The Government has announced two changes that materially affect how English local authorities can finance and deliver housing.
First, the discounted Public Works Loan Board rate for Housing Revenue Account borrowing has been extended to 31st March 2027. This preserves access to lower-cost borrowing for councils undertaking HRA capital expenditure.
Second, the threshold at which an authority is legally required to operate an HRA has increased from 200 to 1,000 dwellings. This significantly reduces the regulatory hurdle for councils delivering housing at a modest or phased scale.
These are not minor technical tweaks. Together, they signal a clear policy direction that central government wants councils to deliver social housing directly, and to do so on balance sheet rather than through increasingly complex delivery vehicles.
Why this matters now
Over the past decade, many councils have established wholly owned housing companies. The drivers were familiar:
In practice, many of these structures have delivered higher financing costs, greater operational complexity, and additional tax and regulatory burdens. The extension of discounted PWLB borrowing for HRA purposes further widens the cost gap between direct council borrowing and company-based funding routes.
The concessionary HRA PWLB rate, introduced in June 2023, was explicitly designed to support new housing delivery at lower cost. Extending it to 2027 provides authorities with greater certainty and makes the long-term funding advantage difficult to ignore.
The impact of raising the HRA threshold
Increasing the HRA threshold from 200 to 1,000 homes removes a long-standing deterrent to delivering housing on balance sheet, particularly for district councils and smaller stock-holding authorities.
The previous limit often forced councils with limited ambitions into establishing a fully ring-fenced HRA, complete with disproportionate overheads. The revised threshold offers a more practical runway for authorities that want to scale delivery without triggering immediate and costly bureaucracy.
A renewed case for direct delivery
Taken together, these changes should prompt a reassessment of whether housing company structures remain appropriate, particularly where:
Put simply, for many authorities, the original justification for housing companies is becoming harder to sustain.
Questions councils should now be asking
Authorities with existing housing delivery companies should be revisiting some basic but critical questions:
This is not just a funding decision. It goes to the long-term sustainability of housing delivery and its alignment with wider housing strategy.
How Arlingclose can help
Arlingclose has supported a range of authorities in reviewing their housing delivery arrangements, including:
With discounted PWLB rates secured through March 2027 and the HRA threshold increased, councils now have a clear opportunity to re-examine whether off-balance sheet housing delivery still makes strategic and financial sense.
Authorities that continue to operate housing companies without revisiting the fundamentals risk paying unnecessarily high financing costs for structures designed for a very different policy environment.
If you have any nagging concerns around your current housing delivery model or just want to discuss the options now available get in touch.
10/02/2026
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