Folkestone & Hythe Council Housing: Strong Budget, Slow New Homes

By any normal measure, Folkestone & Hythe District Council’s Housing Revenue Account (HRA) is being run cautiously. At the halfway point of 2025/26, the latest monitoring report, released on the 12 November,  and which will go before the Finance & Performance Committee tonight, shows day-to-day finances broadly on track and reserves comfortably above the minimum level councillors set back in February.

But behind those reassuring numbers lies a more awkward story. The council’s own figures show almost £6m of slippage in this year’s council housing building and acquisition programme – much of it relating to the very schemes being trumpeted in press releases as “affordable homes… taking shape”.

For tenants and people on the waiting list, it is the gap between the upbeat headlines and the harder budget papers that matters most.

What The Housing Revenue Actually Is

The HRA is the council’s legally ring-fenced landlord account. National rules, set out under the Local Government and Housing Act 1989 and updated government guidance, require councils to keep a separate account for all income and spending connected with their own housing stock.

In plain English, it works like this:

• It is a landlord account, covering council houses and flats and the services that go with them – rent income, repairs, maintenance, major works, housing management, and the costs of borrowing to improve or build homes.

• It is ring-fenced. The council cannot raid the HRA to plug gaps in the general budget, and it cannot quietly dump general-fund costs into it either, except in tightly prescribed circumstances.

Most of the money going into the HRA comes from tenants’ rents and service charges, topped up by specific grants, capital receipts (including Right to Buy receipts) and borrowing to fund the capital programme.

Because housing is a long-term business, councils model their HRA over 30 years, using a “business plan” that projects rents, repairs, loan repayments and investment in new or improved homes. Folkestone & Hythe’s current business plan, refreshed in 2024, underpins both the 2025/26 budget and the new-build programme now under scrutiny.

What Councillors Agreed In February 2025

In February 2025, the council approved its HRA revenue and capital budget for 2025/26. The report to Cabinet and Council set out three key points.

First, rents and charges. In line with new national guidance allowing social landlords to increase rents by CPI + 1% each year, the council opted for a 2.7% average rent rise for 2025/26, reflecting the September 2024 inflation rate, and a 3.2% rise for shared ownership rents (RPI + 0.5%).

Second, revenue spending. The HRA revenue budget was increased to reflect higher repairs and management costs, rising interest payments as new borrowing comes on stream for new builds, and a larger depreciation charge linked to the revalued housing stock. Overall, the business plan expected the HRA reserve – the account’s “savings buffer” – to grow from £2.434m at the end of 2024/25 to £3.237m by March 2026, comfortably above the council’s minimum £2m safety line.

Third, capital ambition. Councillors signed off an HRA capital programme of £20.1m for 2025/26, up from £13.45m the year before. The biggest single driver of that rise was a sharp increase in spending on new builds and acquisitions, including:

• 44 homes at Risborough Barracks, Shorncliffe

• 26 homes at Hythe (Sutherland Park / Roddy Homes)

The report was explicit that these schemes far exceeded the original business-plan aim of at least 20 new council homes a year.

The political pitch was clear: rents would go up, but the council would invest heavily – delivering more, better, greener homes while keeping the HRA financially sound.

Q2: Income Trimmed Back, But Revenue Largely Under Control

Fast-forward to the Quarter 2 monitoring report, covering the position at 30 September 2025. The headline is that revenue is broadly on track, but only after recognising that the original income forecast was too optimistic.

The Q2 report shows that:

• Total HRA income for 2025/26 was budgeted at £21.099m. The latest projection cuts that to £20.895m, a reduction of £204,000.

• Almost all of that gap comes from a £185,000 shortfall in dwelling rent income, caused not by tenants failing to pay but by an over-estimation during budget setting; the rents themselves are being charged correctly. A further £35,000 shortfall arises from lower garage income as fewer garages are occupied.

• On the spending side, repairs and maintenance are now forecast to undershoot the revised budget of £6.63m by £84,000, largely because fewer electrical tests (EICR inspections) were needed than expected, partially offset by higher insurance-related works and rechargeable repairs.

Putting all the moving parts together, the HRA is now expected to spend £19,000 more than its latest revenue budget in 2025/26 – a minuscule divergence on a £20m-plus account.

Crucially, the HRA reserve is still forecast to stand at £5.91m by March 2026, only £19,000 below the latest budgeted figure of £5.93m and well above the council’s £2m minimum.

In other words, despite a small correction to over-optimistic rent forecasts, the day-to-day HRA finances look cautious and controlled.

Capital Spending: Nearly £6m Slipping Into Future Years

The real tension lies not in the revenue account but in the capital programme – the part of the HRA that pays for new homes, major works and upgrades.

By Q2, the latest approved HRA capital budget for 2025/26, including carry-forwards from 2024/25, stood at £33.84m. Against that, officers now expect to spend £27.91m this year. The difference – £5.93m – is described as “lower than the latest approved budget”, but in practice it is capital slippage into future years.

The monitoring report is candid about where the problem lies. The reduction, it says, is “primarily attributable” to the HRA New Builds & Acquisitions programme, where a £5m underspend is now forecast “as a result of delays across various build projects (Risborough Barracks, Roddy Homes), which in turn delayed the planned acquisition of properties”.

Appendix 2 spells that out in numbers. The New Builds/Acquisitions line shows:

• Original 2025/26 budget: £12.702m

• Latest approved budget (after carry-forwards and a new temporary-accommodation strategy): £22.508m

• Projected outturn: £17.508m

• Forecast underspend/slippage: £5.000m

The comments make clear that the original budget was boosted by about £4.8m of carry-forwards from 2024/25, largely for Risborough Barracks, and by a new £5m borrowing-funded programme to buy homes for use as temporary accommodation. Officers now expect much of that temporary-accommodation element to slip, because completion depends on whether suitable properties can be bought in time before year-end.

Elsewhere in the capital programme, other lines are broadly on budget. The lion’s share of the £5.93m slippage therefore comes from precisely the new-build and acquisition schemes that councillors were told would accelerate the supply of affordable homes.

The risk section of the Q2 report adds a further warning: there is a “medium/medium” risk that there will not be enough capacity to manage delayed capital expenditure along with next year’s programme, and that planned 2025/26 spending will inevitably spill over into 2026/27 and beyond.

“Affordable Homes Taking Shape” – No Mention Of Delays

On 13 November 2025, the council’s website carried a cheerful press notice: “Affordable homes in district taking shape”. 

The release tells residents that “good progress continues to be made” on schemes delivering 70 new “affordable, green homes” in the district. It highlights:

• 26 homes at Sutherland Park, Hythe – 20 flats for affordable rent and six houses for shared ownership – being built as part of the wider Roddy Homes development on the former Smiths/Portex site.

• 44 homes at Risborough Barracks, Shorncliffe, “due to be complete in May 2026”, to be offered through Kent Homechoice at affordable rent or shared ownership to people on the housing list. 

It emphasises that the Hythe homes will be fossil-fuel-free, using air-source heat pumps and solar panels, while the Shorncliffe homes will be upgraded to EPC B – all very much in line with the council’s climate commitments. 

What the release does not say is that, in the council’s own Q2 monitoring, those same schemes – Risborough Barracks and the Roddy Homes/Sutherland Park development – are flagged as the principal reason the HRA New Builds & Acquisitions budget is £5m behind profile this year.

Nor does it mention that, because of these delays, some of the promised temporary-accommodation acquisitions financed from the HRA will not happen until a later year, even as the number of households in expensive temporary accommodation remains well above where it stood a year ago.

None of this means the press release is untrue: the homes clearly are “taking shape” on site and are still due to complete next year. But it does mean residents reading the website get only half the story. The other half – that the council’s own budget papers now expect millions of pounds of HRA investment to slip into the future – is buried deep in committee documents.

How Many Council Homes Are There Now – And How Many Are Being Sold?

The most up-to-date independent snapshot of housing stock comes from Kent County Council’s “Housing Stock in Kent” bulletin, released in Oct 2025. For 2024 it records that Folkestone & Hythe had: 

• 54,389 dwellings in total, of all tenures

• 3,391 local authority-owned homes (including any owned by other councils)

• 2,155 homes owned by housing associations (Private Registered Providers)

• 300 other public-sector dwellings

That means there are roughly 3,400 council homes in the district today, with a little over 5,500 homes in the wider social housing sector when housing association stock is included. 

Right to Buy sales continue to nibble away at that stock. Kent County Council’s latest Right to buy sales in Kent shows that Folkestone & Hythe recorded: 

• 14 sales in 2021/22

• 10 sales in 2022/23

• 6 sales in 2023/24

That is 30 council homes sold in just three years.

Those sales bring in capital receipts, a proportion of which can be recycled into new homes under strict “one-for-one” rules. But the money is time-limited and tightly controlled; any unspent Right to Buy receipts eventually have to be returned to central government with interest. National guidance and the Q2 capital report both stress the importance of spending these 1-4-1 receipts quickly, which is one reason why the HRA’s new-build and acquisition programme has been pushed so hard.

Set against this, the longer-term trend is stark. An analysis by local investigative blog The Shepway Vox Team, drawing on government data, estimates that between 2002 and March 2024 the council’s social housing stock fell by 1,199 homes – a net reduction of about 21 per cent – with “very little built or bought in return”.

Seen through that lens, the highly publicised 70 new homes at Hythe and Shorncliffe are welcome but modest: if delivered on time in 2026 they will claw back only a fraction of what has been lost over two decades.

Rising Need, Slower Delivery

The council’s own performance figures underline the pressure. The Q1 2025/26 corporate performance report shows the average number of households in temporary accommodation rising to around 64, up from 36 a year earlier, with the number in bed-and-breakfast accommodation roughly doubling.

In response, Cabinet has endorsed an HRA-funded strategy to borrow £5m within the HRA to buy at least 20 additional homes for use as council-owned temporary accommodation, and to convert a further tranche of existing HRA properties into temporary use as they become available.

On paper, this is exactly the sort of joined-up approach the HRA was designed to support: using council borrowing and council stock to tackle homelessness more cheaply and more humanely than the nightly-let market. But the Q2 monitoring makes plain that much of this spending has now slipped into future years, just as temporary-accommodation numbers remain stubbornly high.

So How Well Is The Council Doing?

Judged narrowly against its budget, the HRA looks financially steady:

• Revenue is being managed prudently; the net forecast overspend of £19,000 is trivial against the scale of the account, and reserves are on course to stay well above the council’s own minimum.

• The ring-fence appears to be respected, with HRA income and expenditure broadly aligned with the landlord functions that the law expects it to fund.

Where the HRA is under-performing is on delivery:

• Nearly £6m of capital spending, largely on new builds and acquisitions, is now expected to slip beyond 2025/26.

• The key schemes used to showcase progress – Hythe and Shorncliffe – are precisely the ones driving the £5m underspend, yet public communications make no mention of the delays logged in the financial papers.

• Right to Buy continues to erode stock faster than recent building programmes have replaced it, against a backdrop of a 1,199-home fall in social housing since 2002.

• This is not a story of an HRA in crisis. It is a story of an HRA that is carefully balanced but too slow-moving for the scale of housing need it faces.

From a tenant’s perspective, the crucial questions are simple. Are rents being used to maintain and improve existing homes? Will the promised new “affordable, green homes” actually appear on time? And will the council’s HRA finally begin to reverse two decades of lost stock, rather than merely nibble at the edges?

The Q2 figures suggest that, for now, Folkestone & Hythe’s HRA is financially safe but politically exposed. It has the money and the plans to do more. What it still lacks is the delivery pace to match its own rhetoric – and to match the urgency of the housing crisis on its doorstep.

The Shepway Vox Team

Dissent Is Not A Crime