A councillor's
guide to social housing in England: Local authorities as social housing providers
MAY 2025
Tristan Smith, Janis Bright and Chloe Fletcher
Whether you're a new councillor or have recently taken up a cabinet or committee role, this quick guide will cover the essentials of social housing. In this briefing, we cover the landlord function for councillors of local housing authorities, together with some wider detail to set the context.
Only some types of local authority are classed as local housing authorities and have social housing stock. District councils in two-tier areas, unitary authorities, metropolitan borough councils and London Boroughs can be council landlords, though not all these local authorities have housing, as they may have transferred their stock to a housing association.
All local housing authorities, regardless of whether they own housing stock, are responsible for strategic housing related functions such as preventing homelessness and providing temporary accommodation, but these are separate to the landlord role.
County councils in two-tier authority areas have a strategic planning and funding role for infrastructure to support new housing as well as a co-ordination and supporting role for new settlements, regeneration projects, wider wellbeing work and supported and specialist housing for vulnerable groups. They work closely with their district housing authorities to deliver those objectives. Some areas have combined authorities where councils work formally together – notably on planning for housing – and some councils may share services.
Affordable housing, council housing, social housing – what’s the difference?
In social housing, homes are rented to those in need at rents substantially below the market rate. These are approximately 50% of what private sector tenants pay for comparable properties and, provided they abide by their tenancy agreement, tenants can typically stay for as long as they choose. Council housing refers to social housing owned by a local authority.
In more recent years, the term ‘affordable housing’ has been introduced to describe types of housing created using lower rates of subsidy (see below for more about finance). It is a broad term that covers a collection of housing options, including shared ownership, rent to buy, intermediate rent and social housing operated by councils or housing associations. Because of the lower subsidy, ‘affordable’ rents are generally higher than rents for social housing and can be up to 80% of the market rate.
How does social housing work?
Social housing is provided based on need, which is identified and assessed by local authorities through a points system. To access social housing – whether a council has its own housing stock or not – people apply to the local authority and will be asked to provide some detail on their circumstances. Those who are found to be in need of social housing are accepted on the housing register. Things like length of time waiting, overcrowding or a person having a medical condition that makes their current home inappropriate for them generally result in higher points totals, meaning they’re likely to be housed sooner. Individual local authorities can set their own housing register criteria and allocation policies as long as these are fair, transparent and operate within national legislation and related regulations.
Some councils operate choice-based lettings (CBL) schemes. These usually cover an entire –or more than one – district and will include other social housing providers such as housing associations as well as the Council’s own stock. The register and CBL systems operate separately from a council’s landlord function.
CBL lets people browse and bid on available housing association and local authority properties which they are interested in. A shortlist of all bidders is created and the Council uses the points system to decide which of them will be offered the home.
Some homes are usually reserved for housing homeless people or those suffering other housing emergencies.
Councils as providers
Councils' landlord services are primarily funded through rents and service charges collected from tenants. They can also borrow money and bid for government grants to build new homes. There are different ways for councils to manage their landlord services:
1 In-house, through the Housing Revenue Account (HRA): rent income and ownership of housing and land is managed by the Council through a ringfenced account, keeping finance and management of housing separate from other council operations. This is the most traditional approach to council housing. It is mandatory to have an HRA if you have 200 or more units of housing stock.
2 Through arm's length management organisations (ALMOs): a council-owned but separate, not for profit organisation working under a management agreement to deliver housing services. The ALMO has its own board, made up of councillors, independents and tenants. Councils with an ALMO will still have an HRA and are still ultimately responsible for the landlord service.
3 Through a contract with a private management company or housing association: a council can put the management of its council housing out to tender for a set period of time with a private housing management company or housing association. This is sometimes called 'outsourcing'.
4 Shared services: councils can come together to run housing management services across their areas through an ALMO, an outsourced contract or share staff to manage both sets of housing services.
Regardless of how councils manage their housing they are ultimately responsible for meeting the regulatory requirements and will be inspected by the Regulator of Social Housing.
Councils can also provide additional housing through local housing companies (LHCs). These are a subsidiary of the Council's General Fund and there is a lot of variation in how they work and can be structured. They are typically used for housing that is not for social rent as they can build, develop, buy and manage any type of housing (temporary housing, market rent, student housing, housing for sale, shared ownership, etc) and provide greater flexibility than the HRA. They can include social rented homes, but questions need to be answered as to how they would be funded and why they wouldn’t or couldn’t be built in the HRA, which would provide tenants with more secure tenancies and the Right to Buy. While they offer some additional flexibility and potential for income generation, they also present significant financial and operational risks which need to be fully considered and are not suitable for large numbers of social rented homes.
Regardless of how councils manage their housing they are ultimately responsible for meeting the regulatory requirements and will be inspected by the Regulator of Social Housing.
Right to Buy
Council-owned properties can be sold to their tenants through the Right to Buy scheme. Under this scheme, council tenants can purchase their homes at a significant discount. The government sets the criteria these tenants must meet to be eligible to buy their properties from their local authority.
Flats sold under Right to Buy will be sold as leasehold because of the communal areas and services within buildings. Houses are much more likely to be sold as freehold, meaning ownership is fully transferred to the buyer, but there may be instances where houses are sold on a leasehold basis too.
When a property is purchased on a leasehold basis, buyers own the property for a fixed term, but not the building or land. They will likely still have to pay service charges to the freeholder –in this case, the Council. These cover the maintenance of communal areas and services like shared gardens and lifts in blocks of flats.
In 2024, the New Economics Foundation (NEF) found that 41% of properties sold under Right to Buy were put on the private rental market. Looking at leasehold properties specifically, 38% of leaseholders were found to live at a different address, indicating they are renting out the property privately. This is an issue for housing management because the building is the Council’s responsibility, but the tenant and their property are the leaseholder’s.
A note on housing associations
Housing associations make up the majority of registered social housing providers in the UK. They are not-for-profit organisations, governed by boards, that work alongside local authorities to help meet local housing needs. Many councils will have a list of housing association partners, even when the Council also offers its own housing.
Housing associations fund housing from borrowing, grant funding and rents. They range dramatically in size, with some relatively small housing associations operating in local areas and others operating nationally and/or managing over 100,000 homes. Some only provide housing to specific groups (eg, housing for older or disabled people) and some operate additional services such as care homes.
Housing association properties cannot normally be purchased through Right to Buy. However, if a home was transferred to a housing association by a council and the tenants have remained living there, they retain their Right to Buy under the same rules as council tenants. In most cases, the scheme to purchase a housing association property is called the right to acquire. This scheme has less generous discounts and limited availability.
Social housing finance
The main concept to get to grips with for council housing finance is the housing revenue account (HRA). The operation of the landlord service is via this account – distinct from other council services and other housing-related functions.
• Day to day repairs and maintenance work in council-owned properties
• Providing the housing service to your residents
• Communal items eg maintaining lifts and stairways, paid for via service charges
• Depreciation and loan charge costs
• Recharges for any central costs such as IT, HR, etc that cover the landlord service and staff
• Housing advice services
• Homelessness services
• Private rented sector standards, improvement and enforcement
• Support for vulnerable people to live independently
• The housing register and choicebased lettings systems
• Antisocial behaviour services outside of specific landlord functions
• Housing Benefit administration
• Enabling, which consists of planning, supporting new home development and regeneration work.
Covered by the HRA
Covered by the General Fund
The HRA is ringfenced, meaning councils cannot add to it from budgets for other services or subsidise other services from it. It is also self-financing: council taxpayers do not pay into it and the account must balance.
Income is generated by rents and service charges paid by tenants and leaseholders. This covers the cost of providing the service, day to day repairs and maintenance and managing communal areas. The amount rents can increase by each year is limited according to a government formula. Where loans have been taken out to cover capital costs such as major repairs or new build, the HRA covers the loan repayments, interest and other loan charges. Councils can also levy ‘recharges’: payments for services provided by other council departments or areas, such as for the use of council offices, but these must be reasonable.
The main concept to get to grips with for council housing finance is the Housing Revenue Account (HRA). The operation of the landlord service is via this account –distinct from other council services and other housingrelated functions.
The capital programme, new build and renewal
The existing stock and land are held within the HRA ringfence, meaning they are separate from the Council’s other assets. Since 2018, local authorities have been able to borrow without a government-set limit against their expected rental income. These loans can be used for social housing construction projects, to buy existing housing to add to their stock or to finance the capital programme of major repairs and improvements. The limit to borrowing today is the amount of ‘headroom’ available in the HRA to meet ongoing repayments, interest and loan charges, once other costs have been met.
Some grant funding is available for new social housing via the Affordable Homes Programme (AHP) run by Homes England or, for providers in London, by the Greater London Authority. However, this covers only part of the cost and local authorities would normally need to use borrowing as well to cover the full cost – with the same restrictions mentioned above.
When housing stock is sold off through Right to Buy, the capital receipt the Council receives can then be used to help fund replacement affordable or social housing. A local authority can keep 100% of the receipts from its Right to Buy sales as long as they are spent within five years. It can use them within the HRA to build or acquire new council housing or transfer them to a housing association to build or acquire affordable or social housing. The government has recently consulted on changes to the Right to Buy eligibility rules and discounts as well as the regulations on the spending of the receipts from such sales and we are awaiting an announcement on any changes.
The social housing sector is currently struggling with two key issues: higher demand for social housing properties than can be met and the quality of existing homes.
The government expects councils and housing associations to fund the improvement of existing homes mainly from their own resources but provides grants from the affordable housing programme to help fund new social housing. Grant funding typically accounts for between 30-50% of funding for a new home and councils and housing associations then use their own money and/or long-term borrowing on the back of future rental income to fund the rest. There is also some limited funding available to fund the replacement of homes requiring demolition, as long as they are part of a scheme to build more new social homes as well.
Governance
There are three main options for how councils can govern their landlord services:
1 Through their democratic leadership structures, as with other council services.
2 With the addition of a housing-focused board, either as an advisory service or by making this a part of the Council’s governance structures
3 With the addition and partnership of an ALMO.
Because of the variety in characteristics across different councils, which option is more suitable and how best to operate it will vary.
While the governance of council landlords is not assessed and reviewed in the same way as it is for housing associations, councils need to ensure they have robust governance structures that allow for informed decisionmaking, accountability and transparency. As a councillor, you are likely to be part of this governance structure.
Regulation and standards
… Councils need to ensure they have robust governance structures that allow for informed decision making, accountability and transparency. As a councillor, you are likely to be part of this governance structure.
Council landlords must meet certain standards in their homes and services. These include the Housing Health and Safety Rating System and the Decent Homes Standard. Part of your role in the governance or scrutiny of the housing service will be to ensure the Council meets all required standards and delivers good quality.
Modern social housing policy is heavily influenced by two key factors: the level of demand for affordable housing and the Grenfell Tower tragedy. It is not only about getting people into properties, but also about making sure that these properties and the service people receive as social housing tenants allow them to live safely and with dignity.
There are three main bodies which control and regulate the social housing sector and enforce the required standards. These are the Ministry of Housing, Communities and Local Government (MHCLG), the Housing Ombudsman Service (HOS) and the Regulator of Social Housing (RSH). Each of these has tightened its policies, approach and standards following Grenfell and the RSH has been given significant new powers. Housing is also subject to the Building Safety Regulator (also established following Grenfell) and the Health and Safety Executive. Those landlords also offering care services are subject to the Care Quality Commission and all councils are subject to the Local Government and Social Care Ombudsman for non-landlord related housing issues.
The Ministry of Housing, Communities and Local Government
The government department responsible for setting housing policy on a national level is the Ministry of Housing, Communities and Local Government (MHCLG). As a councillor, keeping up to date with the latest developments from MHCLG will help you to better support housing delivery in your local area.
The Housing Ombudsman
The Housing Ombudsman Service (HOS) is another non-departmental public body. It is an impartial service that looks at individual complaints and works to resolve disputes between social tenants and landlords, which includes councils operating as landlords. Its statutory complaints handling code sets out how issues should be resolved and how complaints processes should operate. It publishes its findings and can order landlords to carry out actions and pay compensation to tenants where maladministration is found.
The HOS publishes both these individual cases and broader spotlight reports, highlighting patterns and trends for common issues in the sector. These cover topics from severe maladministration to damp and mould to best practices around shared ownership. When it comes to council landlords, it may also work with the Local Government and Social Care Ombudsman, which regulates councils more broadly.
The Regulator of Social Housing
Social housing in England is subject to oversight and regulation from the RSH. Its responsibilities are determined by Parliament, but it is a non-departmental public body. This means it is not a government department and is more independent from ministerial control.
The RSH sets standards in the social housing sector which providers are obligated to meet and assesses their compliance. The standards it sets for local authorities are:
• Safety and Quality Standard
• Transparency, Influence and Accountability Standard
• Tenancy Standard
• Neighbourhoods and Community Standard
• Rent Standard.
The first four are collectively called the consumer standards. It also sets two other economic standards – the Governance and Financial Viability Standard and the Value for Money Standard – but these are only applied to housing associations and other private registered providers.
Another area the RSH looks at is Tenant Satisfaction Measures (TSMs), which measure how homes and services are perceived by residents. The TSMs cover:
• Overall satisfaction
• Whether properties are kept in good repair
• Building safety
• How you engage with tenants
• Complaints handling
• Neighbourhood management.
The RSH requires housing providers to report on these and the data is published, but they are also important as a way to identify where housing services are doing well and where they need to improve. You will need to keep a close eye on your own authority’s TSM data.
Compliance and co-regulation
The Regulator of Social Housing conducts cyclical inspections to assess housing providers’ performance. Since 2024, councils (and other registered providers) have been assessed based on how well they are meeting the consumer standards. This performance is rated on a scale of one to four, with four being the lowest grade. A rating of C3 or C4 means there are serious failings and the landlord is considered ‘not compliant’. These scores are referred to as regulatory judgements and are one of the most important indicators of landlord performance.
These inspections involve observation, discussions with senior leaders and involved residents and a review of documentation. It is important that councils are transparent during these processes, as the goal is not to punish failures but to identify areas that need to be improved and set plans in motion to fix them.
The RSH works on the principle of co-regulation. It expects housing providers to maintain assurance that they are consistently complaint with the consumer standards. The governing bodies are held to account for this as well as for how they run more broadly. As a councillor, you may sit on committees responsible for this.
The RSH will also monitor social media and Housing Ombudsman reports and accept whistleblowing referrals from tenants or staff to decide if they need to put any organisations into regulatory measures. Councils also have a duty to self-refer to the Regulator if they discover that they are not complying with any one of the standards for any reason. While the temptation may be to keep issues quiet, being open and honest and working with the RSH to resolve issues quickly is better than attempting to hide potential noncompliance.
Current issues for councils as housing providers
As a councillor taking up a cabinet or committee role, you may be responsible for contributing to policy and strategy development or the landlord service, or for scrutinising and holding your authority to account on housing matters.
In your work, you may run into some or all of the following issues.
As part of the landlord service
• Fire and building safety, particularly in the context of the Grenfell Tower Inquiry outcomes
• Waiting times to access social housing
• Quality and decency or health and safety concerns, especially around damp and mould
• Experiences with repairs services, including the speed and quality of repairs
• Antisocial behaviour
• Complaints handling
• Benefit cuts and the cost of living affecting housing affordability, including ability to pay the rent
• Budgets, especially around where, when and how to invest in existing social housing
• Decarbonisation, meeting net zero targets and making social housing cheaper to heat
• How to achieve good value for money in social housing
• Compliance with new laws and regulations, eg, Awaab's Law around damp and mould and other health hazards
• Professional standards and the regulatory requirements surrounding them
• How best to work with, involve and engage residents.
Wider issues impacting service
• How best to increase availability of social housing
• Homelessness services
• Issues specific to temporary and specialist housing (eg, housing for older people or people with disabilities)
• Standards in the private rented sector
• Housing strategy and planning issues.
This is not an exhaustive list. Engaging with residents and staff in the social housing sector will help you to understand which issues in your local area need your attention.
Expected developments in social housing policy for 2025
Some major social housing policy announcements are expected to come this year. These include:
• The government's long-term vision for the social housing sector. This is likely to be announced later this year
• What will follow on from the existing affordable homes programme, which concludes in 2026. The existing programme centres around delivering homes for social rent, affordable rent, shared ownership, supported housing and using modern construction methods. Specifics around this will likely be announced in June as part of the spending review.
Details will likely be released around the following policy areas:
• The Competence and Conduct Standard: this will regulate standards for training and behaviour of staff working in social housing
• Social tenants access to information requirements (STAIRs): this will allow greater transparency and ability to request information from housing associations. Although these do not apply to local authorities, you may find them relevant in casework with constituents
• Residential personal emergency evacuation plans (PEEPs): this will set out requirements for assessing and providing vulnerable people with emergency evacuation plans from high-rise buildings in case of emergency
• Awaab's Law: the government has announced that this will come into force in October 2025 through a phased approach, starting with requirements for dealing with damp and mould and then expanding to cover other issues in 2026 and beyond. We are currently waiting on secondary legislation around this
• Fuel poverty: this will cover how fuel poverty is measured and what measures will be created and funded to combat it
• Right to Buy: reforms to this policy will likely include restrictions on how much of a discount can be offered and on the qualifying criteria.
We also expect to see:
• Updates on maximum annual rent increases. The government has set the maximum increase for rent in general needs social housing this year at the consumer price index (CPI) inflation +1%, within an overall cap on rent levels and has proposed a five-year ‘formula rent’ settlement moving forward. In addition, government is considering resuming ‘rent convergence’: a policy that aims to make social rents equal across council and housing association tenancies
• A consultation on a revised Decent Homes Standard
• A consultation on minimum energy efficiency standards
• Updates to the Housing Health and Safety Rating System (HHSRS), including its operating and enforcement guidance
• Progress on the English Devolution Bill and local government reorganisation plans affecting how local authorities operate
• Developments and announcements from the new towns taskforce
• Renters’ Rights Bill to become an act, which will impact the rights of private rental sector tenants and the operation of housing association tenancies
• Continued delivery of the government's response to the Grenfell Tower Inquiry
• Detail and secondary legislation around leasehold, freehold and commonhold reform.
HQN will continue to develop resources, events and toolkits around the latest policy and guidance for the social housing sector as announcements are made.
Check out some of our existing resources below:
• The HQN guide to social housing regulation
• Council landlords: Strengthening governance
• Landlords under the microscope: A tenant’s guide to satisfaction measures and consumer regulation in social housing
• TSM rankings and C gradings
• The squeeze on social housing finances: A guide for those getting to grips with the challenging environment
• Social housing regulation: The condensed toolkit.
Fast, practical guidance on everything to do with housing
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Find out more about HQN and our network membership by visiting hqnetwork.co.uk or call us on +44 (0)1904 557150.
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