From flexing their “municipal muscles” to developing financial literacy, some council housing teams are responding to challenging market conditions. Our new research explains how to drive the culture change that is required.
Developing an entrepreneurial mindset is the key to unlocking stalled housing development and meeting the government’s ambitious target of 1.5 million new homes, according to a new Future of London report called How can councils become social housing entrepreneurs?
Based on research across London and the South-East, the report concludes that councils should use their “municipal muscle” – such as compulsory purchase powers – and engage proactively with private sector partners to leverage funding, expertise and innovation.
Download the research report on council housing entrepreneurs
By taking “managed risks,” entrepreneurial councils find creative ways to enable development and deliver social value in the face of unprecedented viability challenges.
Nicola Mathers, Chief Executive of Future of London, said:
“Our research found that housing teams with an entrepreneurial mindset will be comfortable with managed risk and focused on creating social value to maximise the benefits of development.
“They are financially confident, understand viability and trade-offs, with the political intelligence to build support within the council and develop productive relationships with partners.”
Market shapers investing ahead of the private sector
The research, which draws on depth interviews with senior housing leaders and academic experts, draws on the concept of the “entrepreneurial state”. Developed by economist Mariana Mazzucato, the theory suggests that the public sector must act as a “market shaper,” investing early when risks are too high for private companies.
By focusing on social value outcomes for a whole neighbourhood rather than narrow housing numbers, councils can unlock wider collaborations.
For instance, Hammersmith & Fulham Council co-designed a regeneration scheme with the education charity, Ark, to include a youth zone, adult learning centre, and school alongside affordable housing. By managing complex governance structures, they created a multi-use site responding directly to local economic goals.
What makes a council entrepreneurial?
An entrepreneurial council takes innovative and risk-aware steps to create better outcomes. The report identifies four key characteristics housing teams should develop:
- Strategic partnerships: Collaborating with developers and housing associations to share risk and expertise.
- New delivery models: Operating new companies that can build homes and sell services internally or to other authorities.
- Asset investment: Investing in publicly owned assets to generate income and wider social benefits.
- System optimisation: Streamlining internal procurement and harnessing digital innovation tools.
“We have good cross-party relationships. That’s helped us take a long-term view in how we deliver projects entrepreneurially,” added Susanna Morales, Head of New Build, Barnet Homes
Putting an entrepreneurial mindset into practice
The report highlights several authorities already operating as social housing entrepreneurs.
- Westminster City Council recruited from the private sector to create cross-functional, in-house teams with legal, finance, and delivery expertise. Now the council can critically assess development, negotiate effectively, and choose the best delivery methods.
- Eastleigh Borough Council initially intervened in stalled developments by offering purchase guarantees and developer loans. This led to partnerships with developers, reducing risk for all partners, and unlocking previously frozen sites.
- Cambridge City Council formed a 50/50 investment partnership with The Hill Group. This structure allowed the partnership to buy land on the open market – something the council could not do alone expanding its initial 500-home target to 2,000.
Calling for local authority culture change
Developing this mindset requires a change in internal culture. Senior leaders interviewed for the research emphasised the importance of financial literacy and recruiting diverse talent to build commercial confidence.
By celebrating these successes, the report provides the confidence, evidence, and inspiration local authorities need to do things differently and build the homes their communities desperately need.
The benefits of entrepreneurial councils
Here’s what our project partners said about the research findings:
Kate Butler, Assistant Director (Real Estate), British Property Federation
“This report shows that many councils are already acting as entrepreneurial leaders in housing delivery – using their assets, resources and convening role to unlock schemes that would not otherwise come forward.
“Public-private partnerships work best where councils are confident, commercially aware partners, shaping outcomes with community buy-in while sharing risk with the private sector. That entrepreneurial approach is essential if we are to deliver high-quality, affordable homes at the scale and pace required.”
Andy Bugler, Group Chief Executive, Bugler Group:
“When it comes to partnership, we really need to home in on understanding the alignment of values and ambition. It comes down to the planning, to being honest and to understanding each partner’s capability.”
Danny Kaye, Managing Director, Sheridan Development Management
“One entrepreneurial way of improving systems and outcomes would be to bring the design team and building contractors together on day one, as opposed to procuring the latter down the line. There’s so much to be learned from your contractor partners about the buildability, efficiency and economic delivery of new homes.”
Jonathan Harris, Partner, calfordseaden
“Councils must continue to be prudent with public money. But I hope this report will help us explore how we strike the right balance through strong, entrepreneurial partnerships; partnerships where the potential reward genuinely outweighs the risk.”
Download the research report on council housing entrepreneurs
Thanks to Sheridan Development Management, Bugler Group, British Property Federation and calfordseaden for supporting this project.
