Council chiefs demand radical reforms to housing finance

Councils have called on the Government to give them the powers to help solve the housing shortage.

Ahead of its annual conference in Bournemouth this week, the Local Government Association said barely half the 221,000 new homes needed every year would be built without radical reforms to housing finance.

Measures proposed included incentive schemes to encourage private developers to speed up housing delivery; the creation of council-led local land trusts; the complete scrapping of the housing borrowing cap; and an overhaul of the Right to Buy scheme.

To indicate the scale of the shortage, the LGA noted that in the last 14 years, house prices have on average soared by more than 155% while average wages have risen by only 41%.

More than three million adults aged 20-34 are now living with their parents, and the number of people renting has doubled with the average first-time buyer having reached 35.

The LGA’s incoming chair, Labour’s David Sparks, said: “The current housing crisis is nothing short of a national scandal which is going to get worse without radical action. There is an emerging nightmare looming just down the street.

“The shortage of houses in this country is a top priority for people, but buying a house is increasingly out of reach for many. Our plans would see half a million new homes built, transforming the lives of hundreds of thousands of families.” 

The incentive scheme would see private developers encouraged to use existing planning permissions more rapidly by using public resources to reduce up-front costs and risks, with guarantees and phasing payments for infrastructure.

Council-led local land trusts would be created with powers to pool surplus central and local government land for housing and make decisions about its disposal.

They would operate on a ‘build now, pay later’ model to bring large sites forward with necessary infrastructure and affordable housing.

Removal of the Housing Revenue Account borrowing cap would see borrowing for housebuilding governed by the same rules as all other kinds of council borrowing, a move the LGA said could deliver some 80,000 homes over five years.

Offering Right to Buy discounts only in line with the local housing market with receipts reinvested would allow councils to replace around 50,000 houses sold through Right to Buy, it said.

Mark Smulian