Home > Free Essays > Economics > Housing > Croydon and Lambeth: Housing Overview

Croydon and Lambeth: Housing Overview Essay

Exclusively available on IvyPanda Available only on IvyPanda
Updated: Feb 6th, 2022


The purpose of this report is to outline the financial environment that surrounds housing. It will discuss the various types of funding, consumer and producer subsidies, income and expenditure constraints and budgeting as well as forecasting approaches. It will then apply one of these approaches to repairs and maintenance. The city councils of Croydon and Lambeth will be used as examples to illustrate the discussion. The target audience of the report consists of professionals who work in housing-related spheres.

The consumer and producer subsidies for all tenures of housing Subsidies and Funding

Funding and Available Subsidy Options

Different housing organisations secure financing in a variety of ways. Depending on the circumstances, they may attract both private and public investment for their projects (King, 2016). While the government plays a significant role in the construction and maintenance of housing, most privately owned households are sustained by their residents, who take out a loan and use their income to repay it over time. This statement includes rented housing, which typically has the landlord conduct the repairs while collecting rent from the occupants. With that said, social housing, which is generally provided and maintained by the government at lower than market rates to specific individuals or groups, should be mentioned. The last discussed venue of UK housing is the owner-occupation funding. Inhabiting a special niche in the housing market, this term pertains to the arrangement where the owner of a residency lives in it. Owner-occupants make their money by borrowing and mortgages, earned income, as well as rent from the tenants of their property.

Due to the high costs of acquiring and maintaining housing, the government provides a variety of protections to prospective and current owners, such as subsidies. They are generally divided into two categories, producer and consumer subsidies (King, 2016). The former help in increasing the supply of housing and gives better opportunities for the home providers. The introduction of subsidies gives housing organisations an incentive to build more homes, especially ones that match the government’s current needs. Consumer subsidies, on the other hand, increase the consumption in housing by making it more affordable for the people to buy or rent it. They decrease the burden placed on future homeowners, supplying them with more options to satisfy their needs, which results in increased financial freedom. Low-interest loans are some examples of such practices, helping people purchase homes without long-term liabilities (Affordable homeownership schemes, n. d.). The system of government subsidies for individuals allows many to afford better-quality housing (Hills, 2001). Such aid usually comes in the form of Housing Benefit. This type of support is effective in increasing access to housing that suits the person’s needs but that they cannot necessarily afford.

The Croydon Council also offers a variety of consumer subsidy arrangements to the members of the community. They provide home investment loans for emergency repairs and the removal of dwelling hazards (Home investment loans, n.d.). A number of improvements are covered under this program, and the necessity of its provision is determined based on the prospective recipient’s capital. Another idea includes rent subsidy schemes for promising community sector organisations (Rent subsidy scheme, n.d.). The initiative helps applicants to partially cover rent costs if they provide valuable services to Croydon residents. The Croydon council provides community grants to projects that are determined to make a positive change in the area (Community grants, n.d.).

They also support Housing Benefit and universal credit for the eligible individuals (How to make a claim for housing benefit and council tax support, n.d.). Lambeth council also has a number of initiatives to support its residents, including Housing Benefit, tax support and financial advice. One can apply for housing benefits to offset their low income by visiting their website and filling out a form. Croydon programs offer a number of discretionary payment options, which are well-suited for short-term financial aid (Apply for Housing Benefit, n.d.). The discretionary housing payment service allows residents to supplement their rent payments if they are struggling (Apply for a discretionary housing payment (DHP), n.d.). The council also provides a budgeting loan, aimed at helping resolve minor household-related concerns such as purchasing furniture.

The impact of subsidies on housing supply and demand regionally and nationally

The Reasons for Subsidising Housing and Its Impact on The Supply-Demand Chain

Subsidies are a substantial part of the housing market in the UK, and their effects are best understood in relation to the supply and demand for it. The process of building and maintaining a property is associated with large amounts of spending and risk. To promote the construction of new homes and support the initiatives to improve it, the government provides organisations with producer subsidies. Such assistance can come in the form of grants, housing allowances, or tax relief. Consumer subsidies play an equally important part in the growth and development of the housing market.

Producer and consumer subsidies are tightly interconnected, with each capable of influencing the market in a substantial manner. The gap between the demand for homes and their supply in the past has resulted in the inflation of housing prices, leaving many without the ability to afford a home. In such a climate, the need to promote the construction of new housing can be identified. Producer subsidies bolster the supply of houses on the market, allowing various organisations to build and renovate more homes. This method enables providers to create more homes, increasing the country’s supply of available accommodations. This type of government assistance also has local benefits, as the cost of producing new homes is reduced, and the tenants can enjoy low rent payments. Examples include Housing Benefit, Mortgage Interest Tax Relief and schemes to help home buyers. Consumer subsidies, on the other hand, raise the demand for new housing. The use of government benefits allows more people to afford a home, creating demand for more housing that is driven by prospective buyers and their interests. Subsidies, unlike loans, can only be used for one specific, intended purpose, providing targeted, time-relevant support to individuals, meeting their needs across all sectors of housing.

Comparison of the income and expenditure for different types of housing organisations

Income and Expenditure

The incomes and expenditures of various housing organisations are the next points to consider in this discussion. The money to finance different activities comes primarily from rent, interest, savings, and different service costs. With regard to housing spending, it can be generally divided into two distinct categories: revenue expenditure and capital expenditure. The first one pertains to the day-to-day costs for management and repairs that a housing organisation performs. The second is used to describe spending that raises the market value of housing as an asset. Substantial upgrades and renovations that make properties more expensive are considered to be capital expenditures.

The major sources of income are rent and service charge payments. The money taken from residents is used to construct new homes, as well as renovate and maintain the already existing ones. The topic of income and expenditures can be better understood through comparison. There is a pronounced difference between the gains and spending of private renters and owner-occupied housing. Home-buying individuals have to manage the costs of purchasing a house and the associated expenditures, including paying for mortgages and home improvements. Their source of income comes from a combination of government support and the income they earn from their occupation. Private landlords, similarly, have to spend money on keeping the utilities functional and maintaining their property in good condition. Their additional spending also comes in the form of paying letting agents and other expenses connected with having a property for rent. The difference means that owner-occupied housing presents a more significant financial responsibility and difficulty than private renting.

The Hyde Housing Association, a London and Southeast England-based affordable housing provider, can be used as an example. In 2017, its total income constituted £327 million, nearly two-thirds of which came from rent payments, with sales taking the second position at £74 million (Hyde financial report, 2018). The other sources of income are service charges and various miscellaneous items, both of which amount to approximately £20 million each. The report details that the overall turnover has increased by 8%, in large part due to an increase in sales income (Hyde financial report, 2018). The association used this money to finance its £384 million expenditures, with the largest category being new home development, followed by financing and treasury, property services and housing services (Hyde financial report, 2018). The deficit was taken from the organisation’s substantial capital reserves, which consist of £1,083 million grant funding and £1,590 million of borrowed funds.

Knowing the gains and losses of the Hyde housing association, one can compare them with the Croydon council, for example. As an organisation with a variety of goals and responsibilities, it gets its funding through a variety of sources including a number of grants and the money from the local business (The council budget 2020/21, 2020). A medium-term financial strategy published in 2018 lists the main priorities of the council and the sources of its £295.8 million income (namely, council tax, business rates and various commercial opportunities) and expenditure (Medium Term Financial Strategy 2018 – 2022, 2018). The income predictions state that the council tax will comprise from 2 to 3% of the budget, with the Adult Social Care giving a few additional per cent as well (Medium Term Financial Strategy 2018 – 2022, 2018). Other specific sources of income include previous savings, investment, core grants, Collection Fund Surplus and business rates income (Medium Term Financial Strategy 2018 – 2022, 2018).

The most considerable additions to the budget can be attributed to government contributions, followed by rent and service income (Croydon statement of accounts 2018, 2019). The interest and council tax income rank the lowest in this assessment. Expected expenditures, notably for adult health and wellbeing, children, families and education, residents and gateway services and various other items, are listed in the paper as well. They report that the most significant share of the budget was spent on assorted service expenses, with employee benefits being the second priority (Croydon statement of accounts 2018, 2019). The Croydon council relies heavier on government support for its operation, while the Hyde housing association works primarily off of rent. Their expenses vary, with Croydon council focusing their finances on service provision and the Hyde Housing Association investing into new properties.

The constraints that impact on income and expenditure for a housing organisation

Several constraints can have an impact on the income and expenditure of an organisation. The means of regulation place certain limitations on the practice of housing organisations. One of such methods enacted by the government is the borrowing cap, restricting the amount of money local authorities can request. The law limited borrowing to the “headroom rate” which considerably slowed down the initiative to build new homes. The cap affected both the Lambeth and Croydon councils at the time, resulting in a decrease in the number of new homes. After its implementation, the limit was raised due to overwhelming demand and which subsequently allowed housing organisations to construct new housing (Brady, 2019). Another limitation is the local authorities control over rent income of the housing organisations.

Approaches to budgeting and forecasting in relation to housing organisations

Budgeting is essential to ensure that the organisation’s resources are spent in the best possible manner, without unnecessary wastage. Several methods can be used for the task, starting with incremental budgeting. It uses the previous year’s plan as a baseline, making adjustments to suit current priorities. By contrast, in zero-based budgeting, the spending structure is non-fixed and created from nothing annually, with each item considered from different positions to determine its utility compared to the cost before funds are allocated for it. In participatory budgeting, the tenants of the houses managed by the organisation are involved in some manner. Business planning is another noteworthy item because it is a long-term approach to managing spending that attempts to predict the organisation’s performance and design success strategies.

With that said, budgeting, and business planning, specifically, are highly challenging without understanding what challenges can be expected in the future. To that end, housing organisations employ forecasting techniques for different aspects of performance. Cash flow forecasting is one such item, serving to help the organisation understand when its income will arrive. Without it, the expenditures at the same time may have exceeded the revenue, leading to failures to execute planned projects or necessitating additional borrowing. Risk management is another vital framework, as it helps the organisation recognise various potential contingencies and develop measures to deal with them. While housing organisations are generally secure due to their heavy regulation, there are still potential issues that have to be managed, especially as deregulation takes place.

Planned programming budgeting and new house construction

The Croydon Council serves as an illustration of how incremental budgeting can be applied to adjust to changing circumstances. The provision of new housing was determined to be a priority for the town, along with the requisite school places and roads (Council Tax and Budget Covering Report, 2020). With that said, the council’s efforts were impeded by the efficiency strategy instituted in October of 2016 by the cabinet, which reduced Croydon’s funding. Due to the shrinking financial support of the government, the council finds itself struggling to fulfill its duties effectively. An increase in tax, parking charges and the costs of various services was used to balance out the gaps in funding while making sure that the payments are fair and manageable (Council Tax and Budget Covering Report, 2020). The COVID-19 situation has affected the council particularly strongly due to its unexpected nature and the council’s position. It has some of the lowest cash reserves in the nation, which makes implementing initiatives challenging when the typical income sources underperform (Calkin, 2020). The council has cut its funding through staffing reductions and a decrease in borrowing costs (Croydon Council press release, 2020). If the estimated expenditure cannot be met with available resources and a viable emergency plan is not enacted, the council will be effectively bankrupt.


In conclusion, this essay has discussed the peculiarities of finance with regard to housing organisations. The primary sources of funding for major participants are loans, government support in the form of subsidies, and rental income. Most of the revenue comes from collecting rent, and the dependence on the other methods of funding, like loans and government subsidies, is shrinking. The latter are a useful tool to bolster both supply and demand in housing through the support of both residents and housing organisations. Regulations are utilised to manage the debt of the housing sector to the government and guarantee that the residents live in affordable housing conditions. The budget for every organisation is planned and approved in advance, using a variety of methods to formulate a strategy that accurately adheres to the set objectives. The budget plan is transparent and available to the public so that the spending is placed under scrutiny.

Reference List

Affordable home ownership schemes (no date). Web.

(no date). Web.

(no date). Web.

Brady, D. (2019) Web.

Calkin, S. (2020) Web.

Community grants (no date). Web.

(2020). Web.

(2020). Web.

(2019). Web.

DonVito, P., (1969) Santa Monica, CA: RAND Corporation. Web.

Hills, J. (2001). Urban Studies, 38(11), 1887–1902. Web.

(no date). Web.

(no date). Web.


(2018). Web.

King, P. (2016) The principles of housing. 1st edn. New York. Routledge.

(2018). Web.

(no date). Web.

The council budget 2020/21 (2020). Web.

Wilson, W. (2020). Web.

This essay on Croydon and Lambeth: Housing Overview was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.
Removal Request
If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda.
Request the removal

Need a custom Essay sample written from scratch by
professional specifically for you?

801 certified writers online

Cite This paper
Select a referencing style:


IvyPanda. (2022, February 6). Croydon and Lambeth: Housing Overview. https://ivypanda.com/essays/croydon-and-lambeth-housing-overview/


IvyPanda. (2022, February 6). Croydon and Lambeth: Housing Overview. Retrieved from https://ivypanda.com/essays/croydon-and-lambeth-housing-overview/

Work Cited

"Croydon and Lambeth: Housing Overview." IvyPanda, 6 Feb. 2022, ivypanda.com/essays/croydon-and-lambeth-housing-overview/.

1. IvyPanda. "Croydon and Lambeth: Housing Overview." February 6, 2022. https://ivypanda.com/essays/croydon-and-lambeth-housing-overview/.


IvyPanda. "Croydon and Lambeth: Housing Overview." February 6, 2022. https://ivypanda.com/essays/croydon-and-lambeth-housing-overview/.


IvyPanda. 2022. "Croydon and Lambeth: Housing Overview." February 6, 2022. https://ivypanda.com/essays/croydon-and-lambeth-housing-overview/.


IvyPanda. (2022) 'Croydon and Lambeth: Housing Overview'. 6 February.

Powered by CiteTotal, free bibliography tool
More related papers