Thousands of new council homes could be built after the Government announced it will lift one of the biggest barriers to much-needed affordable housing.
The Ministry of Housing, Communities & Local Government today revealed it will raise the threshold at which councils must set up a Housing Revenue Account (HRA) from 200 to 1,000 houses – a reform the District Councils’ Network has long campaigned to bring about.
The HRA is the system councils are required to use to oversee large-scale council housing, which requires specialised accounting systems and dedicated staffing. The extra costs HRAs entail currently make many councils’ expansion of their social housing stock beyond 200 homes unviable.
DCN has been the leading voice calling for a raising of the threshold, making it the number one recommendation in our Blueprint to tackle the affordable housing crisis report released one year ago. DCN has worked closely with MHCLG over the past year to set out the case for reform.
Cllr Paul Harvey, housing spokesperson for the District Councils’ Network, said: “Many councils are desperate to build more council homes but have been held back by the 200-home HRA limit, hindering their ability to meet residents’ rising demand for affordable housing.
“We are delighted the Government has listened to what DCN and other housing experts have told it and agreed to axe what for smaller council house providers amounts to unnecessary and over-complicated bureaucracy. This change creates real potential for thousands of much-needed council homes to be built.
“Raising the HRA threshold to 1,000 homes is a real breakthrough for district and unitary councils, and more importantly for so many people in our communities who are struggling to find affordable homes. Countless lives will be changed for the better.”
The HRA reform was part of a wider package of measures that helps councils generate additional income and improve their housing stock.
Rent convergence allows councils to gradually increase social rents towards target levels, providing much-needed extra funding for housing investment. DCN has previously called for this to begin in April 2026 at £2 per week. However, it was today announced it will start in 2027/28 at £1 per week rises, increasing to £2 in 2028/29.
The Government has also set out more realistic timelines for councils to meet new quality standards for their housing stock, including the Decent Homes Standard and energy efficiency requirements. The change reflects the level of investment needed to upgrade existing homes.
Low-interest Government loans for council housebuilding through the Public Works Loan Board have been extended to March 2027.
Cllr Harvey said: “While we would have preferred rent convergence to begin earlier, the broader package provides the long-term certainty councils need to plan their development programmes.
“We look forward to working with the Government through the new partnership agreement to ensure councils can deliver the affordable homes our communities need.”
