Fancy a three-bed semi with a garden for £152,000? Or rent at less than £500 per month? Sheffield is showing other local authorities how to build again

In 2015, England’s local authorities built fewer than 3,000 new homes, just a tiny fraction of the estimated 250,000 new homes needed every year to meet demand. But one council has begun building again in volume, in what some see as a model for tackling the housing crisis.

On the outskirts of Sheffield, hundreds of new homes are springing up, built by the council to space standards that have all but disappeared in the private sector. New residents – the majority are 25-35 year olds – say they are impressed by the designs and spaciousness, and enjoy their close proximity to the city.

But this is not a return to the era of 1950s and 1960s council building. What Sheffield Housing Company (SHC) is doing is partnering with contractors to build low-cost homes for first-time buyers and families alongside houses and flats to rent at affordable prices, and with tenants better protected.

People have already moved into homes at Cutler’s View, and Brearley Springs and Brearley Forge, named after Harry Brearley, the inventor of stainless steel. Of 325 completed homes, 237 have been sold so far. The semi-detached houses – all with gardens – are selling from £99,995 for a two-bed, £152,00 for a three-bed and just over £200,000 for a four-bed, with 88 of them for affordable rent or shared ownership. There are plans for 24 apartments.

Affordable rent is based on 80% of market value – for example, a three-bedroom semi-detached house with drive and large back garden is around £115 per week. There are no letting fees, and tenants’ rights are the same as for traditional council tenants. Allocation is based on housing needs.

Sheffield has managed to do what the private sector, on its own, failed to do: build low-cost housing in areas that until now have been regarded as derelict or run-down.

Facebook Twitter Pinterest The Brearley Forge development. Photograph: Persuasion PR

SHC sprang out of a 2007 initiative by then housing minister Yvette Cooper, who had a vision of councils partnering with private developers to build on local council land. She named 14 councils that would open schemes, building 35,000 homes. But only three have been successfully established, with Sheffield leading the way on volume.

SHC is a partnership between Sheffield council, housebuilder Keepmoat and Great Places Housing Group, which will manage the affordable rented homes. It wants to restore publicly funded housing to areas that thrived during the 1950s public-sector housing boom but suffered when the steel and coal industries went into decline and unemployment rose in the 1970s and 80s.

John Clephan, project director at SHC, says: “The private sector didn’t want to come in because the land value was low and because of the risk – no one else was building or selling in these areas.”

The council didn’t want to go it alone either, because it lacked the expertise to build and sell homes on the open market, and was wary of taking on all the risk. The joint venture suited the council because it was able to retain control over the quality of the housing and the speed at which it was built, says Clephan.

Set up in 2011, SHC lost no time and began building the following year, with plans to construct 2,300 homes across the city by 2025. Once one batch of homes is finished, the company reviews it with feedback from residents and tweaks the design of the next batch where needed. It says homes are on average 11% larger than those of comparable price elsewhere in the city.

Shirley Eckhardt, 71, lives in one of the new council homes in Cutler’s View, not far from the now-demolished council home where she lived for 19 years with her late husband. She pays a discounted rent of £46.46 a week.

Facebook Twitter Pinterest The Brearley Forge development. Photograph: Persuasion PR

“I’ve lived in Sheffield all my life,” she says. “The house is very large, very spacious, it’s a beautiful house and it’s brand new, I just love it. It’s just marvellous. It’s so modern – all the units are fitted, the cooker, freezer. The back garden is very large. You walk out through a glass door on to the patio.”

Her neighbours – a family with three children and another lady who lives on her own – have bought their properties. “Every other house is bought – it’s a right mix,” Eckhardt says.

Why are Britain’s new homes built so badly? Read more

Rhiannon Parry, who bought a house at Cutler’s View, said at the time: “From initially looking at houses to moving in it was 26 days, so that was obviously a very quick turnaround. You’ve got large corridors and extra headroom. Even my dad, he is hard to please, and he couldn’t actually fault the house at all, which surprised me.”

Other councils are understood to be closely watching Sheffield’s experience. Council building peaked in the late 1960s at more than 425,000, but collapsed to a low of 130 new units in 2004, according to official data. However, housing associations have filled some of the gap in recent years, completing 34,890 in 2015: the most since 1995.

Several factors are encouraging councils to build homes again. Housing for rent constructed by development companies is not classified as council housing and therefore not subject to Right To Buy, so councils will not be forced to sell off these homes. For many, the prospect of steady rental revenues to help fund services is the main driver, as shown by a survey by the regeneration marketing firm 3Fox International.

Nearly half of 112 councils that took part in the 2015 poll had either set up or were considering creating their own housing company. Fourteen had already set one up, and 38 were considering it.

Facebook Twitter Pinterest Cutler’s View interior. Photograph: Persuasion PR

Of those, 11 have since created a company or are about to do so, says Huub Nieuwstadt, author of the survey. They include Bournemouth, South Northamptonshire and Wolverhampton.

While the cap on council borrowing for housing has not been relaxed, other recent changes mean that some local authorities got more headroom. Another reason for councils building is that the Affordable Housing Grant rules were changed in the later years of the Labour government, allowing councils to get grants to build again.

Let the councils build homes again and fix our broken housing market Read more

Croydon council created Brick by Brick last year – an independent development company that plans to build 1,100 homes in the next two years, half of which will be affordable.

Managing director Colm Lacey says that, as an independent company, Brick by Brick does not have to go through the public procurement process , but is able to buy land and borrow cheaply from the council. Profits from homes built and sold, as well as income from rents, will go to the council, as 100% shareholder in the company.

Lacey says: “We don’t have to go out and compete, and don’t overpay for land or mezzanine financing, and can afford more affordable housing.” Profit-driven private developers tend to “overpay for land and assume they won’t have to deliver 50% affordable housing”.

Toby Lloyd, head of housing development at the homeless charity Shelter, says: “If public land is sold on the open market, the highest bidder is likely to be the one that makes the most aggressive assumptions about the amount of affordable housing they will have to provide. So competitive bidding for land tends to mean that the worst possible scheme will be the one that gets built.”

However councils still struggle with the national political restraint on local authority borrowing to build homes because it counts towards public sector deficit and national debt figures. The UK is almost unique in this among major economies, says Lloyd. Along with other experts, he believes the UK should join international standard accounting practice.

The history makers

Facebook Twitter Pinterest Buildings of the Boundary Estate in Bethnal Green, east London. Photograph: Mark Phillips/Alamy

Arguably Britain’s oldest council estate is the Grade II listed Boundary Estate centred around Arnold Circus in east London. Influenced by the Arts and Crafts movement, it was built by London County Council in 1890 to replace a notorious slum, and a century later remains a sought-after, high-density urban environment of the type planners say Britain’s cities desperately need. However, Liverpool can probably lay claim to the first ever council-built dwelling, with the city corporation behind the 1869 construction of St Martin’s Cottages, tenement housing that was demolished in 1977. However the modern era of mass council house building did not really take off until after the first world war.

• 1919 Lloyd George’s Liberal government passes the Housing Act, the first law requiring councils to provide housing. It promised 500,000 “Homes for Heroes” within three years, although by the early 1920s only 213,000 had been completed.

• 1930 A fresh Housing Act gave grants to councils to clear local slums and re-house the poor, with around 700,000 new homes built. However austerity cuts that followed the economic depression saw subsidies withdrawn and council building slowed. This was the era when building societies expanded rapidly, financing the first boom in owner-occupation, led by the Abbey Road building society (now Santander).

• 1939 Outbreak of the second world war. In total, 1.1m council homes were built during the 21-year-long inter-war period, compared with fewer than 30,000 in the past two decades since 1995.

• 1942 The Beveridge Report promises a huge post-war council house building programme and rent control in the private rented sector.

• 1945-51 Clement Atlee’s Labour government oversees the construction of 1m homes, 80% of them council, to replace housing lost from bombing.

• 1951 Conservatives return to power, but successive post-war governments compete to build more housing. Local authority building hits a peak of 239,580 in 1954.

• 1968 The first major backlash against prefabricated cheap high-rise council housing, after a gas explosion partially destroys Ronan Point, a tower block in Newham, east London, killing four.

• 1979 Margaret Thatcher becomes prime minister, at a time when two fifths of the British population are living in local authority housing.

• 1980 Thatcher introduces the right to buy, prompting many tenants to buy their council homes. Grants for council house building are scrapped, and limits put on the ability of councils to borrow.

• 1985 The new Housing Act facilitates the large-scale transfer of council-owned properties to housing associations

• 2004 Building by councils drops to an all time low of just 130 units across the entire country.

• 2017 Asking prices on former council flats in the Boundary Estate reach £950,000.

Patrick Collinson