be surprised if that figure was more than 50 next year.

Mr Eveleigh, a former director of housing and finance, continued: ‘I think that [Sigoma research] is the tip of the iceberg.

'I've spent 40 years in local government finance and I've not known it this bad.

'It's never been quite like this.'

Council chiefs have cited a reduction in the number of private rented properties available as contributing to a rise in homelessness, with national research finding private landlords were more than twice as likely to sell properties than they were to buy them.

The research commissioned by the National Residential Landlords Association (NRLA) revealed that in the second quarter of 2023 more than one in 10 (12%) of landlords in England and Wales sold properties compared to only 5% who purchased properties in the same period.

NRLA said this was despite ‘strong demand' from tenants and warned the ‘supply crisis will only deepen without urgent action from the Government'.

Leader of the Local Government Association's Labour group, Nesil Caliskan, who is also leader of Enfield LBC, said landlords were quitting the market due to the Government ‘crashing the economy and failing to stop interest rates from climbing'.

Head of research, policy and communications at homelessness charity Justlife, Christa Maciver, said: ‘In some cases in the bottom end of the housing market rental supply is totally disappearing, especially in places like London.

'Ultimately, the Government just hasn't been building enough houses.'

A recent Ministry of Justice bulletin admitted changes in regulations and rising mortgage interest rates ‘may have contributed to uncertainty for landlords in the short term and has very likely led to some landlords selling their properties and exiting the rental market'.

In Chelmsford, a 30% reduction in available private sector properties has contributed to a 47% increase in out-of-borough placements in the last nine months, with the council forced to place some people as far away as Peterborough and Ipswich.

Mr Eveleigh added: ‘We've run out of properties that we can put people in.

'There's nothing affordable in Chelmsford and I'm hearing of authorities up North that have run out of properties too.

‘For a council like Chelmsford this simply isn't sustainable as the increase in demand for temporary accommodation over the next 18 months is projected to cost an additional £2.7m per annum.

‘Local government on its own can't solve this.

'It's a massive national issue.'

Opinion: housing needs national fixes for a national problem

WHITEHALL

Radical thinking for real solutions

By Rob Miller | 17 July 2024

Rob Miller argues councils need to remember their innovative past and sets out his five crucial steps for empowering local authorities to seize the challeng...

WHITEHALL

King's Speech: A plan for devolution

By Heather Jameson | 17 July 2024

The new Labour Government has set out a widespread plan for devolution and economic growth in its Parliamentary timetable, with central diktat reserved for p...

WHITEHALL

PFI troubles ahead

By Caroline Mostowfi | 16 July 2024

Caroline Mostowfi outlines the challenges of Private Finance Initiative expiry and why it is time for councils to act now to proactively influence the way th...

WHITEHALL

Brokering a new social contract

By Donna Hall CBE | 16 July 2024

Local government is uniquely positioned to play a huge role in the rebuilding of a new social contract between the public and public servants, says Donna Hall

Dan Peters

Popular articles by Dan Peters