There are now about 150 LHCs in England, most formed over the past few years, and this is likely to increase to 200 by 2020, the Smith Institute suggested in an analysis published earlier this week.
The exact number of LHCs is not currently known because they are not listed on an official register nor chronicled, the think-tank noted.
However, the report concluded there had been a “rapid rise in LHCs”, which had “happened because of the energy and determination of councillors and officers”.
“The evidence we have gathered suggests that LHCs are in fact important new housing providers and that there is the potential to do more,” report author Paul Hackett wrote.
“It has been their willingness to innovate that has made the difference.”
Companies had been set up by all kinds of councils, with the highest concentration being in London and the South East.
Most LHCs have modest ambitions, building on average 50 homes a year, the Smith Institute found. Collectively, they are building 2,000 homes a year but that could go up to 10,000 or 15,000 a year by 2022 – perhaps a quarter of the total in London.
The report estimated that 30-40% of homes built by LHCs were likely to be “affordable” and could generate income and cross-subsidise new private affordable and sub-market housing at social rents.
The prime minister held a housing summit at Number 10 on Tuesday, the day after the report was issued, with attendees from councils, housing associations, developers and the private rented sector.
Local Government Association chair Lord Porter said afterwards the meeting that it had been “encouraging that everyone around the table agreed with us about the important role councils must play” in housebuilding.
The LGA is hoping the government will lift the borrowing cap in the Budget next month to allow councils to borrow more to invest in housing.
Public Finance took a look at councils setting up housing companies last year and the gap in house provision they appeared to be filling.
Some LHAs are solely management companies, letting stock for their parent authority, but others build homes, including for market sale, shared ownership and for rent below market levels.
