Inside Housing | 5 December 2012 | By Emily Twinch

Up to 54,000 new homes could be built in London if the government lifted the cap on council borrowing, a report has found.

Umbrella group London Councils released a study yesterday which calls on the government to support an amendment – New Clause 10 – to the Growth and Infrastructure Bill currently going through parliament.

The clause, proposed by the Local Government Association and London Councils, would see the cap removed on local housing authority debt. It would allow councils to borrow against the full value of their housing assets to finance new homes.

Local authorities were given freedom to borrow against their housing assets as part of the reform of the housing revenue account subsidy system. However the government imposed strict limits on the amount of debt they could run up.

Housing groups including the Chartered Institute of Housing and National Housing Federation have urged chancellor George Osborne to reassess the cap when he makes his autumn statement later today.

Sir Steve Bullock, executive member for housing at London Councils, said: ‘This report shows that the government could, at the stroke of a pen, enable London’s boroughs to build up to 54,000 homes and create 19,000 jobs by removing artificial restrictions on local housing authority borrowing.’

Meeting Londoners’ housing needs: Investing in housing infrastructure estimates that London needs to build 36,000 new homes every year to cope with an expected population of more than nine million by 2025. In 2010/11 there were 19,860 new homes built in London, the report says, and in the first half of 2012/13, the total number of affordable homes built in the capital was just 5,220.

The report also says every £1 invested in housing infrastructure generates £2.60 in additional spending in the supply chain and £408 million a year spent on temporary housing would be wiped out if there were enough homes for social rent.

 

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