William Eichler 14 March 2019

Nearly all councils to build new homes after scrapping of borrowing cap

Local government leaders have called on Whitehall to help them resume their ‘historic role’ as major house builders after decades of depleting council stock.

Nearly all (94%) of the 59 housing stock-owning councils have told the Local Government Association that last year’s scrapping of the housing borrowing cap will help them accelerate house building.

However, 92% said that more support from the Government is needed if councils are to reverse the decline in social housing.

The number of homes built for social rent each year has fallen from over 40,000 in 1997 to 6,000 in 2017, due to, among other factors, central Government policies that hamper the ability of councils borrowing to build.

The LGA warns that the loss of social housing has driven many people into an insecure private renting sector, which in turn has driven up the housing benefits bill.

While they welcomed the Government’s decision to scrap the housing borrowing cap, the LGA stressed that it would not help 205 councils who have no housing stock left.

In their survey, the LGA also learnt that there is an appetite among councils for reform of Right to Buy (RtB). Council chiefs said they wanted the power to retain 100% of RtB receipts and set discounts locally.

Nearly all (97%) local authorities surveyed said more national advice and guidance is needed, and 81% reported that additional future housing supply would help address homelessness in their area.

The growing national and local skills gap was also a cause for concern, the LGA reported.

‘By lifting the cap on councils being able to borrow to invest in new and existing housing, the Government has showed it has heard our argument that councils must be part of the solution to the chronic housing shortage,’ said LGA housing spokesperson Cllr Judith Blake.

‘Our survey shows that councils up and down the country want to build more good quality, affordable homes that meet the strategic housing needs of their local communities.’

Minister Kit Malthouse has urged councils to look at reviving Housing Revenue Accounts (HRA) instead of creating property companies.

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